(a) (1) There is a Linked Deposit Program for Small Businesses in the Department of Housing and Community Development.
(2) The purpose of the Linked Deposit Program for Small Businesses is to stimulate opportunities for small businesses to have access to credit by assisting these businesses in obtaining loans at lower than market interest rates.
(b) A loan qualifies under the Linked Deposit Program for Small Businesses if the loan:
(1) satisfies the lending criteria of the financial institution;
(2) has a term not exceeding 10 years;
(3) is made to a small business qualified under Title 14, Subtitle 5 of this article;
(4) has an interest rate that the financial institution charges on a loan for a similar purpose and a similar term that is reduced by at least the lesser of:
(i) 2 percentage points; or
(ii) the difference between the financial institution’s rate on a 60–month certificate of deposit and the interest rate acceptable to the Treasurer for its deposits; and
(5) has points or fees charged at loan closing not exceeding 1 percent of the loan amount.
(c) The Department of Housing and Community Development shall:
(1) confirm with the Department of General Services that each loan under the Linked Deposit Program for Small Businesses is made to a business that qualifies as a small business;
(2) establish procedures for notification by the Department of General Services if a business that has an outstanding balance of a loan under the Linked Deposit Program for Small Businesses no longer qualifies as a small business;
(3) require small businesses and lenders to notify the Department of Housing and Community Development concerning final loan disposition; and
(4) report annually to the Governor, the Treasurer, and, in accordance with § 2–1257 of the State Government Article, the General Assembly on overall performance of the Linked Deposit Program for Small Businesses.
(d) The Treasurer may establish the Linked Deposit Program for Small Businesses for investment of deposits in any financial institution that:
(1) the Treasurer has designated as a depository for State money; and
(2) makes a loan in accordance with subsection (b) of this section.
(e) (1) The Treasurer may make one or more interest bearing deposits that are equal to:
(i) the amount of the loan made by the financial institution in accordance with subsection (b) of this section; or
(ii) the aggregate amount of two or more loans made by one or more financial institutions in accordance with subsection (b) of this section.
(2) In making an interest bearing deposit under this subsection, the Treasurer may accept a rate that is up to 2 percentage points below current market rates or an index selected by the Treasurer.
(3) The Treasurer may use up to $50,000,000 to make interest bearing deposits in an amount equivalent to the amount financial institutions loan to qualified small businesses.
(4) Notwithstanding the provisions of § 6–202 of this subtitle, the Treasurer may make an interest bearing deposit under this subsection in any financial institution without the security required in § 6–202 of this subtitle if:
(i) the funds are initially placed for deposit with a financial institution selected by the Treasurer;
(ii) the financial institution selected by the Treasurer arranges for the further deposit of the money into one or more certificates of deposit, each in an amount of not more than the applicable Federal Deposit Insurance Corporation maximum insurance coverage limit, in one or more financial institutions for the account of the Treasurer;
(iii) at the same time the money is deposited and the certificates of deposit are issued for the benefit of the Treasurer by other financial institutions, the financial institution selected by the Treasurer receives an amount of deposits from customers of other banks or savings and loan associations equal to the amount of money initially deposited by the Treasurer;
(iv) each certificate of deposit issued for the Treasurer’s account is insured by the Federal Deposit Insurance Corporation for 100% of the principal and accrued interest of the certificate of deposit; and
(v) the financial institution selected by the Treasurer acts as custodian for the depositor with respect to the certificates of deposit issued for the Treasurer’s account.
(f) (1) Subject to paragraph (2) of this subsection, on notification by the Department of Housing and Community Development that a small business participating in the Linked Deposit Program for Small Businesses no longer qualifies as a small business under Title 14, Subtitle 5 of this article, the Treasurer shall reduce the amount of the interest bearing deposit with the participating financial institution by the outstanding balance of the loan made under this section to the small business that no longer qualifies under Title 14, Subtitle 5 of this article.
(2) A small business that loses its qualification due to revenue or employee growth may not be considered unqualified for purposes of paragraph (1) of this subsection.
(g) (1) A loan assisted by a linked deposit is not a debt of the State or a pledge of the credit of the State.
(2) The Treasurer and the State are not liable to any financial institution for payment of the principal or interest on a loan assisted by a linked deposit.
(h) The Department of Housing and Community Development and the Treasurer may adopt regulations to carry out this section.