Minnesota officials hope a $100 million investment they are making in banks will end up in the hands of small business owners.
That could result in more jobs across the state.
Gov. Mark Dayton announced the plan Wednesday, saying that he has heard “over and over” that small businesses, even ones on good financial footing, have trouble getting expansion loans.
“You do these (programs) for that difference you can make to real lives of real people,” Dayton said.
The money comes from the State Investment Board, which controls pension funds.
Board Executive Director Howard Bicker said the $100 million is being moved from low-yielding federal treasury bonds to bank certificates of deposit, which offer higher interest rates and help banks fund loans.
The investment board generally has $50 million to $100 million in bank certificates, but it was limited by a Federal Deposit Insurance Corp. cap on how much it insured. Since that limit has doubled, Bicker said, the state now can invest more in banks.
While there is no guarantee the money will be loaned to small businesses, that is Dayton’s intention. The governor said he will write letters to bankers urging them to increase business loans with the new money.
Dayton left the door open to even larger investments, perhaps up to $200 million.
Lack of access to funds was one of the major issues Dayton heard during his day-long job summit on Tuesday. On Wednesday, he said that he will offer other plans in coming weeks, including:
– Improving how the state higher education system trains workers for future jobs.
– Continuing to streamline the state permitting process, which businesses say often takes so long that it hampers expansion opportunities.
– Funding physical and communications infrastructure, including offering “border to border high speed Internet and cell phone service.”
– Continuing initiatives to make government more efficient.
“There isn’t a single answer,” Dayton said about the slumping economy. “It is a complex problem that did not develop overnight and will not be solved overnight.”