|SAME AS||SAME AS S02520-C|
|Add 29-l, Exec L|
|Establishes the state of emergency small business and not-for-profit organization loan program.|
|03/24/2020||referred to governmental operations|
|04/22/2020||reference changed to banks|
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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: A10212 SPONSOR: Otis
TITLE OF BILL: An act to amend the executive law, in relation to establishing the state of emergency small business and not-for-profit organization loan program   PURPOSE OR GENERAL IDEA OF BILL: This bill seeks to establish the state of emergency small business and not-for-profit loan program.   SUMMARY OF PROVISIONS: Section 1, subdivision 1 adds new section 29-1 to the executive law. Subdivision 2 establishes the state of emergency small business and not-for-profit loan program to guarantee the repayment of loans made by eligible financial institutions to eligible small businesses and not- for-profits. Subdivision 3 establishes the eligibility requirements for the program. Subdivision 4 establishes procedure for small businesses and not-for- profits to apply for additional loans within the program for each addi- tional thirty days they remain affected by the state of emergency. Subdivision 5 establishes the procedures for loan collection. Section 2 establishes that this act shall take effect immediately.   DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE): n/a   JUSTIFICATION: With the outbreak of the coronavirus, many of New York's small busi- nesses and not-for-profits have been put into precarious financial posi- tions. Workers are forced to take sick days, customers and clients are staying home, and supply costs are skyrocketing. For small businesses and not-for-profits which already run on tight margins this can be catastrophic. This bill seeks to create a loan program that would allow eligible financial institutions to make loans to small businesses and not-for-profits with no interest during a 90 day grace period or 180 days following the grace period. With the urgency that goes along with combatting the coronavirus, it is vital to protect New York's small businesses and not-for-profits during this state of emergency.   PRIOR LEGISLATIVE HISTORY: This is a new bill.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: To be determined.   EFFECTIVE DATE: This act shall take effect immediately.
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STATE OF NEW YORK ________________________________________________________________________ 10212 IN ASSEMBLY March 24, 2020 ___________ Introduced by M. of A. OTIS -- read once and referred to the Committee on Governmental Operations AN ACT to amend the executive law, in relation to establishing the state of emergency small business 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. The executive law is amended by adding a new section 29-l 2 to read as follows: 3 § 29-l. State of emergency small business and not-for-profit organiza- 4 tion loan program. 1. Definitions. As used in this section, the follow- 5 ing terms shall have the following meanings: 6 (a) "Affected business or organization" means and includes both a 7 small business and a small not-for-profit organization located within 8 this state during a state of emergency; 9 (b) "Bank" means a bank as such term is defined in subdivision one of 10 section two of the banking law; 11 (c) "Credit union" means a credit union as such term is defined in 12 subdivision nine of section two of the banking law; 13 (d) "Department" means the department of financial services; 14 (e) "Eligible financial institution" means a bank or credit union that 15 has a physical presence in this state and is in good standing; 16 (f) "Grace period" means the ninety-day period after a state of emer- 17 gency is over; 18 (g) "Small business" means a business with not more than fifty employ- 19 ees; 20 (h) "Small not-for-profit organization" means a not-for-profit organ- 21 ization with not more than fifty employees; and 22 (i) "State of emergency" means the period beginning with a declaration 23 by the governor that a state of emergency exists. 24 2. State of emergency small business and not-for-profit organization 25 loan program. (a) The department shall administer a state of emergency 26 small business and not-for-profit loan program to guarantee the repay- 27 ment of loans made by an eligible financial institution to an eligible EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08858-08-0A. 10212 2 1 affected business or organization pursuant to this section. Subject to 2 the cessation of new claim approvals under paragraph (d) of subdivision 3 five of this section, the department shall submit all approved claims to 4 the comptroller, who shall pay from the general fund any and all claims 5 submitted by the department. 6 (b) Any bank or credit union may apply to the department to partic- 7 ipate in the loan guarantee program. Not later than one business day 8 after receiving the application, the department shall determine whether 9 the financial institution is an eligible financial institution and imme- 10 diately notify the bank or credit union of such determination. Any 11 eligible financial institution may make loans to affected businesses and 12 organizations in accordance with this section. 13 (c) Each eligible financial institution that makes a loan pursuant to 14 this section, shall notify the department in writing not later than one 15 business day after making the loan, specifying such information about 16 the borrower as the department may request. 17 3. Loan eligibility. An eligible financial institution may make a loan 18 to an affected business or organization, provided: 19 (a) The affected business or organization has provided to the eligible 20 financial institution proof satisfactory to such institution that such 21 affected business or organization is an affected business or organiza- 22 tion located within the state of New York. 23 (b) The amount of the loan shall not exceed five thousand 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 section 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 subdivision three of this section. 51 5. Collection of loans. (a) On and after one hundred eighty days from 52 the end of the grace period, an eligible financial institution that has 53 made a good-faith effort to collect the outstanding principal from a 54 loan issued pursuant to this section may make a claim to the department 55 for recovery of an amount equal to the outstanding principal for such 56 loan. Prior to the department's approving and submitting a claim to theA. 10212 3 1 comptroller, such eligible financial institution shall demonstrate to 2 the satisfaction of the department that the eligible financial institu- 3 tion has made a good-faith effort to collect the outstanding principal 4 from the eligible small business or not-for-profit organization employee 5 in accordance with such financial institution's loan servicing and 6 collection policies. Upon payment of a claim, the loan shall be assigned 7 to the state, and the department shall have the right to continue 8 collection efforts on the loan. 9 (b) The department shall maintain records in the regular course of 10 administration of the loan guarantee program, including a record of 11 loans issued and of payments made to honor loan guarantees issued under 12 this section. The department shall regularly review such records to 13 determine total loans issued and identify duplicative applications. 14 (c) The department may terminate any loan guarantee if the eligible 15 financial institution misrepresents any information pertaining to the 16 guarantee or fails to comply with any requirements of this section in 17 connection with the guarantee of the underlying loan. 18 (d) If the amounts expended to honor loan guarantees under the program 19 exceed ten percent of total loans issued, the department shall imme- 20 diately cease to approve claims and shall notify the comptroller and 21 each eligible financial institution of the total amount of payments made 22 and that the department has ceased honoring loan guarantees. 23 (e) Any interest deferred or not charged related to a loan issued 24 pursuant to this section shall be exempt from all state taxes that may 25 be applicable to such interest amounts as they relate to an affected 26 business or organization. Eligible financial institutions shall 27 disclose to affected business or organization borrowers in the signed 28 affidavit or loan documents that there may be federal tax consequences 29 to the program loans. 30 (f) No new loan applications shall be submitted under the program 31 after the state of emergency ends. The program shall expire upon the 32 repayment of all loans made under the program and, for all loans in 33 default, the repayment of claims made under the program, or the cessa- 34 tion of new claim approvals under paragraph (d) of this subdivision. 35 § 2. This act shall take effect immediately.