Editor's Note: The following guest column was written by Massachusetts Treasurer and Receiver General Steven Grossman.
As an advocate for business and industry in Massachusetts, one of AIM’s overarching goals is to improve the economic climate in the state. To this end, particularly as the economy starts to show signs of heating up after a years-long recession, opportunities that help spur the fledgling recovery must be pursued.
When I first became Treasurer in January of this year, I wanted to take a full inventory of the potential of my new office. The Treasury is much more than a simple clearinghouse for state finances. I sensed opportunities to do business in an innovative way and to leverage the full influence of the office in a manner that targets valuable resources to needed areas.
We recently kicked off our Small Business Banking Partnership initiative, a program that deposits up to $5 million apiece into Massachusetts-based banks with the understanding that the banks will expand their portfolio of loans to creditworthy small businesses throughout the Commonwealth. With more than 30 banks already on board, we are approaching our goal of dedicating $100 million to the program in its initial phase.
The funds come from existing Treasury reserves that we normally have deposited in large national or international financial institutions. The banks participating in our program offer competitive interest rates, and our deposits are fully insured. There is no cost to the taxpayer, no subsidy whatsoever. The crucial difference is that more Massachusetts banks will have more money to lend to Massachusetts small businesses to help the Massachusetts economy and create jobs.
While the goals of the Partnership are ambitious, I wanted the program to be simple to administer and simple for companies to participate. As the CEO of a 100-year-old family owned business, I knew that complexity – no matter how attractive the lending program – could deter banks from participating. The devil can often be in the details. We purposefully put forth program guidelines that will give us clear metrics to demonstrate that banks are using our deposits for their intended purpose, but that don’t over-burden banks with onerous, redundant, and time-consuming reporting measures or paperwork.
The Partnership program frees up needed capital at these banks and offers credit-worthy small businesses new opportunities to borrow the money they need to prosper and expand. This is truly a win-win partnership between business and government, a goal that I plan on replicating in many other aspects of Treasury business throughout my tenure in office.
For more information on the Small Business Banking Partnership, please contact Barbara L’Italien, Director of Government Affairs, in our office at (617)367-6900 or email@example.com.