MN Banks to Get Up to $100M for Business Lending
In hopes of boosting small business lending, Governor Mark Dayton on Wednesday unveiled a new stimulus program that will give Minnesota banks access to up to $100 million in new capital.
A day after convening his statewide jobs summit, Dayton announced that the state will disburse the funds to Minnesota community banks in hopes that the banks will lend to small businesses in the state.
Under the Minnesota Small Business/Banking Partnership, the state currently disburses about $100 million in deposits among the banks. Dayton's new stimulus plan doubles the size of the program, increasing the deposits to $200 million. The banks, in turn, are urged to lend the money to their customers, especially small businesses.
According to a news release from Dayton's office, the additional funding will help small businesses grow revenues, add jobs, and increase Minnesota's tax base.
“These funds will help break down one of the largest barriers to job growth in our state,” Dayton said in a statement. “After spending the past nine months talking to Minnesotans about how we get our state working again, entrepreneurs need to know that we are going to work aggressively to give them the tools they need to create jobs. Today, I am taking action to spur investment in the small businesses that fuel Minnesota's economy.”
The expansion to the program comes at the recommendation of the governor's Small Business Capital Access Task Force.Dayton appointed the task force earlier this year to address concerns raised by small businesses-that investment capital and credit are difficult to obtain, which constrains business expansion and job growth.
According to the Star Tribune, Dayton's decision to pump more money into the program needs no legislative approval. However, there is reportedly no guarantee that the banks will use the money for loans. The state will also have no say in deciding which businesses get the loans; those decisions will be at the sole discretion of the local banks.
To qualify for the program, banks must have a rating of at least “satisfactory” from the Minnesota Department of Commerce. The deposits-which will be insured by the Federal Deposit Insurance Corporation-will be available only to small community banks, about 300 of which exist in Minnesota, according to the Star Tribune.