N.Y. UDA Law § 16-A — New York Code / Act UDA / Section 16-A
Regional revolving loan program
Status: in_force

§ 16-a. Regional revolving loan program. (1) The corporation shall\nestablish a fund to be known as the "regional revolving loan trust fund"\nand shall pay into such fund any monies made available to the\ncorporation for such fund from any source. The monies held in or\ncredited to the fund shall be expended solely for the purposes set forth\nin this section. The corporation shall not commingle the monies of such\nfund with any other monies of the corporation or any monies held in\ntrust by the corporation.\n  (2) The corporation shall allocate any monies made available for such\nfund for the purpose of making grants to regional corporations. The\ngrants shall be allocated as follows:\n  (a) fifty percent divided equally among the regions;\n  (b) fifty percent according to a formula weighted in favor of those\nregions with the greatest levels of economic distress as determined by\npoverty rates, number of persons receiving public assistance,\nunemployment rates, rate of employment decline and such other indicators\nof economic distress as the corporation deems appropriate; and\n  (c) in the event a regional corporation advises the corporation that\nit does not require all or a portion of the funds to be distributed\npursuant to this subdivision, such funds shall be re-distributed by the\ncorporation equally among the other regional corporations.\n  (3) In accordance with the rules and regulations of the corporation,\neach regional corporation shall establish two special accounts for\nmonies received by the regional corporation pursuant to the provisions\nof this section. The grant monies received from the corporation,\nearnings on such monies, and any principal repayments shall be deposited\nin a loan fund account; any interest earned by the regional corporation\non loans will be deposited in a separate interest repayment account. A\nregional corporation shall be authorized to provide financing assistance\nto eligible projects. Any interest earned from its loans may be used by\na regional corporation for the cost of administering the programs\nauthorized by this section.\n  (3-a) Notwithstanding subdivision three of this section, where\napplicable, the corporation is authorized to enter into agreements as\nmay be necessary for the administration and reporting of funds repaid,\nreceived, expended or collected in a manner consistent with the\nprovisions in section sixteen-t of this act. The use of such funds by\nthe corporation shall be consistent with the terms, conditions and\nrestrictions set forth in subdivision four of this section, to provide\nfinancial assistance to eligible regional corporations as defined in\nsubdivision eighteen of section three of this act. Outstanding expenses,\nloans and other obligations executed prior to the effective date of this\nsubdivision shall be subject to the terms and conditions of the original\ncontract or contracts.\n  (4) Regional corporations shall be selected by the corporation from\namong eligible applicants to administer a regional revolving loan\nprogram. An eligible applicant shall:\n  (a) represent at least two entire contiguous counties;\n  (b) have available to it staff with sufficient expertise to analyze\napplications for financial assistance, to regularly monitor financial\nassistance to clients, and have made arrangements to provide management\nor technical assistance to clients;\n  (c) have an effective plan to market its services to small businesses\nthrough such entities as chambers of commerce, industry trade\nassociations, banks, local development corporations, community based\norganizations and industrial development agencies; and\n  (d) have established a loan committee composed of five or more persons\nexperienced in commercial lending or in the operation of a for-profit\nbusiness and a staff person of the regional office of the department of\neconomic development. Such loan committee shall review every application\nto the regional corporation for financial assistance pursuant to this\nsection, shall determine the feasibility of the transaction proposed in\nthe application and shall recommend to the board of directors or other\ngoverning body of the regional corporation such action as the committee\ndeems appropriate.\n  (5) Applications to the corporation for certification or\nrecertification as a regional corporation shall:\n  (a) describe the applicant corporation, including its organization,\nmembership, loan committee, staff, and sources of other funds, if any;\n  (b) identify the geographic region to be served;\n  (c) explain the methods and criteria to be used in determining firms\neligible for financial assistance from the regional revolving loan\nprogram;\n  (d) describe the means for coordinating financial assistance available\nfrom the regional revolving loan program with financial assistance\navailable from other public funding sources within the region and how\nsuch program will be used to leverage private financing for projects;\n  (e) at any time, the corporation may consider proposals to reconfigure\ngeographic areas served by regional corporations; and\n  (f) contain such other information as the corporation deems\nappropriate.\n  (6) The corporation shall select, from among eligible applicants,\nregional corporations to administer revolving loan programs, on the\nbasis of:\n  (a) the ability of the regional corporation to administer the\nfinancial assistance programs authorized under this section;\n  (b) the extent of coordination with other publicly supported financial\nassistance programs available within the region represented by the\nregional corporation;\n  (c) the degree of public and private support within the region for the\napplicant regional corporation; and\n  (d) the ability of the regional corporation to provide financial and\nother assistance to businesses located in distressed areas within the\nregion.\n  (6-a) The corporation shall, every five years, recertify that each\nregional corporation has complied with the terms and conditions of this\nsection. In the event a regional corporation is not recertified, or its\ncertification is withdrawn pursuant to subdivision nineteen of this\nsection, then the corporation shall give written notice to such regional\ncorporation which shall thereafter neither make new loans nor undertake\nnew obligations except upon written approval of the corporation. The\ncorporation may thereafter certify another regional corporation in the\nmanner provided in this section for the selection of regional\ncorporations. Upon the certification of a successor regional\ncorporation, all remaining loan funds, records and accounts of the\nregional corporation not recertified shall be transferred to the\ncorporation and the regional corporation not recertified shall cease to\nfunction pursuant to this section. The corporation shall transfer\nreturned funds to a successor regional corporation, or in the event no\nsuccessor regional corporation is formed, equally to other existing\nregional corporations.\n  (7) A regional corporation certified by the corporation shall use the\nfunds received from the corporation, subject to the terms, conditions\nand restrictions set forth in this section, to provide financial\nassistance to eligible businesses as defined in subdivision seventeen of\nsection three of this act, for projects that demonstrate a substantial\nlikelihood of providing increases in net new permanent jobs or retaining\njobs in businesses that need such financial assistance to remain viable.\n  (8) The decision to approve or reject an application for financial\nassistance pursuant to the provisions of this section shall be made by a\nmajority of the directors of the regional corporation, and such decision\nshall be final. No member of the board or other governing body of a\nregional corporation shall participate in a decision on a project\napplication when such member is a party to or has a financial interest\nin such project. Any member who cannot participate in a decision on a\nproject application for such reason shall not be counted as a member of\nthe board or other governing body for purposes of determining the number\nof members required for a majority vote on such application.\n  (9) No employee or officer of any regional corporation shall be a\nparty to or have any financial interest in any project that receives\nfinancial assistance pursuant to this section.\n  (10) A regional corporation, in approving applications for financial\nassistance, shall give priority to projects:\n  (a) that will provide increases in net new permanent jobs;\n  (b) located in economically distressed areas as defined by the\ncorporation or employing persons who live in such areas;\n  (c) of minority or women-owned enterprises or enterprises owned by\ndislocated workers, such workers as defined in the Workforce Investment\nAct (P.L. 105-220); and\n  (d) of businesses in the early stages of development that have been\ndenied access to credit.\n  (11) The funds allocated to each regional corporation pursuant to this\nsection may be used to guarantee the repayment of a working capital loan\nprovided by a banking organization to finance an eligible project.\nGuarantees may be provided for up to ninety percent of the required\ntotal project financing, provided that no more than one hundred thousand\ndollars may be guaranteed for any project. Guarantees may be made for\nthe following types of financing: short and medium term loans for\nworking capital, revolving lines of credit, and seasonal inventory and\naccounts receivable loans. Guarantees may be made for up to ninety\npercent of the required total financing up to a maximum of one hundred\nfifty thousand dollars for interim financing where another lender or\nguarantor will provide permanent financing within one hundred eighty\ndays. In no event may a loan guarantee be for a term longer than five\nyears. Any loan made by a banking organization that is guaranteed\npursuant to this subdivision shall be secured by a security agreement,\nchattel paper, loan agreement, or such other instruments or documents\ndeemed necessary or convenient by the regional corporation to secure the\nloan. Any guarantee made pursuant to this subdivision shall be backed by\na minimum reserve within the account established by each regional\ncorporation of at least twenty-five percent of the amount guaranteed\nthat is outstanding.\n  (11-a) A regional corporation, in addition to receiving funds as\nprovided in this section, may also apply for and accept funds from any\nother source for the purpose of furthering its goals and objectives.\nSuch funds may be used in the same manner as funds received from the\ncorporation to carry out the purposes of this section.\n  (12) The funds of each regional corporation derived pursuant to this\nsection may be used to provide loans for working capital for eligible\nprojects; provided that the amount of the loan does not exceed ninety\npercent of the total project cost, or one hundred thousand dollars,\nwhichever is less. The interest rate and the terms on such loans shall\nbe determined by the regional corporation, but in no event shall the\ninterest rate be less than five percent. The term of any loan shall not\nexceed five years. All loans shall be secured by lien positions on\ncollateral at the highest level of priority that can accommodate the\nborrower's ability to raise sufficient debt and equity capital for the\nproject.\n  (13) A regional corporation shall not provide any financial assistance\nauthorized by this section unless the following conditions are met:\n  (a) the applicant has demonstrated that there is little prospect of\nobtaining the project financing requested from other public sources of\nfunding within the region, including local revolving loan funds, and\nthat there is little prospect of obtaining adequate project financing\nfrom private sources of capital, or in the case of a loan guarantee,\nthat there is little prospect of obtaining project financing without the\nguarantee; except that in the case of local revolving loan funds,\nfinancial assistance from the regional revolving loan fund account may\nbe provided for a project in conjunction with financial assistance from\na local revolving loan fund, provided that assistance from the regional\nrevolving loan fund is no greater than that provided by the local\nrevolving loan fund, and that a project qualifying for financial\nassistance available from a local revolving loan fund is not denied such\nassistance;\n  (b) the applicant has a minimum equity interest of at least ten\npercent in the business or project;\n  (c) there is a reasonable prospect of repayment;\n  (d) the project is located in the region represented by the regional\ncorporation;\n  (e) the project will comply with any applicable environmental rules or\nregulations;\n  (f) the applicant has certified that it will not discriminate against\nany employee or any applicant for employment because of race, religion,\ncolor, national origin, sex, or age;\n  (g) a staff member or a representative of the regional corporation\nacting in an official capacity has personally visited the project site\nand/or the applicant's place of business; and\n  (h) financial commitments for the project have been obtained from\nother public and private sources.\n  (14) Grants made by the corporation pursuant to this section shall not\nbe made available for:\n  (a) projects that would result in the relocation of any business\noperation from one municipality within the state to another, except\nunder one of the following conditions: (i) when a business is relocating\nwithin a municipality with a population of at least one million where\nthe governing body of such municipality approves such relocation; or\n(ii) the regional corporation notifies each municipality from which such\nbusiness operation will be relocated and each municipality agrees to\nsuch relocation;\n  (b) projects of newspapers, broadcasting or other news media; medical\nfacilities, libraries, community or civic centers; or public\ninfrastructure improvements;\n  (c) refinancing any portion of the total project cost or other\nexisting loans or debts of an applicant, except for the purpose of\ntransferring to the employees or to other local interests ownership of a\ncompany that would otherwise depart from or cease or substantially\nreduce operations in the state;\n  (d) providing funds, directly or indirectly, for payment,\ndistribution, or as a loan, to owners, partners or shareholders of the\napplicant enterprise, except as ordinary income for services rendered;\nand\n  (e) retail projects, except where the regional corporation finds there\nwill be an increase in net new permanent jobs.\n  (15) A regional corporation may charge application, commitment and\nloan guarantee fees pursuant to a schedule of fees adopted by the\nregional corporation and approved by the corporation.\n  (16) The regional corporations shall submit annual reports for the\nprevious fiscal year to the corporation describing the financial\nassistance provided pursuant to this section, including: the number of\nprojects assisted; the amount and type of assistance provided; a\ndescription of the projects; the number of jobs created or retained; the\nstatus of outstanding loans, guarantees, earnings and account balances;\nand such other information as the corporation may require.\n  (17) The corporation shall, assisted by the commissioner of economic\ndevelopment and in consultation with the department of economic\ndevelopment, promulgate rules and regulations in accordance with the\nstate administrative procedure act setting forth procedures to be\nfollowed by, and the responsibilities and obligations of, regional\ncorporations and the corporation. Such rules and regulations shall be\nconsistent with the program plan required by subdivision nineteen of\nsection one hundred of the economic development law.\n  (18) For any positions opened as a result of assistance provided in\nthis section, businesses so assisted shall first consider unemployed or\nlow income individuals eligible to participate in programs funded\nthrough the Workforce Investment Act (P.L. 105-220) who shall be\nreferred to the business by local workforce investment boards created\npursuant to such act or by the job service division of the department of\nlabor.\n  (19) The corporation shall annually conduct an audit of each regional\ncorporation to ensure conformity of all aspects of program\nadministration and of financial assistance transactions with the\nsubstantive and procedural provisions of this section. In the event that\nthe corporation finds instances of substantive noncompliance by a\nregional corporation with any of the provisions of this section and such\ninstances were, or should have been, known to be in noncompliance, the\nregional corporation shall return, within thirty days, upon demand by\nthe corporation, all uncommitted grant funds on hand and provide an\naccounting of the loans currently outstanding.\n  The corporation may withdraw a regional corporation's certification:\n  (a) when a member of a board of directors or other governing body, an\nofficer or an employee of said regional corporation is party to or has\nfinancial interests in loan projects;\n  (b) when said regional corporation fails to comply with the\nrequirements for project loans pursuant to this section; or\n  (c) when a regional corporation makes no loans within the previous\nfiscal year and there is more than one hundred thousand dollars\nremaining in its loan fund account.\n  The corporation shall transfer funds returned from a decertified\nregional corporation to a successor regional corporation, or, if there\nbe none, distribute such funds equally among other existing regional\ncorporations. Outstanding loans and other obligations payable to such a\ndecertified regional corporation shall be assigned to its successor\nregional corporation, or to the corporation or an agent designated by\nthe corporation upon such terms and conditions as the corporation shall\ndetermine.\n  (20) Reporting. (a) The lending organization shall submit to the\ncorporation annual reports stating: the number of program loans made;\nthe amount of program funding used for loans; the use of loan proceeds\nby the borrower; the number of jobs created or retained; the status of\neach outstanding program loan, including fund balance; and such other\ninformation as the corporation may require.\n  (b) The corporation shall, on or before October 1, 1988 and on or\nbefore each October first thereafter, submit a report to the governor\nand the legislature on the operations and accomplishments of the\nregional revolving loan program. Such report shall include a summary of\nthe information contained in the reports submitted pursuant to\nsubdivision sixteen of this section and of the results of the audits\nperformed by the corporation pursuant to subdivision nineteen of this\nsection, and shall set forth the status of the regional revolving loan\nprogram for the previous fiscal year, including grants to the regional\ncorporations, earnings and account balances as reported to the\ncorporation. The report to be submitted on October 1, 2005 and on or\nbefore each October first thereafter shall be consolidated with the\nannual program report of the corporation required under the provisions\nof subdivision (b) of section thirty of this act, as amended.\n  (c) Beginning April 1, 2019, the corporation shall publish on its\nwebsite the information contained in the annual reports required under\nparagraphs (a) and (b) of this subdivision in aggregate form omitting\nborrower identifiable information.\n  (21) Evaluation. (a) The corporation shall submit to the director of\nthe division of the budget, the chairperson of the senate finance\ncommittee, and the chairperson of the assembly ways and means committee\nan evaluation of this program prepared by an entity independent of the\ncorporation. Such evaluation shall be submitted by September 1, 2005 and\nby September first every four years thereafter.\n  (b) Between evaluation due dates, the corporation shall maintain the\nnecessary records and data required to satisfy such evaluation\nrequirements and to satisfy information requests received from the\ndirector of the budget, the chairperson of the senate finance committee\nand the chairperson of the assembly ways and means committee between\nsuch evaluation due dates.\n  (22) The corporation shall recertify existing regional corporations\nor, in the event a regional corporation's certification has been\nwithdrawn, seek successor corporations among eligible applicants after\nApril first, two thousand two.\n