JEFFERSON CITY — Lawmakers and representatives of several organizations spoke Wednesday in support of legislation that would expand MOBUCKS, a circa-1980s state-funded loan program that reduces interest rates for eligible businesses.
The program is geared toward helping small businesses, farmers, agriculture businesses, affordable housing developers and local governments.
The proposal, which was discussed by the House Financial Institutions Committee, would increase the pool of funds the treasurer’s office can use for MOBUCKS loans from $800 million to $1.2 billion.
Treasurer Vivek Malek last week announced that demand for MOBUCKS loans was so high that available program funds were spoken for within six hours of the applications being made available. It was the first time the program accepted new applications since last May.
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“If you talk to businesses, talk to farmers, the biggest concern is the interest rate on their cash flows,” said bill sponsor Rep. Terry Thompson, R-Lexington.
Thompson said that 136 banks spanning every state Senate district participated in the program.
“These kinds of programs are instrumental in making Missouri competitive,” said Rep. Doug Clemens, D-St. Ann.
Clemens also pointed out that a similar bill was “pretty overwhelmingly” passed by the House last year but stalled in the Senate.
“I think it’s needed. I think it’s beneficial for economic growth in the state,” said Rep. Mike McGirl, R-Potosi. While committee chairman Rep. Michael O’Donnell, R-south St. Louis County, expressed general support for MOBUCKS, he raised concerns that the state could be giving too much of a break to borrowers and missing out on needed revenue.
In recent years, O’Donnell said, “We’ve had a lot of cushion. We’ve had a lot of money sloshing around. But my concern is that those days are past.”
O’Donnell also said extremely high demand could suggest that a product “is priced too cheap.”
In reducing interest rates for MOBUCKS borrowers, the state misses out on revenue from interest payments, representing an opportunity cost.
“Increasing the allocation for (MOBUCKS) could result in a decrease to state revenues given that there are investments with higher interest rates of return that the (state Treasurer’s Office) could take advantage of,” according to the bill’s .
The Missouri Farm Bureau at its annual meeting in December changed its policy to call for MOBUCKS expansion, according to Ben Travlos, who spoke on behalf of the bureau.
“We see this as a great tool to help bring down one of the biggest barriers to making a small business successful, which is the ability to use their capital in a way that develops their business,” said Sarah Schlemeier, representing entrepreneurship advocacy organization, NEXT Missouri.
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