PEORIA — New and expanding small businesses in Illinois have another place to turn for financing.

The Illinois State Treasurer's office has launched a $500 million loan program through local community banks at below market rates.

"The greatest driver of economic development downstate is frequently in small business growth," state Treasurer Michael Frerichs said in a phone interview. 

The treasurer's job is to invest state funds, and here the agency is using a portion of the $12 billion in that money it invests to fund the program — earning money through interest payments from recipients rather than through other earnings on investments. The idea is to improve growth, and ultimately economic health and tax revenue, downstate, he said.

"By investing in rural Illinois, we expect we get an added dividend," Frerichs said.

Banks eligible to participate can't have more than five branches, and at least one of them has to be in an enterprise zone, "so we're looking for areas that are economically hurting," Frerichs said.

Rates will vary by the financial institution and the term of the loan.

Frerichs is promoting the program alongside a long-running Ag Invest one that provides low-interest loans to start or expand family farming operations, and a Finally Home initiative that helps individuals purchase a home or refinance their mortgage in cases of hardship.