NY State Senate Bill 2021-S1976

Senate Bill S1976

2021-2022 Legislative Session

Establishes the coronavirus pandemic small business and not-for-profit organization loan program

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Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to finance
Jan 16, 2021	referred to finance

co-Sponsors

2021-S1976 (ACTIVE) - Details

Current Committee:: Senate Finance
Law Section:: Financial Services
Versions Introduced in Other Legislative Sessions:: 2019-2020: S8169
2023-2024: S1033

2021-S1976 (ACTIVE) - Summary

Establishes the coronavirus pandemic small business and not-for-profit organization loan program.

2021-S1976 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S1976

SPONSOR: JACKSON
 
TITLE OF BILL:

An act in relation to establishing the coronavirus pandemic small busi-
ness and not-for-profit organization loan program

 
PURPOSE:

This bill allows small businesses and not-for-profit's to apply for
no-interest loans up to $75,000 if their business or not-for-profit has
suffered a loss because of the coronavirus pandemic.

 
SUMMARY OF PROVISIONS:

Section 1 outlines the following terms, "affected businesses", "bank",
"credit union", "department", "eligible financial institution", "grace
period", "small business", "small not-for-profit organization", and
"coronavirus pandemic."

Section 2 allows small businesses and not-for-profits to submit a loan
guarantee claim to an eligible financial institution for the comp-
troller's approval during the coronavirus pandemic.

Section 3 describes the loan program eligibility for small businesses or
not-for-profit organizations within New York. The provisions for eligi-
bility state that the loan will not exceed $75,000 and will not charge
interest until at least 270 days after the coronavirus pandemic is over.
Additionally, the loan agreement will allow small businesses and not-
for-profits a grace period of 180 days before repayment of the approved
loan. The loan agreement must be paid in full within three to six equal
payments without a prepayment penalty or early payment penalty. The
eligible financial institution must offer credit counseling or refer
credit counselors to said small businesses or organizations.

Section 4 allows small businesses and not-for-profits to apply for addi-
tional extensions for each thirty day period the business is affected by
the coronavirus pandemic. Small businesses and not-for-profits can only
apply for up to three loan extensions under this program.

Section 5 describes the collection procedure for loans. Small businesses
and not-for-profits are expected to maintain records of when the loans
were issued and of payments made to honor the loan guarantees issued
under this act. No additional loan applications can be submitted after
the coronavirus pandemic ends.

Section 6 sets the effective date.

 
JUSTIFICATION:

In light of the coronavirus pandemic, it is necessary to provide addi-
tional financial resources to small businesses and not-for-profit organ-
izations to help them stay afloat during these unforeseen circumstances.
This bill provides relief due to the coronavirus emergency and allows
businesses and not-for-profit organizations to operate during the
pandemic.

 
LEGISLATIVE HISTORY:
2019-2020: S.8169 - Referred to Finance/A.10208 - Referred to Banks

 
STATE AND LOCAL FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2021-S1976 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   1976
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 16, 2021
                                ___________
 
 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:
 
   Section 1. Definitions. As used in this act, the following terms shall
 have the following meanings:
   (a) "Affected business or organization"  means  and  includes  both  a
 small  business  and  a small not-for-profit organization located within
 this state during the coronavirus pandemic;
   (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  the  coronavirus
 pandemic is over;
   (g)  "Small  business" means a business with not more than one hundred
 employees that has experienced a loss in sales of 25 percent or more  as
 a result of the coronavirus pandemic;
   (h)  "Small not-for-profit organization" means a not-for-profit organ-
 ization with not more than one hundred employees; and
   (i) "Coronavirus pandemic" means the period of time during  which  the
 presence of coronavirus disease 2019 in this state exists in significant
 enough  numbers  for  which  the threat of the spread of such disease is
 considered a pandemic.
   § 2. Coronavirus pandemic small business and not-for-profit  organiza-
 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.

                                                            LBD02322-01-1

 S. 1976                             2
 
 pandemic small business and not-for-profit loan program to guarantee the
 repayment of loans made by  an  eligible  financial  institution  to  an
 eligible  affected  business  or  organization  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-
 diately notify the bank or  credit  union  of  such  determination.  Any
 eligible financial institution may make loans to affected businesses and
 organizations 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 business or organization, provided:
   (a) The affected business or organization has provided to the eligible
 financial  institution  proof satisfactory to such institution that such
 affected business or organization is an affected business  or  organiza-
 tion located within the state of New York.
   (b)  The  amount  of  the  loan shall not exceed seventy-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 business or organization'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 business or
 organization 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 affected business or organization to nonprofit
 credit counselors.
   § 4. Additional loans. An affected business or  organization  who  has
 received  a  loan  pursuant  to  this act may apply to the same eligible
 financial institution for an additional loan for each thirty-day  period
 such  small  business or not-for-profit organization remains an affected
 business or organization, provided no affected business or  organization
 may  receive  more  than  three loans under the program. Each additional
 loan shall be made in accordance with section three of this  act.    The
 total  amount of all loans received by an affected business or organiza-
 tion shall not exceed seventy-five thousand dollars.

 S. 1976                             3
 
   § 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 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 small business or not-for-profit organization  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 act. The department shall regularly review such records  to  deter-
 mine 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 act 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  busi-
 ness or organization.  Eligible financial institutions shall disclose to
 affected  business  or organization 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  coronavirus pandemic 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.
   § 6. This act shall take effect immediately.

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Senate Bill S1976

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Sponsored By

Robert Jackson