|SAME AS||No Same As|
|COSPNSR||Simon, Montesano, Stern, Buttenschon, Aubry, Galef, Englebright, Epstein, Kolb, Seawright|
|Establishes the coronavirus pandemic small business and not-for-profit organization loan program.|
|03/24/2020||referred to banks|
A10208 Committee Votes:Go to top
A10208 Floor Votes:
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NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10208 SPONSOR: Buchwald
TITLE OF BILL: An act in relation to establishing the coronavirus pandemic small busi- ness and not-for-profit organization loan program   TITLE OF BILL: An act in relation to establishing the coronavirus pandemic small busi- ness and not-for-profit organization loan program   PURPOSE OR GENERAL IDEA OF BILL: This bill allows small businesses and not-for-profit's to apply for no-interest loans up to $75,000 if their business or not-for-profit has suffered a loss because of the coronavirus pandemic.   SUMMARY OF PROVISIONS: Section 1 outlines the following terms, "affected businesses", "bank", "credit union", "department", "eligible financial institution", "grace period", "small business", "small not-for-profit organization", and "coronavirus pandemic." Section two allows small businesses and not-for-profits to submit a loan guarantee claim to an eligible financial institution for the comp- troller's approval during the coronavirus. pandemic. Section three describes the loan program eligibility for small busi- nesses or not-for-profit organizations within New York. The provisions for eligibility state that the loan will not exceed $75,000 and will not charge interest until at least 270 days after the coronavirus pandemic is over. Additionally, the loan agreement will allow small businesses and not-for-profits a grace period of 180 days before repayment of the approved loan. The loan agreement must be paid in full within three to six equal payments without a prepayment penalty or early payment penal- ty. The eligible financial institution must offer credit counseling or refer credit counselors to said small businesses or organizations. Section four allows small businesses and not-for-profits to apply for additional extensions for each thirty day period the business is affected by the coronavirus pandemic. Small businesses and not-for-pro- fits can only apply for up to three loan extensions under this program. Section five describes the collection procedure for loans. Small busi- nesses and not-for-profits are expected to maintain records of when the loans were issued and of payments made to honor the loan guarantees issued under this act. No additional loan applications can be submitted after the coronavirus pandemic ends. Section six sets the effective date.   JUSTIFICATION: In light of the coronavirus pandemic, it is necessary to provide addi- tional financial resources to small businesses and not-for-profit organ- izations to help them stay afloat during these unforeseen circumstances. This bill provides relief due to the coronavirus emergency and allows businesses and not-for-profit organizations to operate during the pandemic,   PRIOR LEGISLATIVE HISTORY: New bill.   EFFECT ON FINES, TERMS OF IMPRISONMENT OR OTHER PENAL SANCTIONS: None.   IMPACT ON REGULATION OF BUSINESSES AND INDIVIDUALS: None.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: Less of a fiscal impact than letting businesses and not-for-profit organizations fail.   EFFECTIVE DATE: This act shall take effect immediately.
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STATE OF NEW YORK ________________________________________________________________________ 10208 IN ASSEMBLY March 24, 2020 ___________ Introduced by M. of A. BUCHWALD -- read once and referred to the Commit- tee on Banks AN ACT in relation to establishing the coronavirus pandemic small busi- ness and not-for-profit organization loan program The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Definitions. As used in this act, the following terms shall 2 have the following meanings: 3 (a) "Affected business or organization" means and includes both a 4 small business and a small not-for-profit organization located within 5 this state during the coronavirus pandemic; 6 (b) "Bank" means a bank as such term is defined in subdivision 1 of 7 section 2 of the banking law; 8 (c) "Credit union" means a credit union as such term is defined in 9 subdivision 9 of section 2 of the banking law; 10 (d) "Department" means the department of financial services; 11 (e) "Eligible financial institution" means a bank or credit union that 12 has a physical presence in this state and is in good standing; 13 (f) "Grace period" means the ninety-day period after the coronavirus 14 pandemic is over; 15 (g) "Small business" means a business with not more than one hundred 16 employees that has experienced a loss in sales of 25 percent or more as 17 a result of the coronavirus pandemic; 18 (h) "Small not-for-profit organization" means a not-for-profit organ- 19 ization with not more than one hundred employees; and 20 (i) "Coronavirus pandemic" means the period of time during which the 21 presence of coronavirus disease 2019 in this state exists in significant 22 enough numbers for which the threat of the spread of such disease is 23 considered a pandemic. 24 § 2. Coronavirus pandemic small business and not-for-profit organiza- 25 tion loan program. (a) The department shall administer a coronavirus 26 pandemic small business and not-for-profit loan program to guarantee the 27 repayment of loans made by an eligible financial institution to an 28 eligible affected business or organization pursuant to this act. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD15943-03-0A. 10208 2 1 Subject to the cessation of new claim approvals under subdivision (d) of 2 section five of this act, the department shall submit all approved 3 claims to the comptroller, who shall pay from the general fund any and 4 all claims submitted by the department. 5 (b) Any bank or credit union may apply to the department to partic- 6 ipate in the loan guarantee program. Not later than one business day 7 after receiving the application, the department shall determine whether 8 the financial institution is an eligible financial institution and imme- 9 diately notify the bank or credit union of such determination. Any 10 eligible financial institution may make loans to affected businesses and 11 organizations in accordance with this act. 12 (c) Each eligible financial institution that makes a loan pursuant to 13 this act, shall notify the department in writing not later than one 14 business day after making the loan, specifying such information about 15 the borrower as the department may request. 16 § 3. Loan eligibility. An eligible financial institution may make a 17 loan to an affected business or organization, provided: 18 (a) The affected business or organization has provided to the eligible 19 financial institution proof satisfactory to such institution that such 20 affected business or organization is an affected business or organiza- 21 tion located within the state of New York. 22 (b) The amount of the loan shall not exceed seventy-five thousand 23 dollars. 24 (c) The loan is made in accordance with the eligible financial insti- 25 tution's underwriting policy and standards, provided further that the 26 affected business or organization's creditworthiness shall not be a 27 factor used for the purposes of determining eligibility. 28 (d) The loan agreement shall not (i) require repayment during the 29 grace period, or (ii) charge interest on the principal amount before or 30 during the grace period or for one hundred eighty days after the grace 31 period, provided after such one hundred eighty-day period, the eligible 32 financial institution may charge interest or fees in accordance with 33 such financial institution's lending policy and the terms of the under- 34 lying loan agreement. 35 (e) The loan agreement shall require that the affected business or 36 organization repay the loan in full not later than one hundred eighty 37 days after the end of the grace period by making at least three, and no 38 more than six, equal installment payments. The loan agreement shall not 39 contain a fee or penalty for the prepayment or early payment of the 40 loan. 41 (f) The eligible financial institution shall offer credit counseling 42 services or refer such affected business or organization to nonprofit 43 credit counselors. 44 § 4. Additional loans. An affected business or organization who has 45 received a loan pursuant to this act may apply to the same eligible 46 financial institution for an additional loan for each thirty-day period 47 such small business or not-for-profit organization remains an affected 48 business or organization, provided no affected business or organization 49 may receive more than three loans under the program. Each additional 50 loan shall be made in accordance with section three of this act. The 51 total amount of all loans received by an affected business or organiza- 52 tion shall not exceed seventy-five thousand dollars. 53 § 5. Collection of loans. (a) On and after one hundred eighty days 54 from the end of the grace period, an eligible financial institution that 55 has made a good-faith effort to collect the outstanding principal from a 56 loan issued pursuant to this act may make a claim to the department forA. 10208 3 1 recovery of an amount equal to the outstanding principal for such loan. 2 Prior to the department's approving and submitting a claim to the comp- 3 troller, such eligible financial institution shall demonstrate to the 4 satisfaction of the department that the eligible financial institution 5 has made a good-faith effort to collect the outstanding principal from 6 the eligible small business or not-for-profit organization employee in 7 accordance with such financial institution's loan servicing and 8 collection policies. Upon payment of a claim, the loan shall be assigned 9 to the state, and the department shall have the right to continue 10 collection efforts on the loan. 11 (b) The department shall maintain records in the regular course of 12 administration of the loan guarantee program, including a record of 13 loans issued and of payments made to honor loan guarantees issued under 14 this act. The department shall regularly review such records to deter- 15 mine total loans issued and identify duplicative applications. 16 (c) The department may terminate any loan guarantee if the eligible 17 financial institution misrepresents any information pertaining to the 18 guarantee or fails to comply with any requirements of this act in 19 connection with the guarantee of the underlying loan. 20 (d) If the amounts expended to honor loan guarantees under the program 21 exceed ten percent of total loans issued, the department shall imme- 22 diately cease to approve claims and shall notify the comptroller and 23 each eligible financial institution of the total amount of payments made 24 and that the department has ceased honoring loan guarantees. 25 (e) Any interest deferred or not charged related to a loan issued 26 pursuant to this act shall be exempt from all state taxes that may be 27 applicable to such interest amounts as they relate to an affected busi- 28 ness or organization. Eligible financial institutions shall disclose to 29 affected business or organization borrowers in the signed affidavit or 30 loan documents that there may be federal tax consequences to the program 31 loans. 32 (f) No new loan applications shall be submitted under the program 33 after the coronavirus pandemic ends. The program shall expire upon the 34 repayment of all loans made under the program and, for all loans in 35 default, the repayment of claims made under the program, or the cessa- 36 tion of new claim approvals under subdivision (d) of this section. 37 § 6. This act shall take effect immediately.