State adds $440 million to loan program, 6,000 businesses could receive aid
Hope Knight, CEO of Empire State Development and the state's economic development commissioner, addresses the Long Island Regional Economic Development Council on Feb. 24 at LIU Post in Brookville. Credit: Neil Miller
About 6,000 small- and medium-sized businesses in New York could receive low-interest bank loans in the next few years due to the expansion of a state aid program.
The 2025-26 state budget adopted last month nearly doubles the funding for the Low Interest Capital program, from $560 million to $1 billion.
The additional funding means companies on Long Island and across the state could participate in an initiative that would have been severely limited if not for the new funding, according to Hope Knight, president and CEO of Empire State Development, the state’s primary business aid agency.
She told Newsday the program only had $7 million remaining as of February.
The program reduces interest rates by up to 3 percentage points on business loans by depositing state money with the lender, matching the loan amount that the borrower is to receive.
The state accepts a lower return on its deposit, allowing the lender to pass the savings on to the borrower. After four years, the lender returns the deposit to the state, according to a 2024 annual report to Gov. Kathy Hochul and the State Legislature.
“With interest rates being as high as they are, we want to be able to provide businesses with the ability to get lower-cost capital,” Knight said in a February interview in Brookville.
An Empire State Development spokesperson wasn’t immediately available to comment Thursday.
The loans are for manufacturers with 500 or fewer employees in the state and service firms with 100 or fewer employees. Applicants must be headquartered in the state and cannot be retailers, professional service firms or provide a personal service, such as child care or funerals, according to ESD.
Since the program’s inception 31 years ago, $2.4 billion in loans have been made to more than 6,600 small businesses that in turn have invested nearly $5 billion in expansion projects, the annual report states.
The additional funding for what was once called the Linked Deposit Program follows changes two years ago that raised the maximum borrowing amount for the borrower’s lifetime to $6 million and the maximum loan amount from $2 million to $4 million.
Local business leaders welcomed the changes on Thursday, saying small companies need greater access to financing.
Matt Cohen, president and CEO of the Long Island Association business group, said, “Small businesses … continue to face operational and financial challenges due to economic uncertainty and although they are resilient, expanding programs like this one increases their opportunity for growth, keeping our local communities vibrant."
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
