To listen to the Show Me Today interview with State Treasurer Scott Fitzpatrick, click below.

Missouri’s Linked Deposit Program is gaining popularity among the state’s small businesses, farms and local government agencies during this time of record inflation and high gas prices.

State Treasurer Scott Fitzpatrick’s Office oversees the program, called MOBUCK$. He said MOBUCK$ helps them access loans at a lower interest rate.

Missouri Treasurer Scott Fitzpatrick (Photos courtesy of the Treasurer’s Office)

“It’s 30% below whatever the market rate for that loan would be,” said Fitzpatrick. “In a time like we’re in now where interest rates are rising and are expected to continue to rise at least through the end of this year, it becomes much more important for this program to be available.”

For example, Fitzpatrick said if a business wants a $1 million loan, the difference between a 6% interest rate and a 30% discounted rate of 4.2% is about $18,000 annually.

“This is not just nibbling around the edges. For some people, this can be a lot of money, a lot of savings that they can then use that savings either to buy additional equipment or they can use it to invest in other ways in their business. I do think it’s a good program and something that a lot of people can benefit from,” he said.

The State Treasurer’s Office partners with Missouri banks and credit unions to provide the loans. When using linked deposits, the Treasurer’s Office places deposits with participating lenders to provide liquidity the lender uses to fund a loan. These deposits are placed at a discount from the market rate to the institution. In return, the institution passes these interest savings on to the borrower.

So far this year, the program has issued about $60 million in new deposits, compared to nearly $30 million for all of last year.

“This is not a handout,” he said. “We’re essentially just providing a deposit to a bank at a low interest rate. The bank is taking the credit risk. The state is not even taking credit risk in these deals.”

Requirements include fewer than 100 employees, the business must be current on their taxes and the owner cannot be a convicted felon. The loan can be up to five years and the loan limit is up to about $10 million, depending on demand.

“I really believe that it is a good use of our money to anytime we can use the money that we’re holding in the state treasury to enhance economic development opportunities in the state of Missouri without making it a handout. I think that makes a ton of sense to do that,” said Fitzpatrick.

More than 140 lenders with more than 350 branches across Missouri are partnering with the state to provide these loans.

For more information about MOBUCK$, click here.

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