S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2520
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 25, 2019
                                ___________
 
 Introduced  by Sen. HARCKHAM -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks
 
 AN ACT establishing the federal shutdown affected employees loan program
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. Definitions. As used in this act, the following terms shall
 have the following meanings:
   (a) "Affected employee" means a federal employee who, during the shut-
 down,  is  (i)  a resident of this state, and (ii) required to work as a
 federal employee without pay or furloughed as a federal employee without
 pay;
   (b) "Bank" means a bank as such term is defined in  subdivision  1  of
 section 2 of the banking law;
   (c)  "Credit  union"  means  a credit union as such term is defined in
 subdivision 9 of section 2 of the banking law;
   (d) "Department" means the department of financial services;
   (e) "Eligible financial institution" means a bank or credit union that
 has a physical presence in this state and is in good standing;
   (f) "Grace period" means  the  ninety-day  period  after  an  affected
 employee's federal agency is funded; and
   (g)  "Shutdown"  means the federal fiscal year 2019 partial government
 shutdown that began on December 22, 2018.
   § 2. Federal shutdown affected employee loan program. (a) The  depart-
 ment  shall administer a federal shutdown affected employee loan program
 to guarantee the repayment of loans made by an eligible financial insti-
 tution to an eligible affected employee pursuant to this act.    Subject
 to the cessation of new claim approvals under subdivision (d) of section
 five of this act, the department shall submit all approved claims to the
 comptroller,  who  shall  pay  from  the general fund any and all claims
 submitted by the department.
   (b) Any bank or credit union may apply to the  department  to  partic-
 ipate  in  the  loan  guarantee program. Not later than one business day
 after receiving the application, the department shall determine  whether
 the financial institution is an eligible financial institution and imme-
              

 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08858-02-9

 S. 2520                             2
 
 diately  notify  the  bank  or  credit  union of such determination. Any
 eligible financial institution may make loans to affected  employees  in
 accordance with this act.
   (c)  Each eligible financial institution that makes a loan pursuant to
 this act, shall notify the department in  writing  not  later  than  one
 business  day  after  making the loan, specifying such information about
 the borrower as the department may request.
   § 3. Loan eligibility. An eligible financial institution  may  make  a
 loan to an affected employee, provided:
   (a)  The  affected  employee  has  provided  to the eligible financial
 institution (i) proof of the employee's status, income and residence  in
 this  state,  and  (ii) the amount of unemployment compensation benefits
 the employee has received and has been deemed eligible to receive during
 the shutdown. Such proof may include a  paystub  or  bank  statement,  a
 federal  employee  identification  card,  the federal tax identification
 number of the employee's  employer  and  a  sworn  affidavit  from  such
 employee  indicating  that  such  employee  (A)  is  currently a federal
 employee residing in this state, (B) may be eligible to receive back-pay
 when the shutdown ends, and (C) is not receiving a loan from  any  other
 financial institution pursuant to this act.
   (b) The amount of the loan shall not exceed (i) the lesser of (A) five
 thousand  dollars,  or  (B)  the affected employee's most recent monthly
 after-tax pay, (ii) less four times the amount,  if  any,  the  affected
 employee has reported to the eligible financial institution under subdi-
 vision  (a)  of  this section related to any weekly unemployment compen-
 sation benefits the employee has received or has been deemed eligible to
 receive during the shutdown.
   (c) The loan is made in accordance with the eligible financial  insti-
 tution's  underwriting  policy  and standards, provided further that the
 affected employee's creditworthiness shall not be a factor used for  the
 purposes of determining eligibility.
   (d)  The  loan  agreement  shall  not (i) require repayment during the
 grace period, or (ii) charge interest on the principal amount before  or
 during  the  grace period or for one hundred eighty days after the grace
 period, provided after such one hundred eighty-day period, the  eligible
 financial  institution  may  charge  interest or fees in accordance with
 such financial institution's lending policy and the terms of the  under-
 lying loan agreement.
   (e)  The loan agreement shall require that the affected employee repay
 the loan in full not later than one hundred eighty days after the end of
 the grace period by making at least three, and no more than  six,  equal
 installment  payments.  The  loan  agreement  shall not contain a fee or
 penalty for the prepayment or early payment of the loan.
   (f) The eligible financial institution shall offer  credit  counseling
 services or refer such employee to nonprofit credit counselors.
   §  4.  Additional  loans. An affected employee who has received a loan
 pursuant to this act may apply to the same eligible  financial  institu-
 tion  for  an  additional  loan for each thirty-day period such employee
 remains an affected employee, provided no affected employee may  receive
 more than three loans under the program, and each such employee shall be
 required  to  update the eligible financial institution as to the amount
 of unemployment compensation benefits the employee has received and  has
 been  deemed  eligible  to  receive during the shutdown. Each additional
 loan shall be made in accordance with section three of this act.
   § 5. Collection of loans. (a) On and after  one  hundred  eighty  days
 from the end of the grace period, an eligible financial institution that

 S. 2520                             3
 
 has made a good-faith effort to collect the outstanding principal from a
 loan  issued pursuant to this act may make a claim to the department for
 recovery of an amount equal to the outstanding principal for such  loan.
 Prior  to the department's approving and submitting a claim to the comp-
 troller, such eligible financial institution shall  demonstrate  to  the
 satisfaction  of  the department that the eligible financial institution
 has made a good-faith effort to collect the outstanding  principal  from
 the  eligible  employee  in accordance with such financial institution's
 loan servicing and collection policies. Upon payment  of  a  claim,  the
 loan  shall  be assigned to the state, and the department shall have the
 right to continue collection efforts on the loan.
   (b) The department shall maintain records in  the  regular  course  of
 administration  of  the  loan  guarantee  program, including a record of
 loans issued and of payments made to honor loan guarantees issued  under
 this  section.  The  department  shall  regularly review such records to
 determine total loans issued and identify duplicative applications.  The
 department  shall  report  to  the  department of labor the names of the
 affected employees who have received a loan under the program,  and  the
 department of labor shall provide to the department information concern-
 ing  such  employees' unemployment compensation benefits. If the depart-
 ment determines that an affected  employee  misrepresented  unemployment
 compensation  benefits,  the  affected employee may be deemed ineligible
 for additional loans under this act.
   (c) The department may terminate any loan guarantee  if  the  eligible
 financial  institution  misrepresents  any information pertaining to the
 guarantee or fails to comply with any requirements of  this  section  in
 connection with the guarantee of the underlying loan.
   (d) If the amounts expended to honor loan guarantees under the program
 exceed  ten  percent  of  total loans issued, the department shall imme-
 diately cease to approve claims and shall  notify  the  comptroller  and
 each eligible financial institution of the total amount of payments made
 and that the department has ceased honoring loan guarantees.
   (e)  Any  interest  deferred  or  not charged related to a loan issued
 pursuant to this act shall be exempt from all state taxes  that  may  be
 applicable  to  such  interest  amounts  as  they  relate to an affected
 employee.  Eligible financial institutions shall  disclose  to  affected
 employee  borrowers in the signed affidavit or loan documents that there
 may be federal tax consequences to the program loans.
   (f) No new loan applications shall  be  submitted  under  the  program
 after  the shutdown ends. The program shall expire upon the repayment of
 all loans made under the program and, for  all  loans  in  default,  the
 repayment  of  claims  made  under  the program, or the cessation of new
 claim approvals under subdivision (d) of this section.
   § 6. Unemployment benefits. Upon the passage of federal legislation or
 the issuance of federal guidance from the United  States  department  of
 labor  or  another  federal  agency which allows an affected employee to
 receive benefits, such affected employee may be eligible  for  unemploy-
 ment  benefits  pursuant  to such federal legislation or guidance during
 the period of the shutdown. If the shutdown ends and an affected employ-
 ee is paid by the federal government for any period of time the affected
 employee worked without pay during the shutdown, the  affected  employee
 shall  reimburse  the  unemployment insurance fund in an amount equal to
 the unemployment benefits the affected employee received for the  period
 of the shutdown.
   § 7. This act shall take effect immediately.

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  2520--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 25, 2019
                                ___________
 
 Introduced  by Sen. HARCKHAM -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks  --  recommitted  to
   the  Committee  on  Banks  in accordance with Senate Rule 6, sec. 8 --
   committee discharged, bill amended, ordered reprinted as  amended  and
   recommitted to said committee

 AN ACT to amend the executive law, in relation to establishing the state
   of emergency small business loan program
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The executive law is amended by adding a new  section  29-l
 to read as follows:
   §  29-L.  STATE  OF  EMERGENCY  SMALL  BUSINESS LOAN PROGRAM. 1. DEFI-
 NITIONS. AS USED IN THIS SECTION, THE FOLLOWING  TERMS  SHALL  HAVE  THE
 FOLLOWING MEANINGS:
   (A)  "AFFECTED  SMALL  BUSINESS" MEANS A SMALL BUSINESS LOCATED WITHIN
 THIS STATE DURING A STATE OF EMERGENCY;
   (B) "BANK" MEANS A BANK AS SUCH TERM IS DEFINED IN SUBDIVISION ONE  OF
 SECTION TWO OF THE BANKING LAW;
   (C)  "CREDIT  UNION"  MEANS  A CREDIT UNION AS SUCH TERM IS DEFINED IN
 SUBDIVISION NINE OF SECTION TWO OF THE BANKING LAW;
   (D) "DEPARTMENT" MEANS THE DEPARTMENT OF FINANCIAL SERVICES;
   (E) "ELIGIBLE FINANCIAL INSTITUTION" MEANS A BANK OR CREDIT UNION THAT
 HAS A PHYSICAL PRESENCE IN THIS STATE AND IS IN GOOD STANDING;
   (F) "GRACE PERIOD" MEANS THE NINETY-DAY PERIOD AFTER A STATE OF  EMER-
 GENCY IS OVER;
   (G) "SMALL BUSINESS" MEANS A BUSINESS WITH NOT MORE THAN FIFTY EMPLOY-
 EES; AND
   (H) "STATE OF EMERGENCY" MEANS THE PERIOD BEGINNING WITH A DECLARATION
 BY THE GOVERNOR THAT A STATE OF EMERGENCY EXISTS.
   2.  STATE OF EMERGENCY SMALL BUSINESS LOAN PROGRAM. (A) THE DEPARTMENT
 SHALL ADMINISTER A STATE OF EMERGENCY SMALL  BUSINESS  LOAN  PROGRAM  TO
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD08858-04-0

 S. 2520--A                          2
 
 GUARANTEE  THE REPAYMENT OF LOANS MADE BY AN ELIGIBLE FINANCIAL INSTITU-
 TION TO AN ELIGIBLE AFFECTED SMALL BUSINESS PURSUANT  TO  THIS  SECTION.
 SUBJECT  TO  THE CESSATION OF NEW CLAIM APPROVALS UNDER PARAGRAPH (D) OF
 SUBDIVISION  FIVE  OF  THIS  SECTION,  THE  DEPARTMENT  SHALL SUBMIT ALL
 APPROVED CLAIMS TO THE COMPTROLLER, WHO SHALL PAY FROM THE GENERAL  FUND
 ANY AND ALL CLAIMS SUBMITTED BY THE DEPARTMENT.
   (B)  ANY  BANK  OR CREDIT UNION MAY APPLY TO THE DEPARTMENT TO PARTIC-
 IPATE IN THE LOAN GUARANTEE PROGRAM. NOT LATER  THAN  ONE  BUSINESS  DAY
 AFTER  RECEIVING THE APPLICATION, THE DEPARTMENT SHALL DETERMINE WHETHER
 THE FINANCIAL INSTITUTION IS AN ELIGIBLE FINANCIAL INSTITUTION AND IMME-
 DIATELY NOTIFY THE BANK OR  CREDIT  UNION  OF  SUCH  DETERMINATION.  ANY
 ELIGIBLE  FINANCIAL  INSTITUTION  MAY MAKE LOANS TO AFFECTED SMALL BUSI-
 NESSES IN ACCORDANCE WITH THIS SECTION.
   (C) EACH ELIGIBLE FINANCIAL INSTITUTION THAT MAKES A LOAN PURSUANT  TO
 THIS  SECTION, SHALL NOTIFY THE DEPARTMENT IN WRITING NOT LATER THAN ONE
 BUSINESS DAY AFTER MAKING THE LOAN, SPECIFYING  SUCH  INFORMATION  ABOUT
 THE BORROWER AS THE DEPARTMENT MAY REQUEST.
   3. LOAN ELIGIBILITY. AN ELIGIBLE FINANCIAL INSTITUTION MAY MAKE A LOAN
 TO AN AFFECTED SMALL BUSINESS, PROVIDED:
   (A) THE AFFECTED SMALL BUSINESS HAS PROVIDED TO THE ELIGIBLE FINANCIAL
 INSTITUTION PROOF SATISFACTORY TO SUCH INSTITUTION THAT SUCH SMALL BUSI-
 NESS IS A SMALL BUSINESS LOCATED WITHIN THE STATE OF NEW YORK.
   (B) THE AMOUNT OF THE LOAN SHALL NOT EXCEED FIVE THOUSAND DOLLARS.
   (C)  THE LOAN IS MADE IN ACCORDANCE WITH THE ELIGIBLE FINANCIAL INSTI-
 TUTION'S UNDERWRITING POLICY AND STANDARDS, PROVIDED  FURTHER  THAT  THE
 AFFECTED  SMALL  BUSINESS'S  CREDITWORTHINESS SHALL NOT BE A FACTOR USED
 FOR THE PURPOSES OF DETERMINING ELIGIBILITY.
   (D) THE LOAN AGREEMENT SHALL NOT  (I)  REQUIRE  REPAYMENT  DURING  THE
 GRACE  PERIOD, OR (II) CHARGE INTEREST ON THE PRINCIPAL AMOUNT BEFORE OR
 DURING THE GRACE PERIOD OR FOR ONE HUNDRED EIGHTY DAYS AFTER  THE  GRACE
 PERIOD,  PROVIDED AFTER SUCH ONE HUNDRED EIGHTY-DAY PERIOD, THE ELIGIBLE
 FINANCIAL INSTITUTION MAY CHARGE INTEREST OR  FEES  IN  ACCORDANCE  WITH
 SUCH  FINANCIAL INSTITUTION'S LENDING POLICY AND THE TERMS OF THE UNDER-
 LYING LOAN AGREEMENT.
   (E) THE LOAN AGREEMENT SHALL REQUIRE THAT THE AFFECTED SMALL  BUSINESS
 REPAY  THE LOAN IN FULL NOT LATER THAN ONE HUNDRED EIGHTY DAYS AFTER THE
 END OF THE GRACE PERIOD BY MAKING AT LEAST THREE, AND NO MORE THAN  SIX,
 EQUAL  INSTALLMENT  PAYMENTS. THE LOAN AGREEMENT SHALL NOT CONTAIN A FEE
 OR PENALTY FOR THE PREPAYMENT OR EARLY PAYMENT OF THE LOAN.
   (F) THE ELIGIBLE FINANCIAL INSTITUTION SHALL OFFER  CREDIT  COUNSELING
 SERVICES OR REFER SUCH SMALL BUSINESS TO NONPROFIT CREDIT COUNSELORS.
   4.  ADDITIONAL  LOANS.  AN  AFFECTED SMALL BUSINESS WHO HAS RECEIVED A
 LOAN PURSUANT TO THIS SECTION MAY APPLY TO THE SAME  ELIGIBLE  FINANCIAL
 INSTITUTION FOR AN ADDITIONAL LOAN FOR EACH THIRTY-DAY PERIOD SUCH SMALL
 BUSINESS  REMAINS AN AFFECTED SMALL BUSINESS, PROVIDED NO AFFECTED SMALL
 BUSINESS MAY RECEIVE MORE THAN THREE LOANS UNDER THE PROGRAM. EACH ADDI-
 TIONAL LOAN SHALL BE MADE IN ACCORDANCE WITH SUBDIVISION THREE  OF  THIS
 SECTION.
   5.  COLLECTION OF LOANS. (A) ON AND AFTER ONE HUNDRED EIGHTY DAYS FROM
 THE END OF THE GRACE PERIOD, AN ELIGIBLE FINANCIAL INSTITUTION THAT  HAS
 MADE  A  GOOD-FAITH  EFFORT  TO COLLECT THE OUTSTANDING PRINCIPAL FROM A
 LOAN ISSUED PURSUANT TO THIS SECTION MAY MAKE A CLAIM TO THE  DEPARTMENT
 FOR  RECOVERY  OF  AN AMOUNT EQUAL TO THE OUTSTANDING PRINCIPAL FOR SUCH
 LOAN. PRIOR TO THE DEPARTMENT'S APPROVING AND SUBMITTING A CLAIM TO  THE
 COMPTROLLER,  SUCH  ELIGIBLE  FINANCIAL INSTITUTION SHALL DEMONSTRATE TO
 THE SATISFACTION OF THE DEPARTMENT THAT THE ELIGIBLE FINANCIAL  INSTITU-

 S. 2520--A                          3
 
 TION  HAS  MADE A GOOD-FAITH EFFORT TO COLLECT THE OUTSTANDING PRINCIPAL
 FROM THE ELIGIBLE SMALL BUSINESS EMPLOYEE IN ACCORDANCE WITH SUCH FINAN-
 CIAL INSTITUTION'S LOAN SERVICING AND COLLECTION POLICIES. UPON  PAYMENT
 OF  A CLAIM, THE LOAN SHALL BE ASSIGNED TO THE STATE, AND THE DEPARTMENT
 SHALL HAVE THE RIGHT TO CONTINUE COLLECTION EFFORTS ON THE LOAN.
   (B) THE DEPARTMENT SHALL MAINTAIN RECORDS IN  THE  REGULAR  COURSE  OF
 ADMINISTRATION  OF  THE  LOAN  GUARANTEE  PROGRAM, INCLUDING A RECORD OF
 LOANS ISSUED AND OF PAYMENTS MADE TO HONOR LOAN GUARANTEES ISSUED  UNDER
 THIS  SECTION.  THE  DEPARTMENT  SHALL  REGULARLY REVIEW SUCH RECORDS TO
 DETERMINE TOTAL LOANS ISSUED AND IDENTIFY DUPLICATIVE APPLICATIONS.
   (C) THE DEPARTMENT MAY TERMINATE ANY LOAN GUARANTEE  IF  THE  ELIGIBLE
 FINANCIAL  INSTITUTION  MISREPRESENTS  ANY INFORMATION PERTAINING TO THE
 GUARANTEE OR FAILS TO COMPLY WITH ANY REQUIREMENTS OF  THIS  SECTION  IN
 CONNECTION WITH THE GUARANTEE OF THE UNDERLYING LOAN.
   (D) IF THE AMOUNTS EXPENDED TO HONOR LOAN GUARANTEES UNDER THE PROGRAM
 EXCEED  TEN  PERCENT  OF  TOTAL LOANS ISSUED, THE DEPARTMENT SHALL IMME-
 DIATELY CEASE TO APPROVE CLAIMS AND SHALL  NOTIFY  THE  COMPTROLLER  AND
 EACH ELIGIBLE FINANCIAL INSTITUTION OF THE TOTAL AMOUNT OF PAYMENTS MADE
 AND THAT THE DEPARTMENT HAS CEASED HONORING LOAN GUARANTEES.
   (E)  ANY  INTEREST  DEFERRED  OR  NOT CHARGED RELATED TO A LOAN ISSUED
 PURSUANT TO THIS SECTION SHALL BE EXEMPT FROM ALL STATE TAXES  THAT  MAY
 BE  APPLICABLE  TO  SUCH  INTEREST AMOUNTS AS THEY RELATE TO AN AFFECTED
 SMALL BUSINESS.   ELIGIBLE  FINANCIAL  INSTITUTIONS  SHALL  DISCLOSE  TO
 AFFECTED  SMALL BUSINESS BORROWERS IN THE SIGNED AFFIDAVIT OR LOAN DOCU-
 MENTS THAT THERE MAY BE FEDERAL TAX CONSEQUENCES TO THE PROGRAM LOANS.
   (F) NO NEW LOAN APPLICATIONS SHALL  BE  SUBMITTED  UNDER  THE  PROGRAM
 AFTER  THE SHUTDOWN ENDS. THE PROGRAM SHALL EXPIRE UPON THE REPAYMENT OF
 ALL LOANS MADE UNDER THE PROGRAM AND, FOR  ALL  LOANS  IN  DEFAULT,  THE
 REPAYMENT  OF  CLAIMS  MADE  UNDER  THE PROGRAM, OR THE CESSATION OF NEW
 CLAIM APPROVALS UNDER SUBDIVISION (D) OF THIS SECTION.
   § 2. This act shall take effect immediately.

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  2520--B
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             January 25, 2019
                                ___________
 
 Introduced  by Sen. HARCKHAM -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks  --  recommitted  to
   the  Committee  on  Banks  in accordance with Senate Rule 6, sec. 8 --
   committee discharged, bill amended, ordered reprinted as  amended  and
   recommitted  to  said committee -- committee discharged, bill amended,
   ordered reprinted as amended and recommitted to said committee
 
 AN ACT to amend the executive law, in relation to establishing the state
   of emergency small business loan program
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The executive law is amended by adding a new section 29-l
 to read as follows:
   § 29-L. STATE OF EMERGENCY  SMALL  BUSINESS  LOAN  PROGRAM.  1.  DEFI-
 NITIONS.  AS  USED  IN  THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE
 FOLLOWING MEANINGS:
   (A) "AFFECTED SMALL BUSINESS" MEANS A SMALL  BUSINESS  LOCATED  WITHIN
 THIS STATE DURING A STATE OF EMERGENCY;
   (B)  "BANK" MEANS A BANK AS SUCH TERM IS DEFINED IN SUBDIVISION ONE OF
 SECTION TWO OF THE BANKING LAW;
   (C) "CREDIT UNION" MEANS A CREDIT UNION AS SUCH  TERM  IS  DEFINED  IN
 SUBDIVISION NINE OF SECTION TWO OF THE BANKING LAW;
   (D) "DEPARTMENT" MEANS THE DEPARTMENT OF FINANCIAL SERVICES;
   (E) "ELIGIBLE FINANCIAL INSTITUTION" MEANS A BANK OR CREDIT UNION THAT
 HAS A PHYSICAL PRESENCE IN THIS STATE AND IS IN GOOD STANDING;
   (F)  "GRACE PERIOD" MEANS THE NINETY-DAY PERIOD AFTER A STATE OF EMER-
 GENCY IS OVER;
   (G) "SMALL BUSINESS" MEANS A BUSINESS WITH NOT MORE THAN FIFTY EMPLOY-
 EES; AND
   (H) "STATE OF EMERGENCY" MEANS THE PERIOD BEGINNING WITH A DECLARATION
 BY THE GOVERNOR THAT A STATE OF EMERGENCY EXISTS.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08858-05-0
              

 S. 2520--B                          2
 
   2. STATE OF EMERGENCY SMALL BUSINESS LOAN PROGRAM. (A) THE  DEPARTMENT
 SHALL  ADMINISTER  A  STATE  OF EMERGENCY SMALL BUSINESS LOAN PROGRAM TO
 GUARANTEE THE REPAYMENT OF LOANS MADE BY AN ELIGIBLE FINANCIAL  INSTITU-
 TION  TO  AN  ELIGIBLE AFFECTED SMALL BUSINESS PURSUANT TO THIS SECTION.
 SUBJECT  TO  THE CESSATION OF NEW CLAIM APPROVALS UNDER PARAGRAPH (D) OF
 SUBDIVISION FIVE OF  THIS  SECTION,  THE  DEPARTMENT  SHALL  SUBMIT  ALL
 APPROVED  CLAIMS TO THE COMPTROLLER, WHO SHALL PAY FROM THE GENERAL FUND
 ANY AND ALL CLAIMS SUBMITTED BY THE DEPARTMENT.
   (B) ANY BANK OR CREDIT UNION MAY APPLY TO THE  DEPARTMENT  TO  PARTIC-
 IPATE  IN  THE  LOAN  GUARANTEE PROGRAM. NOT LATER THAN ONE BUSINESS DAY
 AFTER RECEIVING THE APPLICATION, THE DEPARTMENT SHALL DETERMINE  WHETHER
 THE FINANCIAL INSTITUTION IS AN ELIGIBLE FINANCIAL INSTITUTION AND IMME-
 DIATELY  NOTIFY  THE  BANK  OR  CREDIT  UNION OF SUCH DETERMINATION. ANY
 ELIGIBLE FINANCIAL INSTITUTION MAY MAKE LOANS TO  AFFECTED  SMALL  BUSI-
 NESSES IN ACCORDANCE WITH THIS SECTION.
   (C)  EACH ELIGIBLE FINANCIAL INSTITUTION THAT MAKES A LOAN PURSUANT TO
 THIS SECTION, SHALL NOTIFY THE DEPARTMENT IN WRITING NOT LATER THAN  ONE
 BUSINESS  DAY  AFTER  MAKING THE LOAN, SPECIFYING SUCH INFORMATION ABOUT
 THE BORROWER AS THE DEPARTMENT MAY REQUEST.
   3. LOAN ELIGIBILITY. AN ELIGIBLE FINANCIAL INSTITUTION MAY MAKE A LOAN
 TO AN AFFECTED SMALL BUSINESS, PROVIDED:
   (A) THE AFFECTED SMALL BUSINESS HAS PROVIDED TO THE ELIGIBLE FINANCIAL
 INSTITUTION PROOF SATISFACTORY TO SUCH INSTITUTION THAT SUCH SMALL BUSI-
 NESS IS A SMALL BUSINESS LOCATED WITHIN THE STATE OF NEW YORK.
   (B) THE AMOUNT OF THE LOAN SHALL NOT EXCEED FIVE THOUSAND DOLLARS.
   (C) THE LOAN IS MADE IN ACCORDANCE WITH THE ELIGIBLE FINANCIAL  INSTI-
 TUTION'S  UNDERWRITING  POLICY  AND STANDARDS, PROVIDED FURTHER THAT THE
 AFFECTED SMALL BUSINESS'S CREDITWORTHINESS SHALL NOT BE  A  FACTOR  USED
 FOR THE PURPOSES OF DETERMINING ELIGIBILITY.
   (D)  THE  LOAN  AGREEMENT  SHALL  NOT (I) REQUIRE REPAYMENT DURING THE
 GRACE PERIOD, OR (II) CHARGE INTEREST ON THE PRINCIPAL AMOUNT BEFORE  OR
 DURING  THE  GRACE PERIOD OR FOR ONE HUNDRED EIGHTY DAYS AFTER THE GRACE
 PERIOD, PROVIDED AFTER SUCH ONE HUNDRED EIGHTY-DAY PERIOD, THE  ELIGIBLE
 FINANCIAL  INSTITUTION  MAY  CHARGE  INTEREST OR FEES IN ACCORDANCE WITH
 SUCH FINANCIAL INSTITUTION'S LENDING POLICY AND THE TERMS OF THE  UNDER-
 LYING LOAN AGREEMENT.
   (E)  THE LOAN AGREEMENT SHALL REQUIRE THAT THE AFFECTED SMALL BUSINESS
 REPAY THE LOAN IN FULL NOT LATER THAN ONE HUNDRED EIGHTY DAYS AFTER  THE
 END  OF THE GRACE PERIOD BY MAKING AT LEAST THREE, AND NO MORE THAN SIX,
 EQUAL INSTALLMENT PAYMENTS. THE LOAN AGREEMENT SHALL NOT CONTAIN  A  FEE
 OR PENALTY FOR THE PREPAYMENT OR EARLY PAYMENT OF THE LOAN.
   (F)  THE  ELIGIBLE FINANCIAL INSTITUTION SHALL OFFER CREDIT COUNSELING
 SERVICES OR REFER SUCH SMALL BUSINESS TO NONPROFIT CREDIT COUNSELORS.
   4. ADDITIONAL LOANS. AN AFFECTED SMALL BUSINESS  WHO  HAS  RECEIVED  A
 LOAN  PURSUANT  TO THIS SECTION MAY APPLY TO THE SAME ELIGIBLE FINANCIAL
 INSTITUTION FOR AN ADDITIONAL LOAN FOR EACH THIRTY-DAY PERIOD SUCH SMALL
 BUSINESS REMAINS AN AFFECTED SMALL BUSINESS, PROVIDED NO AFFECTED  SMALL
 BUSINESS MAY RECEIVE MORE THAN THREE LOANS UNDER THE PROGRAM. EACH ADDI-
 TIONAL  LOAN  SHALL BE MADE IN ACCORDANCE WITH SUBDIVISION THREE OF THIS
 SECTION.
   5. COLLECTION OF LOANS. (A) ON AND AFTER ONE HUNDRED EIGHTY DAYS  FROM
 THE  END OF THE GRACE PERIOD, AN ELIGIBLE FINANCIAL INSTITUTION THAT HAS
 MADE A GOOD-FAITH EFFORT TO COLLECT THE  OUTSTANDING  PRINCIPAL  FROM  A
 LOAN  ISSUED PURSUANT TO THIS SECTION MAY MAKE A CLAIM TO THE DEPARTMENT
 FOR RECOVERY OF AN AMOUNT EQUAL TO THE OUTSTANDING  PRINCIPAL  FOR  SUCH
 LOAN.  PRIOR TO THE DEPARTMENT'S APPROVING AND SUBMITTING A CLAIM TO THE

 S. 2520--B                          3
 
 COMPTROLLER, SUCH ELIGIBLE FINANCIAL INSTITUTION  SHALL  DEMONSTRATE  TO
 THE  SATISFACTION OF THE DEPARTMENT THAT THE ELIGIBLE FINANCIAL INSTITU-
 TION HAS MADE A GOOD-FAITH EFFORT TO COLLECT THE  OUTSTANDING  PRINCIPAL
 FROM THE ELIGIBLE SMALL BUSINESS EMPLOYEE IN ACCORDANCE WITH SUCH FINAN-
 CIAL  INSTITUTION'S LOAN SERVICING AND COLLECTION POLICIES. UPON PAYMENT
 OF A CLAIM, THE LOAN SHALL BE ASSIGNED TO THE STATE, AND THE  DEPARTMENT
 SHALL HAVE THE RIGHT TO CONTINUE COLLECTION EFFORTS ON THE LOAN.
   (B)  THE  DEPARTMENT  SHALL  MAINTAIN RECORDS IN THE REGULAR COURSE OF
 ADMINISTRATION OF THE LOAN GUARANTEE  PROGRAM,  INCLUDING  A  RECORD  OF
 LOANS  ISSUED AND OF PAYMENTS MADE TO HONOR LOAN GUARANTEES ISSUED UNDER
 THIS SECTION. THE DEPARTMENT SHALL  REGULARLY  REVIEW  SUCH  RECORDS  TO
 DETERMINE TOTAL LOANS ISSUED AND IDENTIFY DUPLICATIVE APPLICATIONS.
   (C)  THE  DEPARTMENT  MAY TERMINATE ANY LOAN GUARANTEE IF THE ELIGIBLE
 FINANCIAL INSTITUTION MISREPRESENTS ANY INFORMATION  PERTAINING  TO  THE
 GUARANTEE  OR  FAILS  TO COMPLY WITH ANY REQUIREMENTS OF THIS SECTION IN
 CONNECTION WITH THE GUARANTEE OF THE UNDERLYING LOAN.
   (D) IF THE AMOUNTS EXPENDED TO HONOR LOAN GUARANTEES UNDER THE PROGRAM
 EXCEED TEN PERCENT OF TOTAL LOANS ISSUED,  THE  DEPARTMENT  SHALL  IMME-
 DIATELY  CEASE  TO  APPROVE  CLAIMS AND SHALL NOTIFY THE COMPTROLLER AND
 EACH ELIGIBLE FINANCIAL INSTITUTION OF THE TOTAL AMOUNT OF PAYMENTS MADE
 AND THAT THE DEPARTMENT HAS CEASED HONORING LOAN GUARANTEES.
   (E) ANY INTEREST DEFERRED OR NOT CHARGED  RELATED  TO  A  LOAN  ISSUED
 PURSUANT  TO  THIS SECTION SHALL BE EXEMPT FROM ALL STATE TAXES THAT MAY
 BE APPLICABLE TO SUCH INTEREST AMOUNTS AS THEY  RELATE  TO  AN  AFFECTED
 SMALL  BUSINESS.    ELIGIBLE  FINANCIAL  INSTITUTIONS  SHALL DISCLOSE TO
 AFFECTED SMALL BUSINESS BORROWERS IN THE SIGNED AFFIDAVIT OR LOAN  DOCU-
 MENTS THAT THERE MAY BE FEDERAL TAX CONSEQUENCES TO THE PROGRAM LOANS.
   (F)  NO  NEW  LOAN  APPLICATIONS  SHALL BE SUBMITTED UNDER THE PROGRAM
 AFTER THE STATE OF EMERGENCY ENDS. THE PROGRAM  SHALL  EXPIRE  UPON  THE
 REPAYMENT  OF  ALL  LOANS  MADE  UNDER THE PROGRAM AND, FOR ALL LOANS IN
 DEFAULT, THE REPAYMENT OF CLAIMS MADE UNDER THE PROGRAM, OR  THE  CESSA-
 TION OF NEW CLAIM APPROVALS UNDER SUBDIVISION (D) OF THIS SECTION.
   § 2. This act shall take effect immediately.