Alabama Plan for Linked Deposits

     The Alabama Plan for Linked Deposits is a program operated as a division of the State Treasurer's Office. It allows the State Treasurer to make deposits in state banks on which banks pay 2% below the normal interest rate paid to the state for its funds. The reduction in the interest rate paid by the bank must be passed on to the borrowers on loans qualifying for this program. It amounts to a 2% subsidy on the borrower's interest rates for two years to help stimulate economic growth in the state.

Advantages

•Reduces cost of borrower funds.

Use of Funds

•Land, buildings or equipment.

•Repairs and renovations

•Rent, utilities, insurance or taxes.

•Legal or accounting fees.

•Wages or inventory.

Source of Funds

•Applicant handles all loan application procedures with the bank, and all funds are loaned by the bank.

Interest Rates

•A reduction of 2% from the rate quoted by the bank.

Maturity Term

•Two years is maximum use of the benefit of this program regardless of maturity date of the loan.

Limits

•Bank must determine eligibility for participation, and the duration of the loan can be no longer than two years.

Eligibility

•Any person, corporation or partnership engaged in business and

—headquartered in Alabama.

—organized for profit.

—maintaining facilities primarily in Alabama.

—having no more than 150 employees.

—having debts equal to or greater than 35% of assets.

—creating or sustaining job opportunities.

Ineligible Uses

•Bank cannot process through program unless eligibility is met.

Job Creation

•One job must be created or sustained for each $15,000 of loan.

•Loan requests above $250,000 must demonstrate that one job can be created for each $10,000 of loan.

Source: Alabama Development Office