NY State Senate Bill 2021-S3406

Senate Bill S3406

2021-2022 Legislative Session

Establishes the state of emergency small business and not-for-profit organization loan program

download bill text pdf

Archive: Last Bill Status - In Senate Committee Banks 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 banks
Jan 29, 2021	referred to banks

2021-S3406 (ACTIVE) - Details

See Assembly Version of this Bill:: A5086
Current Committee:: Senate Banks
Law Section:: Executive Law
Laws Affected:: Add §29-l, Exec L
Versions Introduced in 2019-2020 Legislative Session:: S2520, A10212

2021-S3406 (ACTIVE) - Summary

Establishes the state of emergency small business and not-for-profit organization loan program.

2021-S3406 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S3406

SPONSOR: HARCKHAM
 
TITLE OF BILL:

An act to amend the executive law, in relation to establishing the state
of emergency small business and not-for-profit organization loan program

 
PURPOSE:

To establish a state of emergency small business and not-for-profit
organization loan program.

 
SUMMARY OF PROVISIONS:

Section 1 amends the executive law by adding section 29-1. Terms includ-
ing but not limited to "affected business or organization", "Bank",
"Not-forprofit" and "state of emergency" are defined.

Section 2 creates the "state of emergency small business and not-for-
profit organization loan program" to guarantee loan repayment to eligi-

ble financial institutions who offer loans to eligible affected busi-
nesses or organizations pursuant to this section.  Priority will be
given to those small businesses and not-for-profit which fall under
3,4,5 pursuant to executive order 202 of two thousand twenty. Addi-
tionally, specifications on bank or credit union eligibility and appli-
cation deadlines are stated.

Section 3 states loan eligibility. This section states that creditwor-
thiness shall not be a determining factor for eligibility, provides a
repayment grace period, payment installment options, credit counseling,
no fee or penalty for prepayment or early repayment, and states the loan
max amount.

Section 4 allows for affected businesses or organizations who received a
loan to be eligible for an additional loan for each 30 day period maxing
at 3 loans under the program.

Section 5 states the collection of loans. 180 days after the grace peri-
od financial institutions that have made a good-faith effort to collect
the outstanding principal may make a claim to the department for recov-
ery of an amount equal to the loan's outstanding principal

Section two states the effective date. Paperwork requirements for the
department are stated and most notably no new loan applications shall be
submitted under the program after the state of emergency ends and this
program shall expire upon the repayment of all loans under the program.

Section 6 states the effective date.

 
JUSTIFICATION:

Executive Order 202 of two thousand twenty ordered the state of New York
to stay at home unless deemed essential. Unfortunately, this has created
a financial strain on our small businesses and not-for-profits who are
struggling to retain capital. This bill would offer our small businesses
and not-for-profits additional financial resources to aid with the over-
head costs and hopefully keep them afloat while we continue to navigate
these unforeseen times.
 
LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS:

To be determined

 
EFFECTIVE DATE:
This act shall take effect immediately.

2021-S3406 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3406
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 29, 2021
                                ___________
 
 Introduced  by Sen. HARCKHAM -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks
 
 AN ACT to amend the executive law, in relation to establishing the state
   of emergency  small  business  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. The executive law is amended by adding a new  section  29-l
 to read as follows:
   § 29-L. STATE OF EMERGENCY SMALL BUSINESS AND NOT-FOR-PROFIT ORGANIZA-
 TION  LOAN PROGRAM. 1. DEFINITIONS. AS USED IN THIS SECTION, THE FOLLOW-
 ING 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 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;
   (H)  "SMALL NOT-FOR-PROFIT ORGANIZATION" MEANS A NOT-FOR-PROFIT ORGAN-
 IZATION WITH NOT MORE THAN FIFTY EMPLOYEES; AND
   (I) "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.
                                                            LBD02484-02-1

 S. 3406                             2
 
   2. STATE OF EMERGENCY SMALL BUSINESS AND  NOT-FOR-PROFIT  ORGANIZATION
 LOAN  PROGRAM.  (A) THE DEPARTMENT SHALL ADMINISTER A STATE OF EMERGENCY
 SMALL BUSINESS AND NOT-FOR-PROFIT LOAN PROGRAM TO GUARANTEE  THE  REPAY-
 MENT  OF  LOANS MADE BY AN ELIGIBLE FINANCIAL INSTITUTION TO AN ELIGIBLE
 AFFECTED  BUSINESS OR ORGANIZATION 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. CLAIMS BY  AFFECTED  BUSINESSES  THAT  WERE
 MANDATORILY CLOSED THROUGH PHASE THREE, FOUR AND FIVE PURSUANT TO EXECU-
 TIVE ORDER 202 OF TWO THOUSAND TWENTY SHALL BE GIVEN PRIORITY.
   (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 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 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 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 SECTION 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 SUBDIVISION THREE OF THIS SECTION.

 S. 3406                             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 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-
 TION  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  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
 BUSINESS  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 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 PARAGRAPH (D) OF THIS SUBDIVISION.
   § 2. This act shall take effect immediately.

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