Linked Deposite Loan Program


Under the Kentucky Linked Deposit Investment Loan Program, the State Investment Commission invests funds from the state’s Abandoned Property Cash Account at a set rate with eligible lenders. In turn, the financial institution agrees to lend the proceeds of the funds to eligible small-business borrowers at an attractive rate. The maximum loan rate charged by the lender will be the current Wall Street Journal prime rate, but not less than 5%. The maximum loan amount is $100,000 per business and the maximum loan term is 7 years. Prepayment and early payoff of the loan is available without penalty. Loan proceeds may be used for working capital, interest costs, capital expenses, or debt refinancing. Eligible borrowers must meet the following criteria:

  • Must be established as a for-profit entity
  • Must be headquartered and maintain offices and operate facilities in Kentucky
  • Must employ fewer than 50 full-time employees, the majority of whom must be from Kentucky
  • Must have gross earnings of $1 million or less per year
  • Business principals can’t be officers or directors of eligible lending institutions

Potential borrowers should contact their preferred lending institution to see if the lender offers Linked Deposit Loans. Lenders interested in participating in the Linked Deposit Loan Program can contact Mark Johnson for additional information. Typical steps for a small business interested in obtaining a Linked Deposit Loan:

  • An eligible borrower identifies a lending institution willing to consider his or her loan application and comply with Linked Deposit Loan policies.
  • The lender obtains a Linked Deposit Investment Program Loan Application from Mark Johnson and provides the application to the borrower, along with any other paperwork required for a loan application.
  • The borrower completes and submits all required loan documentation to the lender, including the Linked Deposit Investment Program Loan Application.
  • The lender makes all credit decisions and determines necessary collateral requirements on its behalf.
  • If the lender is willing to make the loan, a copy of the Linked Deposit Investment Program Loan Application, along with the borrower’s personal financial statement, is submitted to Mark Johnson for approval and to assure compliance with program regulations.
  • An approval letter will be forwarded to the State Investment Commission by Mark Johnson and, subject to projected availability of funds by the Department of Treasury, the State Investment Commission will notify the lender and discuss the specific type of investment, terms, and settlement date for the transaction.

Firms that derive more than one-half of their annual gross income from farming can contact Tim Hughes in the Governor’s Office of Agricultural Policy to learn about Linked Deposit Loans for agribusiness firms. For additional information about the Linked Deposit Loan Program, please email MarkL.Johnson@ky.gov or call 800-626-2250.