N.Y. Urban Development Corporation Act 174/68 § 16-t: Small business revolving loan fund

§ 16-t. Small business revolving loan fund. 1. The small business

revolving loan fund program is hereby created. The corporation is

authorized, within available appropriations, to provide low interest

loans to community development financial institutions, in order to

provide funding for those lending organizations' loans to small

businesses, and micro-businesses located within New York state, that

generate economic growth and job creation within New York state but that

are unable to obtain adequate credit or adequate terms for such credit.

If in the discretion of the corporation the use of a community

development financial institution is not practicable based upon the

application of rules and regulations developed by the corporation,

including, but not limited to, assessments of geographic and

administrative capacity, then the corporation is authorized, within

available appropriations, to provide low interest loans to the following

other local community based lending organizations: small business

lending consortia, certified development companies, providers of United

States department of agriculture business and industrial guaranteed

loans, United States small business administration loan providers,

credit unions and community banks. As used in this section "small

business" means a business that is resident in New York state,

independently owned and operated, not dominant in its field, and employs

one hundred or fewer persons. As used in this section "micro-business"

means a business that is resident in New York state, independently owned

and operated, and employs less than five people.

2. In order for a lending organization to be eligible to receive

program funds, it must have established sufficient expertise to analyze

small business and micro-businesses applications for program loans,

evaluate the creditworthiness of small businesses, and micro-businesses

and regularly monitor program loans. The lending organization shall

review every program loan application in order to determine, among other

things, the feasibility of the proposed use of the requested financing

by the small business or micro-business applicant, the likelihood of

repayment and the potential that the loan will generate economic

development and jobs within New York state. The corporation shall

identify eligible lending organizations through one or more competitive

statewide or local solicitations. The corporation shall show preference

in awarding program funds to lending organizations who serve

micro-businesses and micro-loans.

3. Program loans to small businesses and micro-businesses shall be

targeted and marketed to minority and women-owned enterprises,

veteran-owned enterprises as set forth in 15 U.S.C. section 632(Q)(3),

as amended from time to time, and service-disabled veteran-owned

enterprises as set forth in article three of the veterans' services law,

and other small businesses and micro-businesses that are having

difficulty accessing traditional credit markets. Program loans to small

businesses and micro-businesses shall be used for the creation and

retention of jobs, as defined by the corporation, including: (a) working

capital; (b) the acquisition and/or improvement of real property; (c)

the acquisition of machinery and equipment, property or improvement; or

(d) the refinancing of debt obligations. There shall be two categories

of loans to small businesses and micro-businesses: a micro loan that

shall have a principal amount that is less than twenty-five thousand

dollars and a regular loan that shall have a principal amount not less

than twenty-five thousand dollars. Prior to receiving program funds, the

lending organization must certify to the corporation that such loan

complies with this section and rules and regulations promulgated for the

program and that the lending organization has performed its obligations

pursuant to and is in compliance with this section, the program rules

and regulations and all agreements entered into between the corporation

and the lending organization. The program funds amount used by the

lending organization to fund a program applicant loan shall not be more

than fifty percent of the principal amount of such loan. The program

funds amount used by the lending organization to fund a program

applicant loan shall not be greater than one hundred and twenty-five

thousand dollars. Minority- and women-owned business enterprises,

veteran-owned enterprises as set forth in 15 U.S.C. section 632(Q)(3),

as amended from time to time, and service-disabled veteran-owned

enterprises as set forth in article three of the veterans' services law,

and other small businesses or micro-businesses who access such program

loans under this subdivision shall not be precluded from accessing such

short-term financing loans provided under subdivision eleven of this

section.

4. Program funds shall not be used for: (a) projects that would result

in the relocation of any business operation from one municipality within

the state to another, except under one of the following conditions: (i)

when a business is relocating within a municipality with a population of

at least one million where the governing body of such municipality

approves such relocation; or (ii) the lending organization notifies each

municipality from which such business operation will be relocated and

each municipality agrees to such relocation; (b) projects of newspapers,

broadcasting or other news media; medical facilities, libraries,

community or civic centers; or public infrastructure improvements; and

(c) providing funds, directly or indirectly, for payment, distribution,

or as a loan, to owners, members, partners or shareholders of the

applicant business, except as ordinary income for services rendered.

5. With respect to its program loans, the lending organization may

charge application, commitment and loan guarantee fees pursuant to a

schedule of fees adopted by the lending organization and approved by the

corporation. Approved micro-loans for five thousand dollars or less

shall have applications fees waived.

6. Program funds shall be disbursed to a lending organization by the

corporation in the form of a loan to the lending organization. The term

of the loan shall commence upon disbursement of the program funds by the

corporation to the lending organization. The loan shall carry a low

interest rate determined by the corporation based on then prevailing

interest rates and the circumstances of the lending organization.

Notwithstanding the performance of the loans made by the lending

organization using program funds, the lending organization shall remain

liable to the corporation with respect to any unpaid amounts due from

the lending organization pursuant to the terms of the corporation's

loans to the lending organization. In addition, a portion of program

funds may be disbursed to a lending organization in the form of a grant

or forgivable loan, provided those funds are used by the lending

organization for administrative expenses associated with the fund,

loan-loss reserves, or other eligible expenses as determined by the

corporation.

7. Notwithstanding anything to the contrary in this section, the

corporation shall provide at least five hundred thousand dollars in

program funds pursuant to this section to lending organizations for the

purpose of making loans to small business located in Niagara county.

8. Notwithstanding anything to the contrary in this section, the

corporation shall provide at least five hundred thousand dollars in

program funds pursuant to this section to lending organizations for the

purpose of making loans to small business located in St. Lawrence

county.

9. Notwithstanding anything to the contrary in this section, the

corporation shall provide at least five hundred thousand dollars in

program funds pursuant to this section to lending organizations for the

purpose of making loans to small business located in Erie county.

10. Notwithstanding anything to the contrary in this section, the

corporation shall provide at least five hundred thousand dollars in

program funds pursuant to this section to lending organizations for the

purpose of making loans to small business located in Jefferson county.

11. Notwithstanding anything to the contrary in this section, the

corporation may provide at least five hundred thousand dollars in

program funds pursuant to this section to lending organizations for the

purpose of making short-term financing available to minority- and

women-owned business enterprises and other small businesses performing

contracts to provide construction or professional services for state

procurement purposes. Such loans shall be used to underwrite the cost of

labor, materials, and equipment directly associated with (1) the

contract being financed or (2) a contract that has been satisfied for

which the business is awaiting payment from the state. The program funds

amount used by the lending organization to fund a program applicant loan

shall not be more than eighty percent of the principal amount of such

loan. The program funds amount used by the lending organization to fund

a program applicant loan shall not be greater than one hundred

twenty-five thousand dollars. Minority- and women-owned business

enterprises and other small businesses who access such short-term

financing loans under this subdivision shall not be precluded from

accessing such program loans provided under subdivision three of this

section.

12. Notwithstanding any provision of law to the contrary, the

corporation may establish a program fund for program use and pay into

such fund any funds available to the corporation from any source that

are eligible for program use, including moneys appropriated by the

state.

13. With respect to a lending organization program loan applicants, no

person who is a member of the board or other governing body, officer,

employee, or member of a loan committee, or a family member of any such

lending organization shall participate in any decision on such

application if such person is a party to or has a financial or personal

interest in such loan. Any person who cannot participate in a loan

application decision for such reasons shall not be counted as a member

of the loan committee, board or other governing body for purposes of

determining the number of members required for approval of such

application.

14. 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.

14-a. Beginning April 1, 2019, the corporation shall publish on its

website the information contained in the annual reports required under

subdivision fourteen of this section in aggregate form omitting borrower

identifiable information.

15. The corporation may conduct audits of the lending organization in

order to ensure compliance with the provisions of this section, any

regulations promulgated with respect thereto and agreements between the

lending organization and the corporation of all aspects of the use of

program funds and program loan transactions. In the event that the

corporation finds substantive noncompliance, the corporation may

terminate the lending organization's participation in the program.

16. Upon termination of a lending organization's participation in the

program, the lending organization shall return to the corporation,

promptly after its demand therefor, all program fund proceeds held by

the lending organization; and provide to the corporation, promptly after

its demand therefor, an accounting of all program funds received by the

lending organization, including all currently outstanding loans that

were made using program funds. Notwithstanding such termination, the

lending organization shall remain liable to the corporation with respect

to any unpaid amounts due from the lending organization pursuant to the

terms of the corporation's loans to the lending organization.