STATE

Governor signs bill leveraging state funds for small business loans

Andrew Bahl
Topeka Capital-Journal
Gov. Laura Kelly signs into law Thursday legislation leveraging idle state funds for small business loans.

Up to $60 million from the state’s coffers will be leveraged into small business loans under legislation signed into law Thursday by Gov. Laura Kelly, something advocates have deemed essential to help the state’s economy recover from COVID-19.

The bipartisan push to create the Economic Recovery Loan Deposit Program would make the idle funds available to financial institutions, which would in turn offer below-market rates to businesses, farmers and ranchers who need the funds. The bank or credit union, rather than the state, would bear the risk in the transaction.

The bill passed overwhelmingly in both chambers of the Legislature. 

But Kelly vetoed a similar proposal last session on the grounds that the program should not be run by the state treasurer, as well as concerns about how it was structured.

She said Thursday that many of those issues were addressed in the latest version of the bill. That includes her chief concern that funds should go exclusively to Kansas business owners and be spent in the state.

“This is what good government looks like — working together to come to a compromise to promote good things,” Kelly said.

State Treasurer Lynn Rogers said his staff was in the process of ensuring that they are ready to begin issuing loans when the program takes effect in July.

The legislation was framed as a win for rural Kansas, with Kelly pointing to language which also incentivizes housing development outside the state’s urban areas.

But Doug Wareham, president of the Kansas Bankers Association, said that the bill would also help keep banks and financial institutions healthy.

“This is going to be an additional tool for financial institutions to help serve small businesses that have been impacted by a historically challenging year,” Wareham said.