Assembly Passes Bill to Increase Amount Businesses Can Borrow Via State Loan Program
Kenmore, NY – Assemblyman Robin Schimminger (D-C-I-Kenmore) today announced that the Assembly has passed his legislation (A.8117) to increase the lifetime cap on the amount a company may borrow through the state’s Excelsior Linked Deposit Program.
The Linked Deposit Program (LDP) leverages low-interest loans to small and medium-sized businesses in New York State from participating banks and other lenders, which, in turn, are recipients of state deposits that earn a comparably reduced rate of return. Created by legislation Schimminger authored, LDP allows companies to make investments to expand or improve performance or competitiveness that are critical to their continued growth and financial stability.
If Schimminger’s bill is enacted into law, the total maximum amount of linked loans an individual business could receive would increase from $2 million to $5 million. To date, 71 companies have reached their lifetime maximum – 18 in 2017 alone.
The Excelsior Linked Deposit Program is available to borrowers such as manufacturing firms with 500 or fewer full-time employees based in New York State, as well as service businesses that are independently-owned and have 100 or fewer full-time employees in the state. Companies apply for the loans at the participating financial institutions, which make the lending decisions and service the loans. The state’s only role is approval of the project’s eligibility by Empire State Development (ESD). Most businesses qualify for up to a two percent interest rate reduction, while others like agricultural firms, technology and innovation businesses, MWBE and Empire Zone certified businesses and those located in highly distressed areas qualify for up to a three percent reduction. There are currently 74 lenders participating in LDP.
“For many would-be borrowers, additional usage of this economically-advantageous program is currently no longer possible because they have reached their lifetime maximum. A total of 55 borrowers in the state have been locked out of further assistance,” Schimminger said. “By increasing the lifetime cap, eligible small businesses, which need to save costs wherever they can to stay afloat in competitive sectors, may again reap these benefits.”
Since the program’s inception in 1994, LDP has lowered the interest rate for more than 5,500 loans, resulting in $1.87 billion in bank lending and leveraging $3.91 billion in new capital investment by businesses across the state. As a result of receiving LDP assistance last year, borrowers anticipate creating 336 jobs and retaining another 269 over the next four years.
“Since small businesses already face a variety of unique challenges in many markets in today’s rapidly changing economy, it is imperative to ensure they continue to thrive,” added Schimminger. “In this case, more borrowers and lenders will be able to again use a proven, successful program that has helped businesses grow and employ New Yorkers for over 20 years.”
Schimminger’s bill now goes to the Senate, where it is sponsored by Senator Catharine Young (R-C-I-Olean).