Priming The Pump For Small Businesses
Small businesses in Worcester and across the commonwealth want to grow and we want to help them do just that. So I am extremely pleased to be able to announce that just a few weeks after taking office I officially launched the treasury’s Small Business Banking Partnership, that will move at least $100 million of state deposits — properly secured and at competitive interest rates — into Massachusetts banks to help them make more loans to creditworthy small businesses.
Small businesses are the engine of Massachusetts economic growth. According to state data, small businesses and sole proprietorships make up 85 percent of businesses and historically have created two-thirds of the new jobs in the commonwealth.
However, engines need fuel to run. In the business world, that fuel is capital, often in the form of bank loans, which have been difficult for some small businesses to obtain during the recession and its accompanying credit crunch.
Part Of The Solution
We have invited the 200 banks authorized to accept state deposits, including those in the Worcester area, to participate in the program. Worcester, as a Gateway City, is a community to which our program gives special weight. I also met with Mayor Joseph O’Brien, local banks, and small business owners in Worcester on March 4 to discuss our program and answer their questions.
The first applications already have been received by the treasury, and we expect the first deposits to be made in April or May.
Small business people across the state have told us that they are prepared to grow and create jobs if only they can get the capital they need. We have listened and responded.
There’s no one-size-fits-all solution for small businesses or for banks. The treasury’s Small Business Banking Partnership is intended to fill one gap in those programs: the need for standard bank loans to growing companies, loans that do not have to be guaranteed or subsidized.
One of the important elements of the Small Business Banking Partnership is that it will help the economy without costing the taxpayers anything. The money we are shifting is money the state already has on deposit, and we are insisting that partnership banks offer us competitive interest rates and fully secure the funds. The program simply takes money that might otherwise have gone to multinational financial institutions and brings it back home to Massachusetts where it can help Massachusetts grow.
I promised that as treasurer I would use the full potential of the office to help create jobs and protect the public’s money. With the treasury’s Small Business Banking Partnership, we have taken an important step to do both.
Steven Grossman is the Massachusetts State Treasurer.
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