New Initiative to Boost Funding for Small Businesses in New York

News Summary

New York has launched the Linked Deposit Program (LDP) to aid small businesses and minority and women-owned businesses (MWBEs) with low-interest loans. This initiative addresses the significant funding barriers these businesses face, allowing them to secure loans with rates 2-3% lower than the market. Small businesses comprise 98% of New York’s businesses and are vital to the state’s economy. The program aims to facilitate growth and sustainability within this sector by improving access to capital.

New York City – The state of New York has launched a new initiative aimed at improving funding access for small businesses and minority and women-owned businesses (MWBEs). The Linked Deposit Program (LDP) will offer low-interest loans to eligible businesses, providing them with a vital resource needed for growth and sustainability. Small businesses represent 98% of New York’s businesses and employ approximately 40% of the private sector workforce, highlighting their significance to the state’s economy.

The LDP aims to address the persistent challenges faced by MWBEs, which often encounter significant barriers regarding access to capital. By participating in this program, eligible businesses can secure loans with interest rates 2-3% lower than the prevailing rate for four years, enhancing their ability to invest in operations, research and development, market expansion, and renovations.

Under the program, lending institutions such as banks and credit unions receive state funds at a reduced interest rate that aligns with the loans offered to businesses. These funds, deposited by the state, will be returned at the end of the four-year loan term. Small businesses looking to apply for an LDP loan can do so through an approved lender or the New York Business Development Corporation. Applications are submitted to Empire State Development, which typically processes approvals within five business days, although the maximum timeframe for approval or rejection is 28 days.

Common issues that lead to delays in the approval process include incomplete applications or missing documentation. To assist applicants, the Linked Deposit Program FAQ page offers comprehensive information regarding eligibility and loan limits.

This initiative is part of New York’s broader economic strategy, which also includes other programs such as the Low Interest Capital initiative (LINC) and tax incentives for startups. Governor Kathy Hochul emphasized the importance of supporting local businesses during her State of the State address, acknowledging the financial difficulties faced by many of them.

According to the National Federation of Independent Business (NFIB), there are approximately 500,000 small businesses in New York that collectively employ around 3 million individuals. The average profit margins for these businesses range from 3% to 5%. Small businesses face numerous challenges, including rising operational costs and regulatory burdens, which can lead to capital flight as businesses relocate to states with friendlier conditions.

The NFIB has been active in advocating for further support and relief measures aimed at assisting small businesses in New York. Specific reforms regarding unemployment insurance debts have been proposed, alongside solutions to litigations that threaten the viability of smaller enterprises. As part of ongoing legislative discussions, proposals intended to ease the burdens faced by small businesses may be reconsidered in the current session.

Overall, the launch of the Linked Deposit Program represents a significant step towards improving financial support for small businesses and MWBEs in New York, paving the way for increased stability and growth in a sector that plays a crucial role in the state’s economy.

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Additional Resources

• Mid Hudson News: Small Businesses and MWBEs Can Access Reduced Interest Loans Through New York’s Linked Deposit Program
• News10: Small Business Support in Governor’s State of the State
• El País: States Expand Low-Interest Loan Programs for Farms, Businesses, and New Housing
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