Bill Text: NY S00844 | 2019-2020 | General Assembly | Amended
Bill Title: Relates to the small business regional revolving loan program.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Engrossed - Dead) 2020-03-10 - referred to small business [S00844 Detail]
Download: New_York-2019-S00844-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 844--A 2019-2020 Regular Sessions IN SENATE January 9, 2019 ___________ Introduced by Sen. BENJAMIN -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the New York state urban development corporation act, in relation to the small business regional revolving loan trust fund and the small business regional revolving loan program The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Statement of legislative intent. The legislature hereby 2 finds and declares that small businesses are the economic backbone of 3 the state and the source of a majority of new jobs. The legislature 4 further finds that such businesses often have difficulty obtaining small 5 amounts of capital from traditional banking organizations that is neces- 6 sary to start-up, improve, or expand operations. State assistance in the 7 form of loans to meet such capital gaps would enable the formation and 8 expansion of small businesses across the state and, thus, provide job 9 opportunities to the state's citizens. The legislature further finds 10 that the existing regional revolving loan program of the state urban 11 development corporation demonstrated that it is more efficient and 12 effective to provide such loans through regional not-for-profit corpo- 13 rations that are knowledgeable about local businesses and economic 14 conditions. Therefore, it is the intent of the legislature to improve 15 job opportunities in the state by revitalizing the urban development 16 corporation's regional revolving loan program and re-naming it the small 17 business regional revolving loan program. 18 § 2. The New York state urban development corporation created by chap- 19 ter 174 of the laws of 1968 is hereby directed to audit, pursuant to 20 subdivision (19) of section 16-a of section 1 of the urban development 21 corporation act, each existing regional corporation administering a 22 small business regional revolving loan fund and to either recertify such EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD06075-03-9S. 844--A 2 1 regional corporation or decertify such regional corporation and competi- 2 tively select a successor corporation to administer the small business 3 regional revolving loan fund. In the case of regions that do not have a 4 regional corporation administering a small business regional revolving 5 loan fund or that have a decertified regional corporation, the urban 6 development corporation shall issue a request for proposals, pursuant to 7 the provisions of section 16-a of section 1 of the urban development 8 corporation act, to administer small business regional revolving loan 9 funds. The corporation shall select from the proposals received the most 10 qualified applicant in each region pursuant to subdivisions (4), (5), 11 and (6) of such section 16-a. If there is no applicant or no qualified 12 applicant in a region of the state, that region shall not participate in 13 the small business regional revolving loan fund program. The corpo- 14 ration, from money available for this purpose, shall allocate funds to 15 each regional corporation pursuant to subdivision 1 of such section 16 16-a. 17 § 3. Section 16-a of section 1 of chapter 174 of the laws of 1968, 18 constituting the New York state urban development corporation act, as 19 amended by chapter 477 of the laws of 2002, subdivision 3-a as added by 20 chapter 474 of the laws of 2017, subdivision 20 as amended by chapter 21 378 of the laws of 2018 and subdivision 21 as amended by chapter 524 of 22 the laws of 2005, is amended to read as follows: 23 § 16-a. [Regional] Small business regional revolving loan program. (1) 24 The corporation shall establish a fund to be known as the "small busi- 25 ness regional revolving loan trust fund" and shall pay into such fund 26 any monies made available to the corporation for such fund from any 27 source. The monies held in or credited to the fund shall be expended 28 solely for the purposes set forth in this section. The corporation shall 29 not commingle the monies of such fund with any other monies of the 30 corporation or any monies held in trust by the corporation. 31 (2) The corporation shall allocate any monies made available for such 32 fund for the purpose of making grants to regional corporations. The 33 grants shall be allocated as follows: 34 (a) fifty percent divided equally among the regions; 35 (b) fifty percent according to a formula weighted in favor of those 36 regions with the greatest levels of economic distress as determined by 37 poverty rates, number of persons receiving public assistance, unemploy- 38 ment rates, rate of employment decline and such other indicators of 39 economic distress as the corporation deems appropriate; and 40 (c) in the event a regional corporation advises the corporation that 41 it does not require all or a portion of the funds to be distributed 42 pursuant to this subdivision, such funds shall be re-distributed by the 43 corporation equally among the other regional corporations. 44 (3) In accordance with the rules and regulations of the corporation, 45 each regional corporation shall establish two special accounts for 46 monies received by the regional corporation pursuant to the provisions 47 of this section. The grant monies received from the corporation, earn- 48 ings on such monies, and any principal repayments shall be deposited in 49 a loan fund account; any interest earned by the regional corporation on 50 loans will be deposited in a separate interest repayment account. A 51 regional corporation shall be authorized to provide financing assistance 52 to eligible projects. Any interest earned from its loans may be used by 53 a regional corporation for the cost of administering the programs 54 authorized by this section. 55 (3-a) Notwithstanding subdivision three of this section, where appli- 56 cable, the corporation is authorized to enter into agreements as may beS. 844--A 3 1 necessary for the administration and reporting of funds repaid, 2 received, expended or collected in a manner consistent with the 3 provisions in section sixteen-t of this act. The use of such funds by 4 the corporation shall be consistent with the terms, conditions and 5 restrictions set forth in subdivision four of this section, to provide 6 financial assistance to eligible regional corporations as defined in 7 subdivision eighteen of section three of this act. Outstanding expenses, 8 loans and other obligations executed prior to the effective date of this 9 subdivision shall be subject to the terms and conditions of the original 10 contract or contracts. 11 (4) Regional corporations shall be selected by the corporation from 12 among eligible applicants to administer a small business regional 13 revolving loan program. An eligible applicant shall: 14 (a) represent at least two entire contiguous counties; 15 (b) have available to it staff with sufficient expertise to analyze 16 applications for financial assistance, to regularly monitor financial 17 assistance to clients, and have made arrangements to provide management 18 or technical assistance to clients; 19 (c) have an effective plan to market its services to small businesses 20 through such entities as chambers of commerce, industry trade associ- 21 ations, banks, local development corporations, community based organiza- 22 tions and industrial development agencies; and 23 (d) have established a loan committee composed of five or more persons 24 experienced in commercial lending or in the operation of a for-profit 25 business and a staff person of the regional office of the department of 26 economic development. Such loan committee shall review every application 27 to the regional corporation for financial assistance pursuant to this 28 section, shall determine the feasibility of the transaction proposed in 29 the application and shall recommend to the board of directors or other 30 governing body of the regional corporation such action as the committee 31 deems appropriate. 32 (5) Applications to the corporation for certification or recertif- 33 ication as a regional corporation shall: 34 (a) describe the applicant corporation, including its organization, 35 membership, loan committee, staff, and sources of other funds, if any; 36 (b) identify the geographic region to be served; 37 (c) explain the methods and criteria to be used in determining firms 38 eligible for financial assistance from the small business regional 39 revolving loan program; 40 (d) describe the means for coordinating financial assistance available 41 from the small business regional revolving loan program with financial 42 assistance available from other public funding sources within the region 43 and how such program will be used to leverage private financing for 44 projects; 45 [(e) at any time, the corporation may consider proposals to reconfig-46ure geographic areas served by regional corporations;] and 47 [(f)] (e) contain such other information as the corporation deems 48 appropriate. 49 (6) The corporation shall select, from among eligible applicants, 50 regional corporations to administer revolving loan programs, on the 51 basis of: 52 (a) the ability of the regional corporation to administer the finan- 53 cial assistance programs authorized under this section; 54 (b) the extent of coordination with other publicly supported financial 55 assistance programs available within the region represented by the 56 regional corporation;S. 844--A 4 1 (c) the degree of public and private support within the region for the 2 applicant regional corporation; and 3 (d) the ability of the regional corporation to provide financial and 4 other assistance to businesses located in distressed areas within the 5 region. 6 (6-a) The corporation shall, every five years, recertify that each 7 regional corporation has complied with the terms and conditions of this 8 section. In the event a regional corporation is not recertified, or its 9 certification is withdrawn pursuant to subdivision nineteen of this 10 section, then the corporation shall give written notice to such regional 11 corporation which shall thereafter neither make new loans nor undertake 12 new obligations except upon written approval of the corporation. The 13 corporation may thereafter certify another regional corporation in the 14 manner provided in this section for the selection of regional corpo- 15 rations. Upon the certification of a successor regional corporation, all 16 remaining loan funds, records and accounts of the regional corporation 17 not recertified shall be transferred to the corporation and the regional 18 corporation not recertified shall cease to function pursuant to this 19 section. The corporation shall transfer returned funds to a successor 20 regional corporation, or in the event no successor regional corporation 21 is formed, equally to other existing regional corporations. 22 (7) A regional corporation certified by the corporation shall use the 23 funds received from the corporation, subject to the terms, conditions 24 and restrictions set forth in this section, to provide financial assist- 25 ance to eligible businesses as defined in subdivision seventeen of 26 section three of this act, for projects that demonstrate a substantial 27 likelihood of providing increases in net new permanent jobs or retaining 28 jobs in businesses that need such financial assistance to remain viable. 29 The regional corporation certified by the corporation shall also use the 30 funds received from the corporation, subject to the terms, conditions, 31 and restrictions set forth in this section, to provide financial assist- 32 ance to micro-enterprises, defined as any commercial business with five 33 or fewer employees, one or more of whom is the owner. 34 (8) The decision to approve or reject an application for financial 35 assistance pursuant to the provisions of this section shall be made by a 36 majority of the directors of the regional corporation, and such decision 37 shall be final. No member of the board or other governing body of a 38 regional corporation shall participate in a decision on a project appli- 39 cation when such member is a party to or has a financial interest in 40 such project. Any member who cannot participate in a decision on a 41 project application for such reason shall not be counted as a member of 42 the board or other governing body for purposes of determining the number 43 of members required for a majority vote on such application. 44 (9) No employee or officer of any regional corporation shall be a 45 party to or have any financial interest in any project that receives 46 financial assistance pursuant to this section. 47 (10) A regional corporation, in approving applications for financial 48 assistance, shall give priority to projects: 49 (a) that will provide increases in net new permanent jobs; 50 (b) located in economically distressed areas as defined by the corpo- 51 ration or employing persons who live in such areas; 52 (c) of minority or women-owned enterprises or enterprises owned by 53 dislocated workers, such workers as defined in the Workforce Investment 54 Act (P.L. 105-220); and 55 (d) of businesses in the early stages of development that have been 56 denied access to credit.S. 844--A 5 1 (11) The funds allocated to each regional corporation pursuant to this 2 section may be used to guarantee the repayment of a working capital loan 3 provided by a banking organization to finance an eligible project. 4 Guarantees may be provided for up to ninety percent of the required 5 total project financing, provided that no more than one hundred thousand 6 dollars may be guaranteed for any project. Guarantees may be made for 7 the following types of financing: short and medium term loans for work- 8 ing capital, revolving lines of credit, and seasonal inventory and 9 accounts receivable loans. Guarantees may be made for up to ninety 10 percent of the required total financing up to a maximum of one hundred 11 fifty thousand dollars for interim financing where another lender or 12 guarantor will provide permanent financing within one hundred eighty 13 days. In no event may a loan guarantee be for a term longer than five 14 years. Any loan made by a banking organization that is guaranteed pursu- 15 ant to this subdivision shall be secured by a security agreement, chat- 16 tel paper, loan agreement, or such other instruments or documents deemed 17 necessary or convenient by the regional corporation to secure the loan. 18 Any guarantee made pursuant to this subdivision shall be backed by a 19 minimum reserve within the account established by each regional corpo- 20 ration of at least twenty-five percent of the amount guaranteed that is 21 outstanding. 22 (11-a) A regional corporation, in addition to receiving funds as 23 provided in this section, may also apply for and accept funds from any 24 other source for the purpose of furthering its goals and objectives. 25 Such funds may be used in the same manner as funds received from the 26 corporation to carry out the purposes of this section. 27 (12) The funds of each regional corporation derived pursuant to this 28 section may be used to provide loans for working capital for eligible 29 projects; provided that the amount of the loan does not exceed ninety 30 percent of the total project cost, or one hundred thousand dollars, 31 whichever is less. The interest rate and the terms [on] of such loans 32 shall be determined by the regional corporation, but in no event shall 33 the interest rate be less than [five percent] the federal discount rate. 34 The term of any loan shall not exceed five years. All loans shall be 35 secured by lien positions on collateral at the highest level of priority 36 that can accommodate the borrower's ability to raise sufficient debt and 37 equity capital for the project. 38 (13) A regional corporation shall not provide any financial assistance 39 authorized by this section unless the following conditions are met: 40 (a) the applicant has demonstrated that there is little prospect of 41 obtaining the project financing requested from other public sources of 42 funding within the region, including local revolving loan funds, and 43 that there is little prospect of obtaining adequate project financing 44 from private sources of capital, or in the case of a loan guarantee, 45 that there is little prospect of obtaining project financing without the 46 guarantee; except that in the case of local revolving loan funds, finan- 47 cial assistance from the small business regional revolving loan fund 48 account may be provided for a project in conjunction with financial 49 assistance from a local revolving loan fund, provided that assistance 50 from the small business regional revolving loan fund is no greater than 51 that provided by the local revolving loan fund, and that a project qual- 52 ifying for financial assistance available from a local revolving loan 53 fund is not denied such assistance; 54 (b) the applicant has a minimum equity interest of at least ten 55 percent in the business or project; 56 (c) there is a reasonable prospect of repayment;S. 844--A 6 1 (d) the project is located in the region represented by the regional 2 corporation; 3 (e) the project will comply with any applicable environmental rules or 4 regulations; 5 (f) the applicant has certified that it will not discriminate against 6 any employee or any applicant for employment because of race, religion, 7 color, national origin, sex, or age; 8 (g) a staff member or a representative of the regional corporation 9 acting in an official capacity has personally visited the project site 10 and/or the applicant's place of business; and 11 (h) financial commitments for the project have been obtained from 12 other public and private sources. 13 (14) Grants made by the corporation pursuant to this section shall not 14 be made available for: 15 (a) projects that would result in the relocation of any business oper- 16 ation from one municipality within the state to another, except under 17 one of the following conditions: (i) when a business is relocating 18 within a municipality with a population of at least one million where 19 the governing body of such municipality approves such relocation; or 20 (ii) the regional corporation notifies each municipality from which such 21 business operation will be relocated and each municipality agrees to 22 such relocation; 23 (b) projects of newspapers, broadcasting or other news media; medical 24 facilities, libraries, community or civic centers; or public infrastruc- 25 ture improvements; 26 (c) refinancing any portion of the total project cost or other exist- 27 ing loans or debts of an applicant, except for the purpose of trans- 28 ferring to the employees or to other local interests ownership of a 29 company that would otherwise depart from or cease or substantially 30 reduce operations in the state and except when such refinancing is 31 required to enable a viable business to maintain or expand its oper- 32 ations in the state; 33 (d) providing funds, directly or indirectly, for payment, distrib- 34 ution, or as a loan, to owners, partners or shareholders of the appli- 35 cant enterprise, except as ordinary income for services rendered; and 36 (e) retail projects, except where the regional corporation finds there 37 will be an increase in net new permanent jobs. 38 (15) A regional corporation may charge application, commitment and 39 loan guarantee fees pursuant to a schedule of fees adopted by the 40 regional corporation and approved by the corporation. 41 (16) The regional corporations shall submit annual reports for the 42 previous fiscal year to the corporation describing the financial assist- 43 ance provided pursuant to this section, including: the number of 44 projects assisted; the amount and type of assistance provided; a 45 description of the projects; the number of jobs created or retained; the 46 status of outstanding loans, guarantees, earnings and account balances; 47 and such other information as the corporation may require. 48 (17) The corporation shall, assisted by the commissioner of economic 49 development and in consultation with the department of economic develop- 50 ment, promulgate rules and regulations in accordance with the state 51 administrative procedure act setting forth procedures to be followed by, 52 and the responsibilities and obligations of, regional corporations and 53 the corporation. Such rules and regulations shall be consistent with the 54 program plan required by subdivision nineteen of section one hundred of 55 the economic development law.S. 844--A 7 1 (18) For any positions opened as a result of assistance provided in 2 this section, businesses so assisted shall first consider unemployed or 3 low income individuals eligible to participate in programs funded 4 through the Workforce Investment Act (P.L. 105-220) who shall be 5 referred to the business by local workforce investment boards created 6 pursuant to such act or by the job service division of the department of 7 labor. 8 (19) The corporation shall annually conduct an audit of each regional 9 corporation to ensure conformity of all aspects of program adminis- 10 tration and of financial assistance transactions with the substantive 11 and procedural provisions of this section. In the event that the corpo- 12 ration finds instances of substantive noncompliance by a regional corpo- 13 ration with any of the provisions of this section and such instances 14 were, or should have been, known to be in noncompliance, the regional 15 corporation shall return, within thirty days, upon demand by the corpo- 16 ration, all uncommitted grant funds on hand and provide an accounting of 17 the loans currently outstanding. 18 The corporation may withdraw a regional corporation's certification: 19 (a) when a member of a board of directors or other governing body, an 20 officer or an employee of said regional corporation is party to or has 21 financial interests in loan projects; 22 (b) when said regional corporation fails to comply with the require- 23 ments for project loans pursuant to this section; or 24 (c) when a regional corporation makes no loans within the previous 25 fiscal year and there is more than one hundred thousand dollars remain- 26 ing in its loan fund account. 27 The corporation shall transfer funds returned from a decertified 28 regional corporation to a successor regional corporation, or, if there 29 be none, distribute such funds equally among other existing regional 30 corporations. Outstanding loans and other obligations payable to such a 31 decertified regional corporation shall be assigned to its successor 32 regional corporation, or to the corporation or an agent designated by 33 the corporation upon such terms and conditions as the corporation shall 34 determine. 35 (20) [Reporting.] (a) The lending organization shall submit to the 36 corporation annual reports stating: the number of program loans made; 37 the amount of program funding used for loans; the use of loan proceeds 38 by the borrower; the number of jobs created or retained; the status of 39 each outstanding program loan, including fund balance; and such other 40 information as the corporation may require. 41 (b) The corporation shall, on or before October 1, 1988 and on or 42 before each October first thereafter, submit a report to the governor 43 and the legislature on the operations and accomplishments of the small 44 business regional revolving loan program. Such report shall include a 45 summary of the information contained in the reports submitted pursuant 46 to subdivision sixteen of this section and of the results of the audits 47 performed by the corporation pursuant to subdivision nineteen of this 48 section, and shall set forth the status of the small business regional 49 revolving loan program for the previous fiscal year, including grants to 50 the regional corporations, earnings and account balances as reported to 51 the corporation. The report to be submitted on October 1, 2005 and on or 52 before each October first thereafter shall be consolidated with the 53 annual program report of the corporation required under the provisions 54 of subdivision (b) of section thirty of this act, as amended. 55 (c) Beginning April 1, 2019, the corporation shall publish on its 56 website the information contained in the annual reports required underS. 844--A 8 1 paragraphs (a) and (b) of this subdivision in aggregate form omitting 2 borrower identifiable information. 3 (21) [Evaluation.] (a) The corporation shall submit to the director of 4 the division of the budget, the chairperson of the senate finance 5 committee, and the chairperson of the assembly ways and means committee 6 an evaluation of this program prepared by an entity independent of the 7 corporation. Such evaluation shall be submitted by September 1, 2005 and 8 by September first every four years thereafter. 9 (b) Between evaluation due dates, the corporation shall maintain the 10 necessary records and data required to satisfy such evaluation require- 11 ments and to satisfy information requests received from the director of 12 the budget, the chairperson of the senate finance committee and the 13 chairperson of the assembly ways and means committee between such evalu- 14 ation due dates. 15 (22) The corporation shall recertify existing regional corporations 16 or, in the event a regional corporation's certification has been with- 17 drawn, seek successor corporations among eligible applicants after April 18 first, two thousand two. 19 § 4. Paragraph (f) of subdivision 2 of section 16-c of section 1 of 20 chapter 174 of the laws of 1968, constituting the New York state urban 21 development corporation act, as added by chapter 169 of the laws of 22 1994, is amended to read as follows: 23 (f) The provisions of subdivisions eight, nine, and fourteen through 24 nineteen of section sixteen-a of this act pertaining to the small busi- 25 ness regional revolving [loans] loan trust fund shall also be applicable 26 to the minority and women revolving loan trust fund, provided that: 27 where the term "regional corporation" appears therein it shall be inter- 28 preted to mean an entity selected to administer a minority and women 29 revolving loan trust fund account, and "small business regional revolv- 30 ing [loans] loan trust fund" shall mean a minority and women revolving 31 loan trust fund, and where the term "this section" appears therein it 32 shall mean this section sixteen-c. 33 § 5. Paragraph (h) of subdivision 1 of section 16-e of section 1 of 34 chapter 174 of the laws of 1968, constituting the New York state urban 35 development corporation act, as added by chapter 169 of the laws of 36 1994, is amended to read as follows: 37 (h) "Revolving loan fund account grants" shall include: (i) grants to 38 provide the local match for federally funded community-based loan funds; 39 (ii) grants to capitalize and recapitalize small business regional 40 revolving loan trust fund accounts pursuant to section sixteen-a of this 41 act; and (iii) grants to recapitalize minority and women revolving loan 42 trust fund accounts established pursuant to section sixteen-c of this 43 act. 44 § 6. Subdivision 13 of section 16-e of section 1 of chapter 174 of the 45 laws of 1968, constituting the New York state urban development corpo- 46 ration act, as added by chapter 169 of the laws of 1994, is amended to 47 read as follows: 48 (13) Regional loan fund account grants. Assistance from this program 49 may be provided for grants of up to five hundred thousand dollars to 50 capitalize, and up to two hundred thousand dollars to recapitalize, 51 small business regional revolving loan trust fund accounts established 52 pursuant to section sixteen-a of this act and up to two hundred thousand 53 dollars to recapitalize minority and women revolving loan trust fund 54 accounts established pursuant to section sixteen-c of this act; and up 55 to two hundred thousand dollars to provide the local match for appropri- 56 ately federally-financed community-based loan funds.S. 844--A 9 1 § 7. The opening paragraph of paragraph (b-1) of subdivision 6 of 2 section 16-l of section 1 of chapter 174 of the laws of 1968, constitut- 3 ing the New York state urban development corporation act, as added by 4 chapter 603 of the laws of 2003, is amended to read as follows: 5 The corporation is authorized, within available appropriations in the 6 empire state economic development fund established pursuant to section 7 16-m of this act, to provide financial assistance in the form of loans, 8 loan guarantees, working capital loans, and interest subsidy grants to 9 subsidize loans from federally chartered instrumentalities and state and 10 private lending institutions, including agricultural cooperative corpo- 11 rations, provided that such assistance to state lending institutions 12 shall not exceed one-third of the total project cost or four hundred 13 thousand dollars, whichever is less, to agricultural enterprises seeking 14 to implement the projects listed in this paragraph. Funds for such 15 loans, grants, subsidies, or any other assistance specified pursuant to 16 this act may come from funds derived from the financial assistance for 17 small and medium-sized business assistance projects established pursuant 18 to section 9-a of this act, the small business regional revolving loan 19 trust fund established pursuant to section 16-a of this act, the 20 regional economic development partnership program established pursuant 21 to section 16-e of this act, the empire state economic development fund 22 established pursuant to section 16-m of this act, or from any other 23 funds, programs, or projects administered by the corporation or by other 24 state appropriations. 25 § 8. This act shall take effect immediately.
