Even in an extremely low-interest financial environment, the State Treasurer is pushing a program to drive interest rates even lower for small businesses and farms.
Much of Invest in Missouri seeks to bring more money into Missouri through the removal of an artificial cap on interest rate returns. But another part of the program championed by Treasurer Clint Zweifel seeks to increase participation in the state Linked Deposit program. At present, the state has $200 million in loans out to small businesses and farms. He would like to push that to the maximum $720 million.
The program began in the 1980s when interest rates were very high. The state underwrote loans, especially those to farms and agri-business, giving lenders a much-needed three percent break on interest. The program allowed some to survive in a harsh interest-rate environment. The program, dubbed MOBUCKS by then-Treasurer Wendell Bailey, has undergone several name changes over the years and hasn’t received the attention of late since interest rates have dropped to historic lows.
Zweifel insists the program is still viable, even with a prime interest rate of 3.25 %.
"The interest rate environment is low right now, but this still knocks off two or three percent off the interest business pays on a loan," Zweifel says, "If they can put that money to work other places for the business then I think it’s a win for the economy, because, at this point, those small investments happening throughout the state repeatedly can make a difference."
Zweifel says changes in the program should help greatly. No longer will the program be limited to businesses of 25 employees or less. Businesses with up to 100 employees will now be eligible. He says the Treasurer’s office also hasn’t placed enough emphasis on the program, providing the staff and resources needed to make it a more attractive program.
He believes the program has the potential to give the state economy an immediate boost upon its enactment at the end of August.