Friday, 26 April 2019 15:48

OP ED: New York State’s Linked Deposit Program Benefits Economy

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OP ED: New York State’s Linked Deposit Program Benefits Economy Supplied photo

In 1994, the state began the Linked Deposit Program (LDP) to assist and encourage firms, manufacturers and small businesses to make investments.

This program offers reduced-rate financing to makes it less expensive to borrow money. Under this program, loans can be obtained by qualifying businesses through commercial banks, savings banks, savings and loan associations, farm credit institutions and the New York Business Development Corporation at a reduced rate. Interest rates for these loans are subsidized by the state. Since the start of this program, it has helped lower interest rates for thousands of business owners and brought in billions in private capital investments.

In 2016, the LDP processed 98 applications and approved 89, which resulted in more than $40.85 million in deposits. It is estimated that these funds helped generate $51.01 million in private sector capital investment. Currently, there are 73 lenders participating in the LDP in New York state. For each loan, the state deposits the same amount as the loan to the lending institution but earns less interest on the deposit. This allows the lender to transfer the interest rate savings to the borrower. At the end of the loan term, the bank returns the initial deposit to the state. The program state reduces some risks for the banks and reduces commercial interest rates for borrowers which encourages private investments. Help from the LDP has proven to stimulate the economy by allowing businesses to expand, become more competitive, upgrade their equipment and develop new products. A 2017 report for the governor and the Legislature showed assistance from the LDP created 253 jobs in 2016, and would retain an additional 268 through at least 2021.

Many businesses in Central New York and the Finger Lakes region have utilized this program. In 2016, 12 projects were approved in Central New York and 27 in the Finger Lakes. This resulted in $13.91 million in assistance for both regions. Since the program’s establishment, most assisted businesses have been small businesses with 100 employees or less. In 2016, 98 percent of the loans approved benefitted small businesses. In that same year, it cost the state just under $2 million to provide this reduced interest rate through the program. This is a small investment the state can make that provides an incentive for private investments. For some businesses, it is the only way they can stay in business or expand.

There have been numerous legislative changes designed to help increase participation in the program. The lifetime maximum amount to borrow for eligible companies increased from $1 million to $2 million. Another change allowed companies to apply for a four-year extension for the life of the loan, providing up to eight years of assistance on certain loans. I was pleased to support a measure in the Assembly that extended a higher interest rate benefit to agricultural businesses. Helping farmers and local agricultural businesses to access these reduced interest rate loans helps keep local farms in business. In addition, the Legislature enabled technology and innovation businesses to benefit from a higher subsidy in an effort to spur investments and bring more high-paying jobs to New York.

To learn how to apply or find more information, visit, or call the regional offices. Oswego and Onondaga county residents may call the Central New York office at 315-425-9110. Jefferson County residents may call the Watertown office of Empire State Development at 315-785-7907. You also may call my office at 315-598-5185 to request a brochure on the program.

If you have any questions or comments on this or any other state issue, or if you would like to be added to my mailing list or receive my newsletter, please contact my office. My office can be reached by mail at 200 North Second Street, Fulton, New York 13069, by e-mail at [email protected] or by calling (315) 598-5185. You may also friend me, Assemblyman Barclay, on Facebook.

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