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New York State’s Linked-Deposit Program Benefits Economy

By Will Barclay


In 1994, the state began the Linked Deposit Program (LDP) to assist and encourage firms, manufacturers, and small businesses to make investments. This program offers reduced-rate financing to makes it less expensive to borrow money. 

Under this program, qualifying businesses can obtain loans through commercial banks, savings banks, savings and loan associations, farm credit institutions and the New York Business Development Corporation at a reduced rate. Interest rates for these loans are subsidized by the state. Since the start of this program, it has helped lower interest rates for thousands of business owners and brought in billions of dollars in private capital investments.

In 2016, the LDP processed 98 applications and approved 89, which resulted in more than $40.85 million in deposits. It’s estimated that these funds helped generate $51.01 million in private-sector capital investment. Currently, there are 73 lenders participating in the LDP in New York state. For each loan, the state deposits the same amount as the loan to the lending institution but earns less interest on the deposit. This allows the lender to transfer the interest-rate savings to the borrower. At the end of the loan term, the bank returns the initial deposit to the state. The program eases some risks for the banks and reduces commercial interest rates for borrowers, which encourages private investments. Help from the LDP has proven to stimulate the economy by allowing businesses to expand, become more competitive, upgrade their equipment, and develop new products. A 2017 report for the governor and the state legislature showed assistance from the LDP created 253 jobs in 2016, and would retain an additional 268 through at least 2021. 

Many businesses in Central New York and the Finger Lakes region have utilized this LDP program. In 2016, 12 projects were approved in Central New York and 27 in the Finger Lakes. This resulted in $13.91 million in assistance for both regions. Since the program’s establishment, most assisted businesses have been small businesses with 100 employees or less. In 2016, 98 percent of the loans approved benefitted small businesses. In that same year, it cost the state just under $2 million to provide this reduced interest rate through the program. This is a small investment the state can make that provides an incentives for private investments. For some businesses, it’s the only way they can stay in business or expand.

New York has made numerous legislative changes designed to help increase participation in the Linked Deposit Program. The lifetime maximum amount to borrow for eligible companies increased from $1 million to $2 million. Another change allowed companies to apply for a four-year extension for the life of the loan, providing up to eight years of assistance on certain loans. I was pleased to support a measure in the Assembly that extended a higher interest-rate benefit to agricultural businesses. Helping farmers and local agricultural businesses to access these reduced interest rate loans helps keep local farms in business. In addition, the legislature enabled technology and innovation businesses to benefit from a higher subsidy in an effort to spur investments and bring more high-paying jobs to New York. 

To learn how to apply or find more information, visit   

William (Will) A. Barclay is the Republican representative of the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact him at or (315) 598-5185.

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