Higher interest rates are sparking more public demand for some little-known programs that use state government funds to spur private investment with bargain-priced loans.

Under the so-called linked-deposit programs, states deposit money in banks at below-market interest rates. Banks then leverage those funds to provide short-term, low-interest loans to particular borrowers, often in agriculture or small business. The programs can save thousands of dollars for borrowers by reducing their interest rates by an average 2-3 percentage points.

In Illinois, total current deposits for loans: Nearly $950 million for businesses, farms and individuals.

Agricultural Investment loans in 2022: $51 million

Agricultural Investment loans in 2023: $667 million

Not every state has such a program. But some of those that do have reported a significant spike in participation. Earlier this month, for example, the Missouri treasurer opened up applications for about $120 million of linked-deposit loans. Applications had to be cut off after just six hours because there was so much demand that it consumed the entire allotment.