Linked Deposit Program
Program Overview and 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 legislation directs the Office of the State Treasurer, and the Office of Minority and Women's Business Enterprises 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 of up to two percent.
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 $175 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. Up to two percent of the interest that is earned on the state's certificate of deposit (CD) is used to reduce the interest rate that would otherwise be charged to a certified business for its loan or other financing. The state buys certificates of deposit equal to the amount loaned to certified firms. The state then forgoes up to two percent 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.
Banks are required to provide all of the interest the state forgoes to the business owner, up to the full two percent. So if the state earns two percent or more in interest on a certificate of deposit, the business owner receives the full two percent reduction. However, if the state receives less than two percent interest, the loan may only be reduced by the amount the state earns.
The state Department of Veterans Affairs (DVA) offers a separate Linked Deposit Program for businesses owned by veterans and servicemembers certified by that agency.
- Businesses participating in the LDP must be certified by OMWBE.
- Businesses must satisfy their participating bank's lending criteria.
- Qualifying loans include:
- Lines of credit
- Financing of accounts receivable
- Working capital
- Equipment purchases
- Real property acquisition
- Other business related financing
- Up to $1 million per loan maximum; no limit on the number of loans a firm may have, however there is a $5 million lifetime maximum per person.
- Interest rate: Up to two percent below the market rate for a commercial loan (determined by the bank).
- Loan term: Up to 10 years.
- Participants decertified by OMWBE will have their loans removed from the program, at which time they will lose the interest rate reduction.
How can a financial institution participate?
Any qualified public depository that is signed up through the Automated Clearing House can participate in the Linked Deposit Program. Bank representatives can contact the state Treasurer to register as a Linked Deposit lender in order to offer the program to OMWBE certified firms and customers that are veteran or servicemember business owners. See the list of participating financial institutions below.
For more program information, contact LDLP@omwbe.wa.gov.
Download the Linked Deposit Loan Enrollment Form.
- 1st Security Bank of Washington
- Heritage Bank
- Kitsap Credit Union
- Liberty Bank
- Mountain Pacific Bank
- Timberland Bank
- Umpqua Bank
- US Bank
- Washington Trust Bank
- Whatcom Educational Credit Union