A10208 Summary:

COSPNSRSimon, Montesano, Stern, Buttenschon, Aubry, Galef, Englebright, Epstein, Kolb, Seawright, Gottfried, Griffin
Establishes the coronavirus pandemic small business and not-for-profit organization loan program.
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A10208 Actions:

03/24/2020referred to banks
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A10208 Committee Votes:

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A10208 Floor Votes:

There are no votes for this bill in this legislative session.
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A10208 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
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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A10208 Text:

                STATE OF NEW YORK
                   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.

        A. 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 for

        A. 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.
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