N.Y. Urban Development Corporation Act 174/68 § 16-c: Minority- and women-owned business development and lending program

§ 16-c. Minority- and women-owned business development and lending

program.

(1) Minority- and women-owned business development and lending

program. (a) There is hereby created a minority- and women-owned

business development and lending program for the purpose of providing

financial and technical assistance to minority and women-entrepreneurs.

(b) For the purposes of this section the following words or terms

shall mean as follows:

(i) "minority-owned business enterprise" or "minority-owned business"

shall mean the same as "minority business enterprise" as defined in

subdivision three of section two hundred ten of the economic development

law.

(ii) "women-owned business enterprise" or "women-owned business" shall

mean the same as "women-owned business enterprise" as defined in

subdivision five of section two hundred ten of the economic development

law.

(iii) "incubator" shall mean a facility providing low-cost space,

technical assistance and support services, including, but not limited

to, central services shared by tenants of the facility, to minority- and

women-owned business enterprises.

(c) Assistance shall not be provided under this section for:

(i) the purchase or rehabilitation of real property for speculative

purposes;

(ii) payment of any tax or employee benefit arrearage;

(iii) residential construction, renovation or development

construction, except for assistance to minority and women contractors

under subdivision four of this section;

(iv) educational institutions and proprietary education firms, except

licensed child care facilities;

(v) hospitals or residential health care facilities;

(vi) overnight lodging facilities;

(vii) refinancing of commercial or business related debt or equity

invested in a commercial or business related enterprise or commercial or

business related project, unless the corporation finds the terms of the

original debt to be unreasonable as provided in subparagraph (ix) of

paragraph (d) of this subdivision.

(d) The corporation is authorized to:

(i) establish programs in conjunction with locally, and community

based entities to decentralize lending for small loans and loans to

start up minority- and women-owned businesses;

(ii) establish a comprehensive program for minority and women

contractors, which may include assistance through loans, bonding

assistance and technical assistance;

(iii) establish a program to provide loans to established minority-

and women-owned businesses and for minority- and women-owned businesses,

including loans to such businesses seeking to acquire or expand a

franchise;

(iv) provide loan guarantees to financial institutions and make linked

deposits into federally and state chartered credit unions for the

purpose of encouraging private financial institutions to make loans to

minority- and women-owned businesses;

(v) establish a program to create incubators to assist small and high

risk minority- and women-owned businesses to grow and prosper;

(vi) promote equity investment in minority- and women-owned

businesses;

(vii) establish a comprehensive technical assistance program in

cooperation with the department of economic development to assist

minority- and women-owned businesses and potential minority and

women-entrepreneurs;

(viii) notwithstanding any provision of law to the contrary, establish

a minority- and women-owned business investment fund to provide critical

financial support to foster the development of new and emerging ideas

and products of minority- and women-owned business enterprises as well

as to promote the long-term financial performance and success of early

stage enterprises that are minority- and women-owned start-ups. The

selection of an eligible applicant and beneficiary companies for the

minority- and women-owned business investment fund shall be selected by

the process established pursuant to subdivisions two through four of

section sixteen-u of this act. Minority- or women-owned business

enterprises who participate in such minority- and women-owned business

investment fund under this subdivision shall not be precluded from

qualifying for any other assistance, grant or loan made available from

the state; and

(ix) provide for the refinancing of commercial or business related

debt or equity invested in an enterprise or project, provided that the

corporation determines the terms of the original debt to be

unreasonable. The applicant must submit a written justification to the

corporation for each loan explaining why the current loan is not on

reasonable terms. Unreasonable terms of debt may include but are not

limited to:

(1) a demand or balloon maturity feature in the existing note;

(2) the current maturity is not appropriate for the original purpose

of the loan;

(3) the existing debt being refinanced is on a revolving line or a

credit card;

(4) the interest rate is deemed unreasonable by the corporation; or

(5) the loan is over-collateralized.

(2) Minority and women revolving loan trust fund. For the purpose of

establishing programs in conjunction with locally and community based

entities to decentralize lending for small loans and loans to start up

minority- and women-owned businesses, the corporation shall establish

minority and women revolving loan trust fund accounts and related

administrative expenses trust fund accounts.

(a) Each minority and women revolving loan trust fund account shall be

administered by one or more of the following types of entities that

provide services to community businesses and have as one of their

primary purposes the provision of services and assistance to minority-

and women-owned businesses:

(i) empire zone capital corporations established pursuant to section

nine hundred sixty-four of the general municipal law;

(ii) community-based local development corporations or industrial

development agencies that serve a municipality in which an empire zone

has been established pursuant to article eighteen-B of the general

municipal law and have as their primary purpose assistance to minority-

and women-owned businesses located or to be located in such empire zone;

or

(iii) local and community development corporations, industrial

development agencies, or other not-for-profit entities, representative

of the community.

(b) To be eligible to administer a minority and women revolving loan

trust fund account, the entity must also: (i) have staff with sufficient

expertise to analyze applications for financial assistance, to regularly

monitor financial assistance to clients, and to provide management or

technical assistance to clients; and (ii) have established a loan

committee composed of six or more persons experienced in business

management, commercial lending or in the operation of a for-profit

business, at least one-half of whom shall be experienced in commercial

lending, at least one-third of whom shall be minority persons and at

least one-third of whom shall be women. Such loan committee shall review

every application, determine the feasibility of the proposed project and

the likelihood of repayment of the requested financing and shall

recommend to the governing body of the entity such action on the

application as the loan committee deems appropriate. The corporation

shall identify entities eligible to administer minority and women

revolving loan trust fund accounts through a competitive statewide

request for proposal process.

(c) Any entity selected to administer a minority and women revolving

loan trust fund account shall be eligible to draw funds from the account

as needed to provide the following types of financial assistance to

minority- and women-owned businesses upon certification to and

acceptance by the corporation that such assistance complies with rules

and regulations promulgated by the corporation: (i) working capital

loans, provided that the amount of the loan does not exceed thirty-five

thousand dollars and the term of the loan does not exceed five years;

and (ii) loans for the acquisition and/or improvement of real property

and for the acquisition of machinery and equipment provided that the

amount of the loan does not exceed fifty thousand dollars and the term

of the loan does not exceed the useful life of the equipment or

property.

(d) (i) Notwithstanding any provision of law to the contrary, the

corporation may establish an administrative expenses trust fund account

for the benefit of each entity selected to administer a minority and

women revolving loan trust fund account. The initial deposit of funds to

an administrative expenses trust fund account shall be an amount

determined by the corporation but shall not exceed twenty-five thousand

dollars.

(ii) An entity selected to administer a minority and women revolving

loan trust fund account may use the funds in the administrative expenses

trust fund account for costs incurred by it in the start up and

administration of the financial assistance program authorized pursuant

to this subdivision.

(iii) The corporation shall deposit into each administrative expenses

trust fund account:

(A) all income earned from the moneys on deposit in the corresponding

minority and women revolving loan trust fund account during the first

year of the entity's administration of said account; and

(B) beginning with its second year in administering a minority and

women revolving loan trust fund account, said amounts may be used for

costs incurred by the entity in administering the minority and women

revolving loan trust fund account; and

(C) repayments of interest on loans made from the corresponding

minority and women revolving loan trust fund account.

(iv) Funds from the administrative expenses trust fund account may be

used for costs incurred at any time by an administering entity in its

administration of a minority and women revolving loan trust fund account

pursuant to this section.

(v) Funds deposited in an administrative expenses trust fund account

shall be disbursed by the corporation to the entity that administers the

corresponding minority and women revolving loan trust fund account on a

periodic basis and shall be expended by the entity in accordance with an

annual budget and any updates of same, approved by the corporation.

(e) Any entity selected to administer a minority and women revolving

loan trust fund account shall pay to the corporation for deposit any

repayments received in connection with financial assistance provided

from its account. Payments consisting of the repayment of the principal

amount of a loan shall be deposited by the corporation into the minority

and women revolving loan trust fund account from which the loan was

made. The interest earned by the corporation from the investment of

moneys in each minority and women revolving loan trust fund account

during and after the second year of a selected entity's administration

of said account shall be deposited by the corporation into the

corresponding minority and women revolving loan trust fund account and

used to provide the financial assistance to minority- and women-owned

businesses as authorized pursuant to this section.

(f) The provisions of subdivisions eight, nine, and fourteen through

nineteen of section sixteen-a of this act pertaining to the regional

revolving loan trust fund shall also be applicable to the minority and

women revolving loan trust fund, provided that: where the term "regional

corporation" appears therein it shall be interpreted to mean an entity

selected to administer a minority and women revolving loan trust fund

account, and "regional revolving loans trust fund" shall mean a minority

and women revolving loan trust fund, and where the term "this section"

appears therein it shall mean this section sixteen-c.

(g) The corporation may provide funds from an appropriation for the

minority- and women-owned business development and lending program to

any entity selected to administer a minority and women revolving loan

trust fund for the purposes of recapitalizing such account and the

entity's corresponding administrative expenses trust fund account

following an evaluation by the corporation of the entity's

administration and use of such accounts.

(h) Notwithstanding any provision of law to the contrary, the

corporation shall establish a minority and women revolving loan trust

fund to pay into such fund any moneys made available to the corporation

for such fund from any source, including moneys appropriated by the

state and any income earned by, or increment to, the account due to the

investment thereof, or any repayment of moneys advanced from the fund.

The corporation shall not commingle the moneys of such fund with any

moneys held in trust by the corporation, except for investment purposes.

(i) Notwithstanding any other provisions of this subdivision, where

applicable, the corporation is authorized to enter into agreements as

may be necessary for the administration and reporting of funds repaid,

received, expended or collected in a manner consistent with the

provisions in section sixteen-t of this act. The use of such funds by

the corporation shall be consistent with the terms, conditions and

restrictions set forth under this subdivision, to provide financial

assistance to eligible businesses as defined in subdivisions three and

five of section two hundred ten of the economic development law.

Outstanding expenses, loans and other obligations executed prior to the

effective date of this paragraph shall be subject to the terms and

conditions of the original contract or contracts.

(i) The lending organization shall submit to the corporation annual

reports stating: the number of program loans made; the amount of program

funding used for loans; the use of loan proceeds by the borrower; the

number of jobs created or retained; the status of each outstanding

program loan, including fund balance; and such other information as the

corporation may require.

(ii) Beginning April 1, 2019, the corporation shall publish on its

website the information contained in the annual reports required under

subparagraph (i) of this paragraph in aggregate form omitting borrower

identifiable information.

(3) Micro-loan program. (a) For the purposes of this subdivision

"micro-loan" shall mean a loan of under seven thousand five hundred

dollars.

(b) The corporation shall, pursuant to requests for proposals, enter

into agreements for other types of locally, community or regionally

administered loan programs than those set forth in subdivision two of

this section, including micro-loan programs to be administered by local

development corporations, local industrial development organizations,

municipalities and not-for-profit organizations, to provide micro-loans

to small and high risk minority- and women-owned businesses located

within their respective service areas, provided that loan review

committees are established by such administering entity, including women

and minority persons experienced in business management, business

development, commercial lending, entrepreneurship, or in the operation

of a for-profit business.

(c) Agreements entered into pursuant to paragraph (b) of this

subdivision shall be governed by paragraphs (d) through (h) of

subdivision two of this section, and minority and women revolving loan

trust fund accounts and administrative expenses trust fund accounts

shall be established in a similar fashion for entities selected to

administer micro-loan funds pursuant to this subdivision.

(d) Notwithstanding any other provisions of this subdivision, where

applicable, the corporation is authorized to enter into agreements as

may be necessary for the administration and reporting of funds repaid,

received, expended or collected in a manner consistent with the

provisions in section sixteen-t of this act. The use of such funds by

the corporation shall be consistent with the terms, conditions and

restrictions set forth under this subdivision, to provide financial

assistance to eligible businesses as defined in subdivisions three and

five of section two hundred ten of the economic development law.

Outstanding expenses, loans and other obligations executed prior to the

effective date of this paragraph shall be subject to the terms and

conditions of the original contract or contracts.

(e)(i) The lending organization shall submit to the corporation annual

reports stating: the number of program loans made; the amount of program

funding used for loans; the use of loan proceeds by the borrower; the

number of jobs created or retained; the status of each outstanding

program loan, including fund balance; and such other information as the

corporation may require.

(ii) Beginning April 1, 2019, the corporation shall publish on its

website the information contained in the annual reports required under

subparagraph (i) of this paragraph in aggregate form omitting borrower

identifiable information.

(4) Minority and women contracting program. For the purpose of

establishing a comprehensive program to assist minority and women

contractors, the corporation may provide loans, loan guarantees,

technical assistance and bonding assistance, the corporation may enter

into cooperative agreements with cities, counties, municipalities,

authorities, agencies, federally and state chartered credit unions in

New York state and federally insured banking organizations and financial

institutions for such purposes.

(a) To be eligible for a contractor loan, the borrower must have

either (i) a construction contract with, or a contract to provide goods

or services to, a governmental entity or authority, (ii) a subcontract

on a government-sponsored construction contract, (iii) a contract or

subcontract on a government sponsored residential project, or (iv) a

contract or subcontract on a construction project previously approved by

the corporation pursuant to section ten of this act.

(b) The corporation shall provide technical assistance specifically

oriented to minority and women-owned government contractors as part of

its comprehensive technical assistance program.

(c) The corporation is authorized to provide assistance through the

creation of, or assistance to, a minority and women bonding guarantee

program to enable minority and women contractors and subcontractors to

meet payment or performance bonding requirements.

(i) Through such program, assistance in the form of working capital

loans and loan guarantees pursuant to subdivision six of this section

may also be provided to minority and women contractors and

subcontractors who have secured contracts by participating in the

program.

(ii) The corporation shall either establish criteria for the bonding

guarantee program and for any required escrow funds which shall include

detailed provisions for eligibility; or if the corporation is providing

assistance to a program other than one established by the corporation,

review and approve the criteria established for such other program.

(5) Direct financial assistance for minority- and women-owned

businesses. For the purpose of establishing a program to provide direct

financial assistance to minority- and women-owned businesses, the

corporation is authorized to provide assistance in the form of:

(a) Business development loans and loan guarantees pursuant to

subdivision six of this section to eligible enterprises for the

acquisition or improvement of real property, machinery, equipment or

working capital, provided that to be eligible for a business development

loan, the borrowers must have been in business for at least three years

and provided that the loans must be in an amount equal to or in excess

of fifty thousand dollars;

(b) Franchise loans to eligible enterprises seeking to acquire or

expand franchises of nationally recognized corporations, provided that

disbursements by the corporation of such loans shall be conditioned on

obtaining such franchises;

(c) Equity assistance for eligible minority and women-owned

enterprises to match equity contributions to such enterprises by

financial institutions and community development equity capital funds,

provided, however, that such assistance shall be targeted to start-up

and early stage enterprises in the manufacturing, retail and service

sectors located in economically distressed areas.

(6) Deposits and loan guarantees. For the purpose of encouraging

private financial institutions to make loans to eligible enterprises

pursuant to this section for any of the eligible projects pursuant to

subdivisions four and five of this section, the corporation is

authorized to:

(a) Make linked deposits of funds into federally and state chartered

credit unions in New York state, in order to encourage such

organizations to make small loans to minority and women-owned

businesses; and

(b) Provide loan guarantees to private financial institutions for

loans made to eligible minority- and women-owned businesses pursuant to

this subdivision for eligible projects, provided that the guarantee

shall be at least fifty percent backed by funds of the corporation. Any

such loan guaranteed by the corporation shall be made to borrowers that

are approved by the corporation and substantially meet the underwriting

criteria the credit union or financial institution customarily applies

to similar borrowers for similar loans supported by similar guarantees,

and no guaranteed loan funds shall be disbursed until the corporation

has received, reviewed and concurred, in writing, with the

recommendation of the credit union or banking or financial institution

to make a loan.

(7) Minority and women small business incubator program. (a) The

corporation shall establish a minority and women small business

incubator program for the purpose of providing financial support for the

creation of incubators to nurture minority and women-owned business

enterprises with growth potential.

(b) Under this subdivision the corporation is authorized to provide

low-interest loans and grants for construction financing and permanent

financing of up to seventy-five percent of project costs up to a maximum

of six hundred fifty thousand dollars per project, provided that the

total amount of grant assistance provided pursuant to this paragraph

shall not exceed twenty percent of an appropriation provided for the

purposes of this section.

(c) Incubator projects eligible for such assistance shall involve the

renovation or reconstruction of existing facilities or the acquisition

of equipment, except that construction shall be allowable in cases in

which an applicant can demonstrate to the satisfaction of the

corporation that an existing facility is unavailable in the area to be

served by the new incubator facility.

(d) Incubator projects are not eligible to receive loans for the

purpose of covering operating costs or supplying incubator support

services, except that incubators in their first eighteen months of

operation may receive one-time grants not to exceed forty thousand

dollars, which costs may include administrative costs of employing a

resident administrator/advisor to the incubator, provided that the

corporation shall not expend a sum greater than two hundred fifty

thousand dollars in any one state fiscal year, or so much as may be

specifically appropriated for this purpose.

(e) Eligible incubator projects shall be required to demonstrate to

the corporation's satisfaction:

(i) public or private support and involvement sufficient to complete

the renovation of existing facilities or the construction of new

facilities and the acquisition of equipment;

(ii) significant community support for the project;

(iii) the existence of prospective tenants for such incubator space;

(iv) demand for such incubator space, which may include evidence of

the unavailability of suitable space for prospective tenants at

appropriate rental or lease costs in the community in which such

prospective tenants are located; and

(v) the inability of the project to occur without financial assistance

from the corporation.

(f) The corporation shall establish criteria for eligibility for

funding for incubator projects, including but not limited to the

following:

(i) the project must be designed to provide low-cost space and support

services to incubator tenants, coordination with other sources of

assistance and flexible leasing arrangements for tenants;

(ii) the project sponsors must provide a management plan and a

business plan for operating the incubator satisfactory to the

corporation; and

(iii) the project gives preference for incubator space and assistance

to minority- and women-owned businesses which currently receive, or have

received, assistance from the corporation pursuant to this section and

to incubator projects proposed to be located in economically distressed

areas.

(8) Minority- and women-owned business technical assistance program.

(a) The corporation shall establish a comprehensive technical assistance

program within the minority and women business development office, in

cooperation with the department of economic development's division of

minority- and women-business development established pursuant to article

four-A of the economic development law, to provide technical assistance

to minority- and women-owned business enterprises and to prospective

minority- and women-business entrepreneurs through third party service

providers, which assistance shall include, but not be limited to: (i)

technical assistance in development and execution of business plans,

including the formation of, acquisition of, management of, or

diversification of a minority- or women-owned business enterprise; (ii)

technical assistance with applications for obtaining funds from public

and private financing sources; (iii) technical assistance in the

development of a working capital budget; (iv) referrals to other

providers of technical assistance to minority- and women-owned

businesses and minority and women entrepreneurs, where appropriate,

including the entrepreneurial assistance program established pursuant to

article nine of the economic development law; and (v) technical

assistance through education programs directed primarily at women and

minority entrepreneurs.

(b) Technical assistance may be provided through direct corporate

support, through grants to or contracts with service providers or

governmental entities, and minority- and women-owned business

enterprises and individuals.

(9) Priorities. The corporation shall give priority to applications

for assistance pursuant to this section in which the business seeking

such assistance indicates a commitment to first consider persons

eligible to participate in federal job training partnership act (P.L.

97-300) programs.

(10) Non-application of certain provisions. The provisions of section

ten and subdivision two of section sixteen of this act shall not apply

to assistance or projects authorized pursuant to this section.

(11) Rules and regulations. The corporation shall, assisted by the

commissioner of economic development and in consultation with the

department of economic development, promulgate rules and regulations in

accordance with the state administrative procedure act. Such rules and

regulations shall be consistent with the program plan required by

subdivision nineteen of section one hundred of the economic development

law. No funds shall be disbursed under this program until such rules and

regulations have been reviewed and approved by the corporation. All

assistance and projects funded under this program shall be funded in

accordance with the rules and regulations in effect on the date the

completed application for such assistance shall be received by the

corporation.

(12) Minority and women business development and lending account.

Notwithstanding any provision of law to the contrary, the corporation

shall establish within the treasury of the corporation a minority and

women business development and lending account, and shall pay into such

account any moneys which may be made available to the corporation for

this purpose from any source including, but not limited to, moneys

appropriated by the state and any repayment of principal and interest on

loans made by the corporation pursuant to the minority- and women-owned

business development and lending program. Funds in the minority and

women business development and lending account, including funds from the

repayment of principal and interest on loans made by the corporation,

may be used for any form of assistance authorized hereunder. The amounts

deposited in the minority and women business development and lending

account may not be interchanged with any other account, but may be

commingled with any other account for investment purposes. All loans

disbursed by the corporation shall be repaid into the account. The

corporation shall enter into a written agreement with the director of

the budget for repayment, to the state comptroller to the credit of the

capital projects fund, of all moneys in the account after a period of

time to be determined by the corporation and the director of the budget.

The corporation shall transfer to the minority and women business

development and lending account: all moneys appropriated or

reappropriated by New York state for the minority and women revolving

loan trust fund that have not been committed prior to the effective date

of the appropriation for the program in the current fiscal year, or

become uncommitted subsequent to the effective date of the program's

appropriation for the current fiscal year; and all repayments of

principal and interest on loans made by the corporation which are

currently on deposit in, or payable to, the minority and women business

development and lending account.

(13) Standardization. The corporation shall streamline the review and

approval process for projects and wherever possible standardize all

relevant attendant documentation and legal documents.

(14) Approval cycle. The corporation shall approve eligible loans or

grants on at least a four-month cycle and shall give priority

consideration to the comparative degree of economic distress within the

areas in which the project is located. Other factors to be considered by

the corporation shall include the impact of the project on the

employment and economic condition of the community and the financial

feasibility of the project.

(15) Repayment. Notwithstanding the provisions of section forty-a of

the state finance law and any other general or special law, no written

agreement under this program shall require repayment at any time or on

any terms inconsistent with the provisions of this act or the New York

state project finance agency act; except, however, that the corporation

may make grants to projects using funds appropriated for this purpose

and that the repayment provision may not apply to such grants.

(16) Reports. The chairman of the corporation shall submit to the

director of the budget, the speaker of the assembly and the temporary

president of the senate an evaluation of the effectiveness of the

program prepared by an entity independent of the corporation. The

corporation shall select the program evaluator through a request for

proposal process. Such evaluation shall determine whether the assistance

provided has enhanced the economic condition of assisted companies or

communities, and shall make recommendation for improvements which would

make the program more effective. Such evaluation shall be submitted by

September first, nineteen hundred ninety-five and September first every

two years thereafter.