States Boost Low-Interest Loan Programs to Stimulate Economy

　　Demand Surges for Linked-Deposit Programs

　　In a bid to combat rising inflation, states across the U.S. are witnessing a surge in demand for linked-deposit programs that provide low-interest loans to small businesses, farmers, and affordable housing developers. These programs, fueled by state funds, have gained traction as the Federal Reserve's interest rate hikes have made borrowing more expensive.

　　In Missouri, Treasurer Vivek Malek saw an overwhelming response to the state's linked-deposit loan program, receiving applications worth $120 million within six hours. The program, capped at $800 million, was forced to close applications prematurely due to the high demand.

　　Illinois, with its robust linked-deposit program, has witnessed a significant increase in applications. In 2022, the state had 42 applications for low-interest loans, which rose to 317 last year, totaling over $220 million.

　　Other states, such as Montana, Iowa, Kansas, and Ohio, have reported a similar surge in demand for these programs, leading to increased funding allocations and expansions of program capacities.

　　Addressing the Affordable Housing Crisis

　　In Montana, a new linked-deposit loan initiative focused on affordable housing received $77 million of applications within two months, exhausting the program's cap and forcing an early closure.

　　Lawmakers in several states, recognizing the urgent need for affordable housing, are exploring the revival or expansion of linked-deposit programs to address this issue.

　　Reviving Dormant Programs

　　States that had shelved their linked-deposit programs during periods of low interest rates are now considering their revival. Oklahoma, for instance, has received inquiries from banks about restarting its program, which has been dormant since 2010.

　　Texas Agriculture Commissioner Sid Miller, who had not approved any linked deposits since taking office in 2015, recently approved his first two in response to the rising demand.

　　Conclusion

　　As the economy grapples with rising interest rates, states are turning to linked-deposit programs as a means to stimulate economic activity and provide financial relief to businesses and residents. The success of these programs underscores their potential in addressing pressing economic challenges.