§ 16-a. Regional revolving loan program. (1) The corporation shall
establish a fund to be known as the "regional revolving loan trust fund"
and shall pay into such fund any monies made available to the
corporation for such fund from any source. The monies held in or
credited to the fund shall be expended solely for the purposes set forth
in this section. The corporation shall not commingle the monies of such
fund with any other monies of the corporation or any monies held in
trust by the corporation.

(2) The corporation shall allocate any monies made available for such
fund for the purpose of making grants to regional corporations. The
grants shall be allocated as follows:

(a) fifty percent divided equally among the regions;

(b) fifty percent according to a formula weighted in favor of those
regions with the greatest levels of economic distress as determined by
poverty rates, number of persons receiving public assistance,
unemployment rates, rate of employment decline and such other indicators
of economic distress as the corporation deems appropriate; and

(c) in the event a regional corporation advises the corporation that
it does not require all or a portion of the funds to be distributed
pursuant to this subdivision, such funds shall be re-distributed by the
corporation equally among the other regional corporations.

(3) In accordance with the rules and regulations of the corporation,
each regional corporation shall establish two special accounts for
monies received by the regional corporation pursuant to the provisions
of this section. The grant monies received from the corporation,
earnings on such monies, and any principal repayments shall be deposited
in a loan fund account; any interest earned by the regional corporation
on loans will be deposited in a separate interest repayment account. A
regional corporation shall be authorized to provide financing assistance
to eligible projects. Any interest earned from its loans may be used by
a regional corporation for the cost of administering the programs
authorized by this section.

(3-a) Notwithstanding subdivision three of this section, where
applicable, the corporation is authorized to enter into agreements as
may be necessary for the administration and reporting of funds repaid,
received, expended or collected in a manner consistent with the
provisions in section sixteen-t of this act. The use of such funds by
the corporation shall be consistent with the terms, conditions and
restrictions set forth in subdivision four of this section, to provide
financial assistance to eligible regional corporations as defined in
subdivision eighteen of section three of this act. Outstanding expenses,
loans and other obligations executed prior to the effective date of this
subdivision shall be subject to the terms and conditions of the original
contract or contracts.

(4) Regional corporations shall be selected by the corporation from
among eligible applicants to administer a regional revolving loan
program. An eligible applicant shall:

(a) represent at least two entire contiguous counties;

(b) have available to it staff with sufficient expertise to analyze
applications for financial assistance, to regularly monitor financial
assistance to clients, and have made arrangements to provide management
or technical assistance to clients;

(c) have an effective plan to market its services to small businesses
through such entities as chambers of commerce, industry trade
associations, banks, local development corporations, community based
organizations and industrial development agencies; and

(d) have established a loan committee composed of five or more persons
experienced in commercial lending or in the operation of a for-profit
business and a staff person of the regional office of the department of
economic development. Such loan committee shall review every application
to the regional corporation for financial assistance pursuant to this
section, shall determine the feasibility of the transaction proposed in
the application and shall recommend to the board of directors or other
governing body of the regional corporation such action as the committee
deems appropriate.

(5) Applications to the corporation for certification or
recertification as a regional corporation shall:

(a) describe the applicant corporation, including its organization,
membership, loan committee, staff, and sources of other funds, if any;

(b) identify the geographic region to be served;

(c) explain the methods and criteria to be used in determining firms
eligible for financial assistance from the regional revolving loan
program;

(d) describe the means for coordinating financial assistance available
from the regional revolving loan program with financial assistance
available from other public funding sources within the region and how
such program will be used to leverage private financing for projects;

(e) at any time, the corporation may consider proposals to reconfigure
geographic areas served by regional corporations; and

(f) contain such other information as the corporation deems
appropriate.

(6) The corporation shall select, from among eligible applicants,
regional corporations to administer revolving loan programs, on the
basis of:

(a) the ability of the regional corporation to administer the
financial assistance programs authorized under this section;

(b) the extent of coordination with other publicly supported financial
assistance programs available within the region represented by the
regional corporation;

(c) the degree of public and private support within the region for the
applicant regional corporation; and

(d) the ability of the regional corporation to provide financial and
other assistance to businesses located in distressed areas within the
region.

(6-a) The corporation shall, every five years, recertify that each
regional corporation has complied with the terms and conditions of this
section. In the event a regional corporation is not recertified, or its
certification is withdrawn pursuant to subdivision nineteen of this
section, then the corporation shall give written notice to such regional
corporation which shall thereafter neither make new loans nor undertake
new obligations except upon written approval of the corporation. The
corporation may thereafter certify another regional corporation in the
manner provided in this section for the selection of regional
corporations. Upon the certification of a successor regional
corporation, all remaining loan funds, records and accounts of the
regional corporation not recertified shall be transferred to the
corporation and the regional corporation not recertified shall cease to
function pursuant to this section. The corporation shall transfer
returned funds to a successor regional corporation, or in the event no
successor regional corporation is formed, equally to other existing
regional corporations.

(7) A regional corporation certified by the corporation shall use the
funds received from the corporation, subject to the terms, conditions
and restrictions set forth in this section, to provide financial
assistance to eligible businesses as defined in subdivision seventeen of
section three of this act, for projects that demonstrate a substantial
likelihood of providing increases in net new permanent jobs or retaining
jobs in businesses that need such financial assistance to remain viable.

(8) The decision to approve or reject an application for financial
assistance pursuant to the provisions of this section shall be made by a
majority of the directors of the regional corporation, and such decision
shall be final. No member of the board or other governing body of a
regional corporation shall participate in a decision on a project
application when such member is a party to or has a financial interest
in such project. Any member who cannot participate in a decision on a
project application for such reason shall not be counted as a member of
the board or other governing body for purposes of determining the number
of members required for a majority vote on such application.

(9) No employee or officer of any regional corporation shall be a
party to or have any financial interest in any project that receives
financial assistance pursuant to this section.

(10) A regional corporation, in approving applications for financial
assistance, shall give priority to projects:

(a) that will provide increases in net new permanent jobs;

(b) located in economically distressed areas as defined by the
corporation or employing persons who live in such areas;

(c) of minority or women-owned enterprises or enterprises owned by
dislocated workers, such workers as defined in the Workforce Investment
Act (P.L. 105-220); and

(d) of businesses in the early stages of development that have been
denied access to credit.

(11) The funds allocated to each regional corporation pursuant to this
section may be used to guarantee the repayment of a working capital loan
provided by a banking organization to finance an eligible project.
Guarantees may be provided for up to ninety percent of the required
total project financing, provided that no more than one hundred thousand
dollars may be guaranteed for any project. Guarantees may be made for
the following types of financing: short and medium term loans for
working capital, revolving lines of credit, and seasonal inventory and
accounts receivable loans. Guarantees may be made for up to ninety
percent of the required total financing up to a maximum of one hundred
fifty thousand dollars for interim financing where another lender or
guarantor will provide permanent financing within one hundred eighty
days. In no event may a loan guarantee be for a term longer than five
years. Any loan made by a banking organization that is guaranteed
pursuant to this subdivision shall be secured by a security agreement,
chattel paper, loan agreement, or such other instruments or documents
deemed necessary or convenient by the regional corporation to secure the
loan. Any guarantee made pursuant to this subdivision shall be backed by
a minimum reserve within the account established by each regional
corporation of at least twenty-five percent of the amount guaranteed
that is outstanding.

(11-a) A regional corporation, in addition to receiving funds as
provided in this section, may also apply for and accept funds from any
other source for the purpose of furthering its goals and objectives.
Such funds may be used in the same manner as funds received from the
corporation to carry out the purposes of this section.

(12) The funds of each regional corporation derived pursuant to this
section may be used to provide loans for working capital for eligible
projects; provided that the amount of the loan does not exceed ninety
percent of the total project cost, or one hundred thousand dollars,
whichever is less. The interest rate and the terms on such loans shall
be determined by the regional corporation, but in no event shall the
interest rate be less than five percent. The term of any loan shall not
exceed five years. All loans shall be secured by lien positions on
collateral at the highest level of priority that can accommodate the
borrower's ability to raise sufficient debt and equity capital for the
project.

(13) A regional corporation shall not provide any financial assistance
authorized by this section unless the following conditions are met:

(a) the applicant has demonstrated that there is little prospect of
obtaining the project financing requested from other public sources of
funding within the region, including local revolving loan funds, and
that there is little prospect of obtaining adequate project financing
from private sources of capital, or in the case of a loan guarantee,
that there is little prospect of obtaining project financing without the
guarantee; except that in the case of local revolving loan funds,
financial assistance from the regional revolving loan fund account may
be provided for a project in conjunction with financial assistance from
a local revolving loan fund, provided that assistance from the regional
revolving loan fund is no greater than that provided by the local
revolving loan fund, and that a project qualifying for financial
assistance available from a local revolving loan fund is not denied such
assistance;

(b) the applicant has a minimum equity interest of at least ten
percent in the business or project;

(c) there is a reasonable prospect of repayment;

(d) the project is located in the region represented by the regional
corporation;

(e) the project will comply with any applicable environmental rules or
regulations;

(f) the applicant has certified that it will not discriminate against
any employee or any applicant for employment because of race, religion,
color, national origin, sex, or age;

(g) a staff member or a representative of the regional corporation
acting in an official capacity has personally visited the project site
and/or the applicant's place of business; and

(h) financial commitments for the project have been obtained from
other public and private sources.

(14) Grants made by the corporation pursuant to this section shall not
be made available for:

(a) projects that would result in the relocation of any business
operation from one municipality within the state to another, except
under one of the following conditions: (i) when a business is relocating
within a municipality with a population of at least one million where
the governing body of such municipality approves such relocation; or
(ii) the regional corporation notifies each municipality from which such
business operation will be relocated and each municipality agrees to
such relocation;

(b) projects of newspapers, broadcasting or other news media; medical
facilities, libraries, community or civic centers; or public
infrastructure improvements;

(c) refinancing any portion of the total project cost or other
existing loans or debts of an applicant, except for the purpose of
transferring to the employees or to other local interests ownership of a
company that would otherwise depart from or cease or substantially
reduce operations in the state;

(d) providing funds, directly or indirectly, for payment,
distribution, or as a loan, to owners, partners or shareholders of the
applicant enterprise, except as ordinary income for services rendered;
and

(e) retail projects, except where the regional corporation finds there
will be an increase in net new permanent jobs.

(15) A regional corporation may charge application, commitment and
loan guarantee fees pursuant to a schedule of fees adopted by the
regional corporation and approved by the corporation.

(16) The regional corporations shall submit annual reports for the
previous fiscal year to the corporation describing the financial
assistance provided pursuant to this section, including: the number of
projects assisted; the amount and type of assistance provided; a
description of the projects; the number of jobs created or retained; the
status of outstanding loans, guarantees, earnings and account balances;
and such other information as the corporation may require.

(17) The corporation shall, assisted by the commissioner of economic
development and in consultation with the department of economic
development, promulgate rules and regulations in accordance with the
state administrative procedure act setting forth procedures to be
followed by, and the responsibilities and obligations of, regional
corporations and the corporation. Such rules and regulations shall be
consistent with the program plan required by subdivision nineteen of
section one hundred of the economic development law.

(18) For any positions opened as a result of assistance provided in
this section, businesses so assisted shall first consider unemployed or
low income individuals eligible to participate in programs funded
through the Workforce Investment Act (P.L. 105-220) who shall be
referred to the business by local workforce investment boards created
pursuant to such act or by the job service division of the department of
labor.

(19) The corporation shall annually conduct an audit of each regional
corporation to ensure conformity of all aspects of program
administration and of financial assistance transactions with the
substantive and procedural provisions of this section. In the event that
the corporation finds instances of substantive noncompliance by a
regional corporation with any of the provisions of this section and such
instances were, or should have been, known to be in noncompliance, the
regional corporation shall return, within thirty days, upon demand by
the corporation, all uncommitted grant funds on hand and provide an
accounting of the loans currently outstanding.

The corporation may withdraw a regional corporation's certification:

(a) when a member of a board of directors or other governing body, an
officer or an employee of said regional corporation is party to or has
financial interests in loan projects;

(b) when said regional corporation fails to comply with the
requirements for project loans pursuant to this section; or

(c) when a regional corporation makes no loans within the previous
fiscal year and there is more than one hundred thousand dollars
remaining in its loan fund account.

The corporation shall transfer funds returned from a decertified
regional corporation to a successor regional corporation, or, if there
be none, distribute such funds equally among other existing regional
corporations. Outstanding loans and other obligations payable to such a
decertified regional corporation shall be assigned to its successor
regional corporation, or to the corporation or an agent designated by
the corporation upon such terms and conditions as the corporation shall
determine.

(20) Reporting. (a) The lending organization shall submit to the
corporation annual reports stating: the number of program loans made;
the amount of program funding used for loans; the use of loan proceeds
by the borrower; the number of jobs created or retained; the status of
each outstanding program loan, including fund balance; and such other
information as the corporation may require.

(b) The corporation shall, on or before October 1, 1988 and on or
before each October first thereafter, submit a report to the governor
and the legislature on the operations and accomplishments of the
regional revolving loan program. Such report shall include a summary of
the information contained in the reports submitted pursuant to
subdivision sixteen of this section and of the results of the audits
performed by the corporation pursuant to subdivision nineteen of this
section, and shall set forth the status of the regional revolving loan
program for the previous fiscal year, including grants to the regional
corporations, earnings and account balances as reported to the
corporation. The report to be submitted on October 1, 2005 and on or
before each October first thereafter shall be consolidated with the
annual program report of the corporation required under the provisions
of subdivision (b) of section thirty of this act, as amended.

(c) Beginning April 1, 2019, the corporation shall publish on its
website the information contained in the annual reports required under
paragraphs (a) and (b) of this subdivision in aggregate form omitting
borrower identifiable information.

(21) Evaluation. (a) The corporation shall submit to the director of
the division of the budget, the chairperson of the senate finance
committee, and the chairperson of the assembly ways and means committee
an evaluation of this program prepared by an entity independent of the
corporation. Such evaluation shall be submitted by September 1, 2005 and
by September first every four years thereafter.

(b) Between evaluation due dates, the corporation shall maintain the
necessary records and data required to satisfy such evaluation
requirements and to satisfy information requests received from the
director of the budget, the chairperson of the senate finance committee
and the chairperson of the assembly ways and means committee between
such evaluation due dates.

(22) The corporation shall recertify existing regional corporations
or, in the event a regional corporation's certification has been
withdrawn, seek successor corporations among eligible applicants after
April first, two thousand two.