STATE OF NEW YORK
________________________________________________________________________
1033
2023-2024 Regular Sessions
IN SENATE
January 9, 2023
___________
Introduced by Sens. JACKSON, PERSAUD -- read twice and ordered printed,
and when printed to be committed to the Committee on Finance
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
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03532-01-3
S. 1033 2
1 pandemic small business and not-for-profit loan program to guarantee the
2 repayment of loans made by an eligible financial institution to an
3 eligible affected business or organization pursuant to this act.
4 Subject to the cessation of new claim approvals under subdivision (d) of
5 section five of this act, the department shall submit all approved
6 claims to the comptroller, who shall pay from the general fund any and
7 all claims submitted by the department.
8 (b) Any bank or credit union may apply to the department to partic-
9 ipate in the loan guarantee program. Not later than one business day
10 after receiving the application, the department shall determine whether
11 the financial institution is an eligible financial institution and imme-
12 diately notify the bank or credit union of such determination. Any
13 eligible financial institution may make loans to affected businesses and
14 organizations in accordance with this act.
15 (c) Each eligible financial institution that makes a loan pursuant to
16 this act, shall notify the department in writing not later than one
17 business day after making the loan, specifying such information about
18 the borrower as the department may request.
19 § 3. Loan eligibility. An eligible financial institution may make a
20 loan to an affected business or organization, provided:
21 (a) The affected business or organization has provided to the eligible
22 financial institution proof satisfactory to such institution that such
23 affected business or organization is an affected business or organiza-
24 tion located within the state of New York.
25 (b) The amount of the loan shall not exceed seventy-five thousand
26 dollars.
27 (c) The loan is made in accordance with the eligible financial insti-
28 tution's underwriting policy and standards, provided further that the
29 affected business or organization's creditworthiness shall not be a
30 factor used for the purposes of determining eligibility.
31 (d) The loan agreement shall not (i) require repayment during the
32 grace period, or (ii) charge interest on the principal amount before or
33 during the grace period or for one hundred eighty days after the grace
34 period, provided after such one hundred eighty-day period, the eligible
35 financial institution may charge interest or fees in accordance with
36 such financial institution's lending policy and the terms of the under-
37 lying loan agreement.
38 (e) The loan agreement shall require that the affected business or
39 organization repay the loan in full not later than one hundred eighty
40 days after the end of the grace period by making at least three, and no
41 more than six, equal installment payments. The loan agreement shall not
42 contain a fee or penalty for the prepayment or early payment of the
43 loan.
44 (f) The eligible financial institution shall offer credit counseling
45 services or refer such affected business or organization to nonprofit
46 credit counselors.
47 § 4. Additional loans. An affected business or organization who has
48 received a loan pursuant to this act may apply to the same eligible
49 financial institution for an additional loan for each thirty-day period
50 such small business or not-for-profit organization remains an affected
51 business or organization, provided no affected business or organization
52 may receive more than three loans under the program. Each additional
53 loan shall be made in accordance with section three of this act. The
54 total amount of all loans received by an affected business or organiza-
55 tion shall not exceed seventy-five thousand dollars.
S. 1033 3
1 § 5. Collection of loans. (a) On and after one hundred eighty days
2 from the end of the grace period, an eligible financial institution that
3 has made a good-faith effort to collect the outstanding principal from a
4 loan issued pursuant to this act may make a claim to the department for
5 recovery of an amount equal to the outstanding principal for such loan.
6 Prior to the department's approving and submitting a claim to the comp-
7 troller, such eligible financial institution shall demonstrate to the
8 satisfaction of the department that the eligible financial institution
9 has made a good-faith effort to collect the outstanding principal from
10 the eligible small business or not-for-profit organization employee in
11 accordance with such financial institution's loan servicing and
12 collection policies. Upon payment of a claim, the loan shall be assigned
13 to the state, and the department shall have the right to continue
14 collection efforts on the loan.
15 (b) The department shall maintain records in the regular course of
16 administration of the loan guarantee program, including a record of
17 loans issued and of payments made to honor loan guarantees issued under
18 this act. The department shall regularly review such records to deter-
19 mine total loans issued and identify duplicative applications.
20 (c) The department may terminate any loan guarantee if the eligible
21 financial institution misrepresents any information pertaining to the
22 guarantee or fails to comply with any requirements of this act in
23 connection with the guarantee of the underlying loan.
24 (d) If the amounts expended to honor loan guarantees under the program
25 exceed ten percent of total loans issued, the department shall imme-
26 diately cease to approve claims and shall notify the comptroller and
27 each eligible financial institution of the total amount of payments made
28 and that the department has ceased honoring loan guarantees.
29 (e) Any interest deferred or not charged related to a loan issued
30 pursuant to this act shall be exempt from all state taxes that may be
31 applicable to such interest amounts as they relate to an affected busi-
32 ness or organization. Eligible financial institutions shall disclose to
33 affected business or organization borrowers in the signed affidavit or
34 loan documents that there may be federal tax consequences to the program
35 loans.
36 (f) No new loan applications shall be submitted under the program
37 after the coronavirus pandemic ends. The program shall expire upon the
38 repayment of all loans made under the program and, for all loans in
39 default, the repayment of claims made under the program, or the cessa-
40 tion of new claim approvals under subdivision (d) of this section.
41 § 6. This act shall take effect immediately.
