TOPEKA — Gov. Laura Kelly signed bipartisan legislation Thursday releasing up to $60 million from the state treasury to lending institutions to make below-market loans to businesses with fewer than 200 employees struggling during the COVID-19 pandemic.
She said the law was crafted to allow banks and credit unions to make loans to businesses and agricultural operations at interest rates 2% less the market rate with a minimum rate of 0.25%. The money from idle funds held by state government must be expended by Kansans business owners within Kansas. The maximum loan would be $250,000 and borrowers would be limited to one loan. There is no risk to the state with the loans, but the state treasury is expected to earn more on the money that would be typically secured by the Pooled Money Investment Board.
Kansas state Treasurer Lynn Rogers said his office started organizational work in anticipation of approving loans tied to the Kansas Economic Recovery Loan Deposit Program when the statute took effect July 1. Senate Bill 15 was passed 122-1 by the House and 39-0 by the Senate. The concept was originally proposed by Republican legislators in 2020, but the governor wasn’t enthusiastic about that version.
“This is what good government looks like — working together to come to a compromise to promote good things,” Kelly said.
During a bill-signing ceremony attended by Republican and Democratic lawmakers in rotunda of the Capitol, the governor said the compromise legislation included incentives for developers to build housing in rural areas of the state. “Everyone is fully aware that we have a huge housing shortage,” she said.
Doug Wareham, president and chief executive officer of the Kansas Bankers Association, said a coalition of people involving in the banking industry worked with House and Senate committees and the state treasurer’s office on the final version of the bill. A side benefit of the law, he said, would be strengthening of lending institutions in rural communities of Kansas.
“When we look back several years down the road we’re going to see an added benefit of this legislation. It’s going to make community banks more competitive,” he said.
In 2000, the Kansas Legislature allocated $50 million for the Kansas Agricultural Production Loan Deposit Program to assist struggling farmers with day-to-day farming expenses at a modest interest rate. Three dozen banks received nearly the full amount allocated for benefit of over 400 borrowers.