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A05424 Summary:

COSPNSRButler, McLaughlin
MLTSPNSRBarclay, Corwin, Crouch, Curran, Duprey, Finch, Fitzpatrick, Giglio, Hawley, McDonough, McKevitt, Montesano, Oaks, Raia, Saladino
Amd SS213 & 214, St Fin L
Relates to the definition of a business startup and funds reserved for business startups.
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A05424 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
  TITLE OF BILL: An act to amend the state finance law, in relation to the definition of a business startup and funds reserved for business startups   PURPOSE OR GENERAL IDEA OF BILL: To increase the maximum allowed to be invested for the Linked Deposit Program (LDP) to $1 billion and designate $200 million to be solely available for business start-ups.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 amends subdivision 4 of section 213 of the State Finance Law to define business startup as a newly created business in its early research and development stage, as designated by the department of economic development. Section 2 amends section 214 of the State Finance Law to increase the maximum amount the State Comptroller is authorized to deposit for the LDP from $460 million to $900 million and reserves $200 million of those funds for business startups. Section 3 contains the effective date.   JUSTIFICATION: Empire State Development (ESD) is responsible for managing the LDP, which was created to assist New York State manufacturers and small busi- nesses to undertake investments that improve their performance and competitiveness. This revolving loan fund provides businesses with affordable capital based on interest rates subsidized by state deposits. Under LDP, eligible businesses can obtain loans from commercial banks, savings banks, savings and loan associations, farm credit institutions, and the New York Business Development Corporation at an interest rate that is 2 or 3 percentage points lower than the interest rate on tradi- tional loans, thereby making borrowing less expensive. Lenders are compensated by deposits of state funds at comparably reduced rates. The maximum amount allowed to be deposited under current law is $560 million, including $460 million from the State Comptroller and $100 million from the Commissioner of Taxation and Finance. Increasing the maximum to $1 billion will promote additional private sector investment. It has become difficult to raise venture capital in some regions of the state. Many brilliant young people graduate from New York's renowned research institutions, yet they take their innovations elsewhere due to both real and perceived lack of opportunity in this state. Success for small, technologically innovative companies is vital for economic growth. Making available LDP funds for business startups will encourage innovators to stay in the state and will bridge the so-called "Valley of Death", i.e. the period between initial research and marketability for a new product.   PRIOR LEGISLATIVE HISTORY: A.1563 (2013-14), Held in Economic Development; A.4802 (2011-12), Held in Economic Development; A.11280 (2010), Referred to Economic Development.   FISCAL IMPLICATIONS: To be determined.   EFFECTIVE DATE: This act shall take effect immediately.
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