Grossman Expands Scope of Small Business Banking Partnership
Enhanced $10 Million Limit will Channel More Loans to Small Credit-Worthy Businesses
Citing a stronger demand for more lending capital in the recovering economy, Treasurer Steven Grossman today announced that he is increasing the maximum amount of Treasury reserve funds that banks participating in the Small Business Banking Partnership can request from $5 million to $10 million.
“The response to the Small Business Banking Partnership has outpaced even our optimistic expectations – this has really proven to be a win-win-win for government, community banks, and small businesses,” said Treasurer Grossman. “The Partnership puts the reserve resources of the Treasury to their optimal use, creating jobs, opportunity, and prosperity throughout the Commonwealth.”
The Small Business Banking Partnership moves Treasury cash reserve funds typically held by large national and international financial institutions and deposits them in Massachusetts community banks. In exchange for the infusion of new deposits, the banks sign a Memorandum of Understanding (MOU) signaling their intent to enhance their loan portfolios to small credit-worthy Massachusetts businesses. Presently, 37 banks from across the state are participating in the program, with nearly $160 million of funds on deposit.
Grossman said that a number of participating banks have indicated that they have utilized either all of most of the $5 million deposit they initially received. The first deposits under the program were made in May of last year, and this latest expansion of the Partnership will provided additional capital to community banks that have a demonstrated pattern of small business lending. Since being sworn into office, the Treasurer has traveled across the state extensively to promote the substantial benefits of the program with bank officials.
“We’re confident that interest in the Partnership will continue to grow and that we will continue to capitalize on our job creation goals,” said Grossman.
All deposits that the Treasury makes in these community banks are protected through either insurance or collateral, and the interest rate on the money is comparable to what the Commonwealth receives from out-of-state financial institutions.