Gov. Mark Dayton announced Wednesday a new plan to funnel $100 million in loans to Minnesota businesses that need money to expand.
“These funds will help break down one of the largest barriers to job growth in our state,” he said.
The governor announced the plan the day after a daylong jobs summit that included many Minnesota business owners who complained that banks were being too stingy with loans.
Under the plan, the State Board of Investment will deposit about $100 million into numerous Minnesota community banks. The banks can use the money for loans to small businesses around the state. The infusion of cash will double an existing program originally designed to spur lending and does not need legislative approval.
Dayton said there’s no guarantee the banks will loan the money, but he will write a personal letter to banks that take the money stressing the importance of lending it to businesses in need.
The state will have no say in deciding which businesses get the loans. Those decisions will be left solely to the local banks.
Howard Bicker, executive director of the State Board of Investment, said the program is a rock solid investment for taxpayers. The money the state deposits into local banks is federally insured and should return a tidy profit from interest.
Money for the program will come from a tiny sliver of the $1 billion in cash on hand at the State Board of Investment, which manages the state’s multibillion-dollar pension system.
“Entrepreneurs need to know that we are going to work aggressively to give them the tools they need to create jobs,” Dayton said. “Today, I am taking action to spur investment in the small businesses that fuel Minnesota’s economy.”