§ 16-k. Capital access program. 1. Definitions. For the purposes of
this section:

(a) "Financial institution", means any bank, trust company, savings
bank, savings and loan association or cooperative bank chartered by the
state or any national banking association, federal savings and loan
association or federal savings bank or any community development
financial institution or community-based lending organization; provided,
however, that the financial institution has its principal office located
in the state.

(b) "Participating financial institution" shall mean any financial
institution participating in the program established by this section.

(c) "Small business" shall have the same meaning as set forth in
section 131 of the economic development law, whose primary place of
business is in New York state.

2. (a) The corporation, or its agent, shall establish a capital access
program to provide a loan loss reserve to assist small businesses that
otherwise find it difficult to obtain regular bank financing.

(b)(i) Assistance under the capital access program shall be provided
for a capital access program under which the corporation or its agent
shall be authorized to assist small businesses that otherwise find it
difficult to obtain regular or sufficient bank financing. Such
assistance shall take the form of deposits by the corporation or its
agent in the reserve funds in participating financial institutions to
fund loan loss reserves for loans made to such small businesses.

(ii) Any financial institution desiring to become a participating
financial institution shall execute an agreement in such form as the
corporation or its agent may prescribe, which agreement shall contain
the terms and provisions set forth in paragraph (c) of this subdivision
and such other terms and provisions as the corporation or its agent may
deem necessary or appropriate.

(c) A participating financial institution originating a loan to a
small business pursuant to this section shall:

(i) provide a plan to the corporation or its agent for the marketing
of the capital access program to small businesses, including those in
highly distressed areas and to minority- and women-owned businesses,
with appropriate lending objectives identified by the financial
institution for such areas and businesses;

(ii) disperse funds for the purposes of expansion, facility/technology
upgrading, start-up and working capital;

(iii) not disperse funds which exceed an amount greater than five
hundred thousand dollars;

(iv) set aside an amount, specified or agreed to by the corporation or
its agent, from both the participating financial organization and the
small business, not less than three percent nor more than seven percent
of the principal amount of the loan, whereby the amount contributed by
the small business does not exceed fifty percent of the total amount
contributed by the small business and the financial institution, into a
loan loss reserve which the institution shall maintain, applicable to
all such loans by said institution to small businesses pursuant to this
section; and

(v) certify to the corporation or its agent in such a fashion and with
such supporting information as the corporation or its agent shall
prescribe, that it has made such loan and has set aside its contribution
and the contribution of the small business.

(d) The corporation or its agent shall after such certification as
provided in subparagraph (v) of paragraph (c) of this subdivision,
transfer to the participating financial institution an amount equal to
the total of the contributions of the participating financial
institution and the small business or such additional amount up to one
hundred fifty percent of such contributions as determined by the
corporation or its agent. The participating financial institution shall
set aside such amount so received into said loan loss reserve.

(e) In the event the participating financial institution suffers a
loss on any such loan, it may in its discretion draw upon the funds in
such loan loss reserve to repay the loan in whole or in part.

(f) All amounts set aside by the participating financial institution
into said loan loss reserve shall be in an account at said institution.

(g) Earnings or interest from the principal of said loan loss reserve
accounts shall be:

(i) maintained in the account and held as additional loan loss
reserves; and

(ii) available to the corporation or its agent at any time and from
time to time, to be used to defray the costs of administering the
program or to replenish the loan loss reserve account of the corporation
or its agent.

(h) The corporation shall assure adequate geographic distribution of
participating financial institutions throughout the state to the extent
feasible.

3. Administration of the capital access program. (a) The corporation
is hereby authorized to do the following:

(i) enter into a contract with a third party financial institution,
which may be the New York business development corporation, established
under section 210 of the banking law, to act as the agent of the
corporation with respect to the administration of the program, provided
that the selection of a third party other than the New York business
development corporation shall be made pursuant to a competitive process;

(ii) conduct an annual review and assessment of the performance of the
third party in its capacity as agent for the corporation to determine
whether the contract referenced in subparagraph (i) of this paragraph
should be renewed for an additional two year period. The review shall be
based on whether the third party agent has satisfactorily met the terms
and conditions of the contract;

(iii) where an initial determination finds that the third party
agent's performance is unsatisfactory, allow the third party agent the
opportunity to take corrective action;

(iv) where a final review of the third party agent's performance
continues to conclude that the third party agent's performance is
unsatisfactory, submit to the speaker of the assembly and the temporary
president of the senate its recommendation to terminate the contract
with the third party agent and transfer the contract to another agent;
and

(v) promulgate rules and regulations with respect to the
implementation of the capital access program established by this section
and any other rules and regulations necessary to fulfill the purposes of
this section, in accordance with the state administrative procedure act,
and which shall be consistent with the program plan required by
subdivision 19 of section 100 of the economic development law.

(b) Any contract entered into pursuant to subparagraph (i) of
paragraph (a) of this subdivision shall:

(i) be for a period of two years and shall be renewed for an
additional two year period subject to requirements of subparagraph (ii)
of paragraph (a) of this subdivision;

(ii) provide for compensation for expenses incurred by the third party
agent in connection with its services as agent and for such other
services as the New York business development corporation may deem
appropriate including, but not limited to the use of the premises,
personnel and personal property of the third party agent; and

(iii) notwithstanding any law, rule or regulation to the contrary, use
the guidelines, related to, but not limited to underwriting standards
provided for in subdivision four of this section to evaluate
applications for loans pursuant to the program filed by a minority and
women-owned business enterprises, or a small business whose principal
place of business is in a highly distressed area.

(c) The corporation, and any third party it contracts with pursuant to
paragraph (a) of this subdivision, shall collaborate, to the extent
practicable, to increase minority and women-owned businesses' and small
businesses' whose principal place of business is in a highly distressed
area, awareness of, participation in, and referrals to the capital
access loan program.

4. Notwithstanding any law, rule or regulation to the contrary, the
department of financial services, the empire state development
corporation and the New York business development corporation, in
consultation with relevant stakeholders, shall jointly establish
guidelines relating to, but not limited to, underwriting standards to
assist minority and women-owned business enterprises and small
businesses in highly distressed areas in accessing and participating in
the capital access program. In addition to other factors, such
guidelines should incorporate verifiable alternative indications and
best practices of creditworthiness presented or made available by the
applicant.

5. Pursuant to subparagraph (v) of paragraph (b) of subdivision 1 of
section 212 of the banking law, the New York business development
corporation and the empire state development corporation shall enter
into an agreement pursuant to which the New York business development
corporation shall authorize, maintain and administer the program
established in such subparagraph.