States expand low-interest loan programs for farms, businesses and new housing

States are seeing increased demand for their cash amid high interest rates

JEFFERSON CITY, Mo. -- On the first business day of the new year, Missouri Treasurer Vivek Malek began accepting applications for about $120 million of state-subsidized, low-interest loans to small businesses, farmers and affordable housing developers.

Within six hours, Malek had so many requests for the money that he had to cut off applications.

“The demand is huge, and it is real,” Malek said.

Missouri's situation, though extreme, is not entirely unique. From New York to Illinois to Montana, states have seen surging public interest in little-known programs that use state funds to spur private investment with bargain-priced loans. The programs have taken off after a series of key interest rate hikes by the Federal Reserve made virtually all loans more expansive, whether for farmers purchasing seed or businesses wanting to expand.

To combat inflation in consumer prices, the Fed raised its benchmark interest rate 11 times from March 2022 to last July, setting it at a two-decade high.