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Natural disaster loan program provides aid to businesses

Since it began in July, a program created by the Missouri State Treasurer’s Office has placed more than $2.5 million in a program designed to assist small-business owners and farmers affected by natural disasters.

State Treasurer Scott Fitzpatrick announced the LIFT — Linked Deposits to Invest and Fund a Timely Recovery — program in July. It uses linked deposits to partner with Missouri financial institutions to provide low-interest loans to those impacted by spring flooding and the May 22 tornado.

After the extensive natural disasters that caused more than 80 counties in Missouri to be designated as part of FEMA disaster declarations, Fitzpatrick said, the state saw a need to help business owners and farmers.

“There’s been a lot of loss across the state of Missouri in 2019, from a variety of natural disasters — from the tornado that hit Jefferson City, which I think did a significant amount of damage downtown in the business district by the Capitol,” Fitzpatrick said. “There’s been a lot of agricultural loss that’s taken place as well.”

In July, Fitzpatrick said an assessment of 251 businesses found around 125 sustained major damage or were entirely destroyed by the May 22 tornado.

In April, researchers found a loss of at least $15 million in revenue due to flooding for corn growers and another $9 million in losses for soybean farmers.

The program can offer low-interest loans of up to $2 million, which is double the maximum amount of the Missouri FIRST program, another linked deposit program for small businesses and agriculture that isn’t natural disaster-focused.

When using linked deposits, the treasurer’s office places state funds with participating lenders to offset the funds provided through loans. More than 140 lenders are participating in the program across the state.

“Linked deposits allow the treasurer’s office to invest directly in Missouri small businesses and farms, and LIFT is going to allow us to invest in their recovery,” Fitzpatrick said when the program was announced in July. “We want those impacted by the storm and flooding to get back on their feet as quickly as possible.”

The LIFT program also authorizes refinancing of funds for existing loans, maximum statutory discounts to lending institutions and approval of loans within 24 hours of an application — additional features not found in Missouri FIRST, which were added to better help with natural disaster recovery.

“There are times where somebody can experience an insurance loss, that takes upwards of a year even to go through the process of assessing the damage, negotiating through the policy provisions — there’s all kinds of things that can complicate the processes, and there’s a lot of times where folks don’t know what they’re going to need until later on,” Fitzpatrick said.

So far, the program has placed more than $2.5 million in linked deposits for four Mid-Missouri participants, including two Jefferson City businesses.

One of the largest participants is the Riley Toyota and Chevrolet dealerships, which fell victim to heavy damage from the tornado.

While they have since managed to reopen both dealerships — one at a temporary location — the loss was extensive, with more than 700 new and used vehicles totaled.

Owner Kevin Riley said while they were looking at their situation after the storm, their bank recommended the program as an option.

Riley said they decided to apply for the program because of the good interest rates and the bank’s recommendation. The process to apply for the loan went smoothly, he said, and he signed the paperwork on the loans this week.

“We’re going to be using it towards the rebuild because I don’t think the insurance coverage will meet all the needs,” Riley said.

Riley said he would recommend the program to other business owners and would consider using it again should another disaster affect his business.

“This tornado event wasn’t foreseen, obviously,” Riley said. “You can plan ahead for (disasters), but until you experience one you don’t know what all you need financially.”

While only a few businesses have taken advantage of the program so far, Fitzpatrick said the program has been successful.

“If we could even help one or two businesses through this, to me that would be a success, because we just want to help anybody that thinks they could take advantage of this when they’re going through a difficulty,” Fitzpatrick said.

The program has no specific end date — the state will continue helping with recovery from the 2019 disasters indefinitely and would consider adding future disasters if needed.

“If somebody came to us two years from now and said, ‘Hey, I’m just now getting around to rebuilding,’ and they had evidence there was a loss from this year we’ll work with them,” Fitzpatrick said, adding future treasurers could continue the program.

Only businesses have applied specifically for the LIFT program, but Fitzpatrick said farmers and others in agriculture likely applied for linked deposits through the Missouri FIRST program instead.

Through Farm Credit Services, the state has approximately $150 million in linked deposits. Fitzpatrick said if Missouri farmers didn’t need more than $1 million — the maximum for Missouri FIRST that was doubled for LIFT — they may have gone through the original program.

The 24-hour turnaround of LIFT could have also caused some to use Missouri FIRST instead — the quick placement may not work with FCS because the state requires collateral from the financial institutions for deposits.

FCS only takes deposits on a certain time frame because they issue bonds for their collateral, so a quick-placement deposit through LIFT wouldn’t work, Fitzpatrick said.

“I would guess that there’s been several million dollars of ag disaster help that’s gone through that kind of channel, that’s just been in the sub-million-dollar range and, therefore, they didn’t need to use this separate application,” he said.

Traditional linked deposits, like through Missouri FIRST, can be used for anything from building new businesses to purchasing equipment or farm land, while the LIFT linked deposits are specifically for natural disaster recovery.

Overall, Fitzpatrick is pleased with the help the program has been able to offer Missourians.

“We have $4 billion of the state’s money that we invest, and putting a little of it to work to help people recover from what could’ve been a catastrophic loss to their business is a good bet on Missourians, and something that I’m glad to be doing,” he said.

Missouri small business owners and farmers can still apply for the program. To qualify, applicants must provide proof of damage or economic injury that occurred in 2019 through insurance documents, photographs or other documentation, among other things.

Those who receive assistance through the LIFT program are still eligible for other assistance such as insurance, federal assistance and other loans.

To seek a loan through the LIFT program, business owners and farmers should talk to a participating lender to apply. More information, including a list of participating lenders and full eligibility qualifications, can be found at treasurer.mo.gov.

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