N.Y. UDA Law § 16-T — New York Code / Act UDA / Section 16-T
Small business revolving loan fund
Status: in_force

§ 16-t. Small business revolving loan fund.  1. The small business\nrevolving loan fund program is hereby created. The corporation is\nauthorized, within available appropriations, to provide low interest\nloans to community development financial institutions, in order to\nprovide funding for those lending organizations' loans to small\nbusinesses, and micro-businesses located within New York state, that\ngenerate economic growth and job creation within New York state but that\nare unable to obtain adequate credit or adequate terms for such credit.\nIf in the discretion of the corporation the use of a community\ndevelopment financial institution is not practicable based upon the\napplication of rules and regulations developed by the corporation,\nincluding, but not limited to, assessments of geographic and\nadministrative capacity, then the corporation is authorized, within\navailable appropriations, to provide low interest loans to the following\nother local community based lending organizations: small business\nlending consortia, certified development companies, providers of United\nStates department of agriculture business and industrial guaranteed\nloans, United States small business administration loan providers,\ncredit unions and community banks. As used in this section "small\nbusiness" means a business that is resident in New York state,\nindependently owned and operated, not dominant in its field, and employs\none hundred or fewer persons. As used in this section "micro-business"\nmeans a business that is resident in New York state, independently owned\nand operated, and employs less than five people.\n  2. In order for a lending organization to be eligible to receive\nprogram funds, it must have established sufficient expertise to analyze\nsmall business and micro-businesses applications for program loans,\nevaluate the creditworthiness of small businesses, and micro-businesses\nand regularly monitor program loans. The lending organization shall\nreview every program loan application in order to determine, among other\nthings, the feasibility of the proposed use of the requested financing\nby the small business or micro-business applicant, the likelihood of\nrepayment and the potential that the loan will generate economic\ndevelopment and jobs within New York state. The corporation shall\nidentify eligible lending organizations through one or more competitive\nstatewide or local solicitations. The corporation shall show preference\nin awarding program funds to lending organizations who serve\nmicro-businesses and micro-loans.\n  3. Program loans to small businesses and micro-businesses shall be\ntargeted and marketed to minority and women-owned enterprises,\nveteran-owned enterprises as set forth in 15 U.S.C. section 632(Q)(3),\nas amended from time to time, and service-disabled veteran-owned\nenterprises as set forth in article three of the veterans' services law,\nand other small businesses and micro-businesses that are having\ndifficulty accessing traditional credit markets. Program loans to small\nbusinesses and micro-businesses shall be used for the creation and\nretention of jobs, as defined by the corporation, including: (a) working\ncapital; (b) the acquisition and/or improvement of real property; (c)\nthe acquisition of machinery and equipment, property or improvement; or\n(d) the refinancing of debt obligations. There shall be two categories\nof loans to small businesses and micro-businesses: a micro loan that\nshall have a principal amount that is less than twenty-five thousand\ndollars and a regular loan that shall have a principal amount not less\nthan twenty-five thousand dollars. Prior to receiving program funds, the\nlending organization must certify to the corporation that such loan\ncomplies with this section and rules and regulations promulgated for the\nprogram and that the lending organization has performed its obligations\npursuant to and is in compliance with this section, the program rules\nand regulations and all agreements entered into between the corporation\nand the lending organization. The program funds amount used by the\nlending organization to fund a program applicant loan shall not be more\nthan fifty percent of the principal amount of such loan. The program\nfunds amount used by the lending organization to fund a program\napplicant loan shall not be greater than one hundred and twenty-five\nthousand dollars. Minority- and women-owned business enterprises,\nveteran-owned enterprises as set forth in 15 U.S.C. section 632(Q)(3),\nas amended from time to time, and service-disabled veteran-owned\nenterprises as set forth in article three of the veterans' services law,\nand other small businesses or micro-businesses who access such program\nloans under this subdivision shall not be precluded from accessing such\nshort-term financing loans provided under subdivision eleven of this\nsection.\n  4. Program funds shall not be used for: (a) projects that would result\nin the relocation of any business operation from one municipality within\nthe state to another, except under one of the following conditions: (i)\nwhen a business is relocating within a municipality with a population of\nat least one million where the governing body of such municipality\napproves such relocation; or (ii) the lending organization notifies each\nmunicipality from which such business operation will be relocated and\neach municipality agrees to such relocation; (b) projects of newspapers,\nbroadcasting or other news media; medical facilities, libraries,\ncommunity or civic centers; or public infrastructure improvements; and\n(c) providing funds, directly or indirectly, for payment, distribution,\nor as a loan, to owners, members, partners or shareholders of the\napplicant business, except as ordinary income for services rendered.\n  5. With respect to its program loans, the lending organization may\ncharge application, commitment and loan guarantee fees pursuant to a\nschedule of fees adopted by the lending organization and approved by the\ncorporation. Approved micro-loans for five thousand dollars or less\nshall have applications fees waived.\n  6. Program funds shall be disbursed to a lending organization by the\ncorporation in the form of a loan to the lending organization. The term\nof the loan shall commence upon disbursement of the program funds by the\ncorporation to the lending organization. The loan shall carry a low\ninterest rate determined by the corporation based on then prevailing\ninterest rates and the circumstances of the lending organization.\nNotwithstanding the performance of the loans made by the lending\norganization using program funds, the lending organization shall remain\nliable to the corporation with respect to any unpaid amounts due from\nthe lending organization pursuant to the terms of the corporation's\nloans to the lending organization. In addition, a portion of program\nfunds may be disbursed to a lending organization in the form of a grant\nor forgivable loan, provided those funds are used by the lending\norganization for administrative expenses associated with the fund,\nloan-loss reserves, or other eligible expenses as determined by the\ncorporation.\n  7. Notwithstanding anything to the contrary in this section, the\ncorporation shall provide at least five hundred thousand dollars in\nprogram funds pursuant to this section to lending organizations for the\npurpose of making loans to small business located in Niagara county.\n  8. Notwithstanding anything to the contrary in this section, the\ncorporation shall provide at least five hundred thousand dollars in\nprogram funds pursuant to this section to lending organizations for the\npurpose of making loans to small business located in St. Lawrence\ncounty.\n  9. Notwithstanding anything to the contrary in this section, the\ncorporation shall provide at least five hundred thousand dollars in\nprogram funds pursuant to this section to lending organizations for the\npurpose of making loans to small business located in Erie county.\n  10. Notwithstanding anything to the contrary in this section, the\ncorporation shall provide at least five hundred thousand dollars in\nprogram funds pursuant to this section to lending organizations for the\npurpose of making loans to small business located in Jefferson county.\n  11. Notwithstanding anything to the contrary in this section, the\ncorporation may provide at least five hundred thousand dollars in\nprogram funds pursuant to this section to lending organizations for the\npurpose of making short-term financing available to minority- and\nwomen-owned business enterprises and other small businesses performing\ncontracts to provide construction or professional services for state\nprocurement purposes. Such loans shall be used to underwrite the cost of\nlabor, materials, and equipment directly associated with (1) the\ncontract being financed or (2) a contract that has been satisfied for\nwhich the business is awaiting payment from the state. The program funds\namount used by the lending organization to fund a program applicant loan\nshall not be more than eighty percent of the principal amount of such\nloan. The program funds amount used by the lending organization to fund\na program applicant loan shall not be greater than one hundred\ntwenty-five thousand dollars. Minority- and women-owned business\nenterprises and other small businesses who access such short-term\nfinancing loans under this subdivision shall not be precluded from\naccessing such program loans provided under subdivision three of this\nsection.\n  12. Notwithstanding any provision of law to the contrary, the\ncorporation may establish a program fund for program use and pay into\nsuch fund any funds available to the corporation from any source that\nare eligible for program use, including moneys appropriated by the\nstate.\n  13. With respect to a lending organization program loan applicants, no\nperson who is a member of the board or other governing body, officer,\nemployee, or member of a loan committee, or a family member of any such\nlending organization shall participate in any decision on such\napplication if such person is a party to or has a financial or personal\ninterest in such loan. Any person who cannot participate in a loan\napplication decision for such reasons shall not be counted as a member\nof the loan committee, board or other governing body for purposes of\ndetermining the number of members required for approval of such\napplication.\n  14. The lending organization shall submit to the corporation annual\nreports stating: the number of program loans made; the amount of program\nfunding used for loans; the use of loan proceeds by the borrower; the\nnumber of jobs created or retained; the status of each outstanding\nprogram loan, including fund balance; and such other information as the\ncorporation may require.\n  14-a. Beginning April 1, 2019, the corporation shall publish on its\nwebsite the information contained in the annual reports required under\nsubdivision fourteen of this section in aggregate form omitting borrower\nidentifiable information.\n  15. The corporation may conduct audits of the lending organization in\norder to ensure compliance with the provisions of this section, any\nregulations promulgated with respect thereto and agreements between the\nlending organization and the corporation of all aspects of the use of\nprogram funds and program loan transactions. In the event that the\ncorporation finds substantive noncompliance, the corporation may\nterminate the lending organization's participation in the program.\n  16. Upon termination of a lending organization's participation in the\nprogram, the lending organization shall return to the corporation,\npromptly after its demand therefor, all program fund proceeds held by\nthe lending organization; and provide to the corporation, promptly after\nits demand therefor, an accounting of all program funds received by the\nlending organization, including all currently outstanding loans that\nwere made using program funds. Notwithstanding such termination, the\nlending organization shall remain liable to the corporation with respect\nto any unpaid amounts due from the lending organization pursuant to the\nterms of the corporation's loans to the lending organization.\n