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LINKED DEPOSIT PROGRAM |
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LINKED DEPOSIT PROGRAM |
 |
| Wait List Information | - The latest details on the wait list |
| Program Overview | - Learn more about the Linked Deposit Program |
| 2008 Legislative Changes | - Details of EHB 3360, passed during the 2008 legislative session, which increased funding for the program. |
| Participating Banks
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- Banks that have participated in the program |
| Terms & Conditions | - Bank Information |
| Program Reporting | - Periodic program performance reporting |
| Program Documents | - Download the program brochure, Tracking Report, and other publications |
| Contacts | - Agency contacts for program information |
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New Rules affecting the funding of qualified loans for the program are now in effect. (See WAC 326-70-010) The intent of these rules is to increase the number of minority and women business owners participating in the program and decrease the wait period between application approval and funding. |
RCW 43.86A authorizes the Office of State Treasurer (OST) to make up to $150 million available for the Linked Deposit Program. *See 2008 Legislative Changes for increased fund amount for minority and women business enterprises and new funding for veteran-owned businesses. When the program operates at its authorized capacity, a wait list is in place. Contact The Office of State Treasurer for up to date information on any wait list. Currently, the LDP can fund interest rate reductions on a maximum of $150 million of loans at any given time.
Background
The Washington State Legislature found that minority and women owned businesses had been historically denied access to capital and that lack of capital is a key barrier to the development of minority and women owned businesses. In response, the legislature passed the 1993 Minority and Women Owned Business Assistance Act, which created the Linked Deposit Program ("LDP").
The Act directs the Office of the State Treasurer ("OST"), the Office of Minority and Women's Business Enterprises ("OMWBE"), and the Department of Community, Trade, and Economic Development ("CTED") to operate a program that links the deposit of state funds to loans made by participating financial institutions to qualified minority and women-owned businesses. The deposit of state funds is made at below market rates. The savings are then passed on by the bank to the Linked Deposit borrowers in the form of an interest rate reduction not to exceed two percent (2%).
Program Eligibility
Any firm currently certified by OMWBE as a Minority Business Enterprises (MBE), Women's Business Enterprise (WBE), Minority Women's Business Enterprise (MWBE), or Combined Business Enterprise (CBE) is entitled to the Linked Deposit benefit. Any business related loan carried by a certified firm, and made by a participating lender, is eligible for enrollment in the program. A firm must be certified by OMWBE before their business loan can be enrolled in the program.
To learn more about certification and eligibility criteria visit the OMWBE certification page.
Please note, the LDP is not a loan or loan guarantee, and the State cannot help a firm obtain a business loan. Firms must satisfy their bank's financing/loan criteria. The LDP allows a certified firm to receive an interest rate reduction on existing business loans made by a participating lender. For loan eligibility, contact your financial institution.
How the Program Works
The State Treasurer is authorized to use up to $150 million of the State's short-term surplus funds to purchase certificates of deposit in an amount equivalent to the amount financial institutions loan to certified minority and women's business enterprises.
The LDP "links" the State's surplus fund deposits to the commercial loans that financial institutions make to certified minority and women's business enterprises. Two percent (2%) of the interest that is earned on the State's certificate of deposit is used to reduce the interest rate that would otherwise be charged to a certified business for its loan or other financing. If the interest rate returns earned by the State on the CDs fall below 2%, banks are allowed to reduce the interest rate reduction passed onto the firms by an equivalent amount.
Effectively, the State buys certificates of deposit equal to the amount lent to certified firms. The State then forgoes 2% of the interest it would earn on the CDs and the banks transfer the savings to the certified firms in the form of an interest rate reduction.
Terms
2008 Legislative Changes
On March 27, 2008,
Governor Gregoire signed EHB 3360. This
legislation increased the amount the State Treasurer may use for the Linked
Deposit Program for qualifying loans that are made to minority and women’s
business enterprises that have received state certification under chapter 39.19
RCW from $150 million to $175 million. Additionally,
this legislation authorized the State Treasurer to use up to $15 million for
qualifying loans that are made to a veteran-owned business that has received
state certification under RCW 43.60A.190. This
legislation will be effective June 11, 2008 (90 days after the close of the 2008
legislative session).
| Any qualified public depository is able to participate in the Linked Deposit Program. Bank representatives are encouraged to contact the Office of the State Treasurer to register their bank as a Linked Deposit lender in order to offer the program to their MWBE customers. The following banks have participated in the program. Borrowers should contact their bank to determine if it currently offers the Linked Deposit Program to its customers. | |
| American West Bank | Plaza Bank |
| Bank of America | Regal Financial Bank |
| Bank of the Pacific | Riverview Community Bank |
| Bank of Whitman | Skagit State Bank |
| Banner Bank | South Sound Bank |
| Cascade Bank | Sterling Savings Bank |
| Coastal Community Bank | Timberland Bank |
| Commerce Bank of Washington | United Commercial Bank |
| Evergreen Bank | U.S. Bank |
| F & M Bank | Valley Bank |
| First Mutual Bank | Venture Bank |
| Frontier Bank | Viking Bank |
| Islanders Bank | Washington Business Bank |
| Key Bank | Washington Trust Bank |
| Kitsap Bank | Wells Fargo Bank |
| North Cascades National Bank | West Coast Bank |
| Pacific Continental Bank | Wheatland Bank |
| People's Bank | Whidbey Island Bank |
BANK
QUALIFICATION
Financial
institutions must verify that a business is certified by the Office of Minority
and Women's Business Enterprises (OMWBE) and certify to The Office of the State
Treasurer (OST) that the 2% rate
reduction on a Linked-Deposit Program loan is passed along to the borrower that
the CD investment was intended to fund. A
loan enrollment form (see Program Documents on website) must be filled out and
returned to OMWBE for verification two (2) weeks prior to disbursement of funds
for every loan. OMWBE will send back a Certification Verification form for each
loan submitted with an estimated time for disbursement.
CD
TERMS AND MATURITIES
OST
funding for the linked deposit program will be made monthly depending upon the
availability of funds.
The
term of the CDs will be the same as the term of the “linked” loans; but no
longer then ten years. The interest
rate and the principal amount of the CD will be adjusted monthly to reflect the
changes in the principal on the “linked” loans during the preceding month.
CDs will mature on the 15th of each month.
If the 15th is a weekend or a bank holiday, the CD will mature on the
first bank working day after the 15th.
The
dollar amount of the Linked-Deposit CD will correspond to the value of the qualifying
loans outstanding monthly. One (1)
Certificate of Deposit (CD) per bank will be issued which will be equal to the
sum of the outstanding principal balances of all Linked Loans done by that bank.
For example, a bank may have done six different linked loans, with an
original principal amount of $600,000.00, that currently have an outstanding
principal amount of $435,090.45. The
amount of the CD for the current month would be $435,090.45.
CD
INTEREST RATE DETERMINATION AND CALCULATION
The
monthly rate will be based on the bond equivalent yield of the old 2-year Note
that now has one year to maturity. The
formula will be the ask yield of the one-year Note, plus 50 basis points, LESS
the 200 basis point differential designated in statute.
The source for the yield of the one-year Note will be from the Bloomberg
system as of the rate setting date. A
list of the specific issues and effective dates that will be used in setting the
rates will be provided by OST (see below). Interest
will be calculated on an actual/360 day basis (non compounding) and paid monthly
to OST. No
CDs will be issued with an interest rate of less than 2% percent. (If
at such time the interest rate would have fallen below 2%, the Banks may adjust
the reduced rate on loans to reflect the difference) but until that time all
loans should carry the full 2% reduction.
The
new principal amount of a CD on the monthly rollover day will be the principal
maturing, LESS any principal paid by
borrowers on “linked” loans
during the preceding month, PLUS the principal amount of any new “linked” loans.
Each
participating financial institution will have one main contact branch.
This contact will provide the monthly certification form.
This form must be received by the OST by the stated time and date on the
form or two working days prior to a CD rollover date.
The principal amount of the CDs changes as the corresponding loan amounts
change, and OST has no way of knowing the amount of loans outstanding on the
rollover date, unless notified by bank contact.
If
official notification is not made, OST reserves the right to assume that all
loans have been paid in full, to close the CD, and return all money to OST.
EXCHANGE
OF FUNDS
All
exchange of funds will be done through the Automated Clearing House (
OST
may redeem all Certificates of Deposit for the following reasons:
Failure
to supply OST with the monthly information form in a timely manner
De-certification
of business by OMWBE
Default
of loan
Unqualified
bank - failure to report and collateralize with PDPC
Determination
is made that loans were not given the 2 percent rate reduction
No
loans shall be funded to any employees of the Office of the State Treasurer.
Rate Setting Date
Notification Date Rollover
Date
Treasury Coupon Used**
March
10
13
17
4.500% 03/31/09
December
8
11
15 3.250% 12/31/09
OMWBE is responsible for providing periodic reports detailing Linked Deposit program performance. OMWBE will make performance reports available for download on a quarterly basis. Reports will be released during the first weeks of April, July, October, and January. Annual reports will be released the first week of January for the preceding calendar year. For reporting inquiries, contact Gerald Ballard with OMWBE. Documents require the Adobe Acrobat Reader.
Performance Reports
| Program Brochure* | - Hi resolution PDF copy of the Linked Deposit brochure suitable for printing. |
| Loan Enrollment Form* | - The Loan Enrollment Form
is the key
document for enrollment of loans in the program. Bank representatives
will need to download and use this document to begin their customers'
participation in the program. (Formerly entitled "Loan
Application Tracking Report")
Please note: As part of the recently adopted data collection plan, the Loan Enrollment Form has been revised. Loan requests made after June 1, 2004 will require the use of this form. |
| ACH Bank Enrollment Form | - Provides bank routing and who to contact information for the OST. |
| Data Collection Plan* | - This document contains the detailed plan for the collection of key data that will measure the program's progress towards meeting its legislative intent. |
| Certification Application | - Download the application for OMWBE
certification.
Note - Firms not engaged in highway construction or transit related activities should download the "State-Only" application. Contact Gerald Ballard with any questions about the state and federal applications. |
| RCW 43.46A.060 | - OST authorization, program establishment, qualifying loans, CDs |
| RCW 43.46A.070 | - Liability |
| RCW 39.19.240 | - OMWBE authorization, data collection, certification, and loan monitoring |
| RCW 43.63A.690 | - CTED authorization, loan packaging, and performance indicators |
| *Document requires Adobe
Acrobat Reader
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| Olympia, WA (360) 753-9693 |
