A10212 Summary:

Add 29-l, Exec L
Establishes the state of emergency small business and not-for-profit organization loan program.
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A10212 Actions:

03/24/2020referred to governmental operations
04/22/2020reference changed to banks
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A10212 Committee Votes:

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A10212 Floor Votes:

There are no votes for this bill in this legislative session.
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A10212 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
  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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A10212 Text:

                STATE OF NEW YORK
                   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
          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.

        A. 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  the

        A. 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.
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