After the program received robust interest at the start of the year, the Missouri Senate unanimously passed an expansion of MOBUCK$, a state-sponsored low-interest loan program serving small business, agriculture and governmental clients.
The legislation, House Bill 1803 sponsored by Rep. Terry Thompson, now sits on Gov. Mike Parson’s desk, awaiting his final decision regarding whether the bill will become law. If so, it would raise the amount of available linked-deposit loan funds for the program from $800 million to $1.2 billion.
The program opened its 2023 loan offerings on Jan. 2 with $119 million available to eligible borrowers. The Missouri Treasurer’s office received 142 applications within six hours, by which time all the funds had been allocated and the program could accept no more applicants. State Treasurer Vivek Malek has been a vocal proponent of the program.
“MOBUCK$ has skyrocketed in popularity because of soaring high interest rates, and the program’s ability to reduce interest rates on these linked-deposit loans to eligible borrowers,” Malek said. “I commend the Legislature for passing this investment by and in Missouri small businesses, farmers, and job retention and creation.”
The program has been in effect since 1985, and it offers these low-interest loans through participating banks, of which there are 136 in the state. Money for the program is sourced from a fund maintained by the treasurer’s office.
These funds are then deposited in the qualified banks that reimburse the state at below-market interest rates for the money. The amount of interest the treasurer’s office is allowed to collect from banks on the MOBUCK$ funds is locked at 3% in state statute.
Those interest rate savings mean that the banks can offer low-rate MOBUCK$ linked-deposit loans, which generally result in a roughly 30% reduction in the borrower’s interest rates.
“MOBUCK$ is a relief valve from inflation for qualified Missouri borrowers, enabling them to strengthen and expand their businesses and help build both the local and state economies,” Malek said. “The tremendous interest and the depletion of available funds in just six hours on a single day was more proof that MOBUCK$ needs expansion.”
More:Lawmakers seek to expand MOBUCK$ program, offer more low interest loans to small business
Recipients of these loans are typically farmers, small businesses, local governments, agriculture businesses and affordable housing developers. Among the 147 recipients approved in January, 97 loan applications were for qualifying small businesses, 39 applications for agri-businesses and six loan applications for multi-family housing.
Since Malek was appointed to the treasurer’s office by Gov. Parson in January 2023, the office processed $651.2 million in linked deposits that support these low-interest loans.
The bill’s fiscal note projects that it won’t cost the state any additional money to increase the availability of funds for the program. However, since the interest rates that the state can receive on MOBUCK$ money in funds at qualified banks are locked at 3%, the state could potentially lose out on more profitable interest payments, given the recent interest rate hikes across the country.
