§ 16-C — Minority- and women-owned business development and lending program

§ 16-c. Minority- and women-owned business development and lending\nprogram.\n (1) Minority- and women-owned business development and lending\nprogram. (a) There is hereby created a minority- and women-owned\nbusiness development and lending program for the purpose of providing\nfinancial and technical assistance to minority and women-entrepreneurs.\n (b) For the purposes of this section the following words or terms\nshall mean as follows:\n (i) "minority-owned business enterprise" or "minority-owned business"\nshall mean the same as "minority business enterprise" as defined in\nsubdivision three of section two hundred ten of the economic development\nlaw.\n (ii) "women-owned business enterprise" or "women-owned business" shall\nmean the same as "women-owned business enterprise" as defined in\nsubdivision five of section two hundred ten of the economic development\nlaw.\n (iii) "incubator" shall mean a facility providing low-cost space,\ntechnical assistance and support services, including, but not limited\nto, central services shared by tenants of the facility, to minority- and\nwomen-owned business enterprises.\n (c) Assistance shall not be provided under this section for:\n (i) the purchase or rehabilitation of real property for speculative\npurposes;\n (ii) payment of any tax or employee benefit arrearage;\n (iii) residential construction, renovation or development\nconstruction, except for assistance to minority and women contractors\nunder subdivision four of this section;\n (iv) educational institutions and proprietary education firms, except\nlicensed child care facilities;\n (v) hospitals or residential health care facilities;\n (vi) overnight lodging facilities;\n (vii) refinancing of commercial or business related debt or equity\ninvested in a commercial or business related enterprise or commercial or\nbusiness related project, unless the corporation finds the terms of the\noriginal debt to be unreasonable as provided in subparagraph (ix) of\nparagraph (d) of this subdivision.\n (d) The corporation is authorized to:\n (i) establish programs in conjunction with locally, and community\nbased entities to decentralize lending for small loans and loans to\nstart up minority- and women-owned businesses;\n (ii) establish a comprehensive program for minority and women\ncontractors, which may include assistance through loans, bonding\nassistance and technical assistance;\n (iii) establish a program to provide loans to established minority-\nand women-owned businesses and for minority- and women-owned businesses,\nincluding loans to such businesses seeking to acquire or expand a\nfranchise;\n (iv) provide loan guarantees to financial institutions and make linked\ndeposits into federally and state chartered credit unions for the\npurpose of encouraging private financial institutions to make loans to\nminority- and women-owned businesses;\n (v) establish a program to create incubators to assist small and high\nrisk minority- and women-owned businesses to grow and prosper;\n (vi) promote equity investment in minority- and women-owned\nbusinesses;\n (vii) establish a comprehensive technical assistance program in\ncooperation with the department of economic development to assist\nminority- and women-owned businesses and potential minority and\nwomen-entrepreneurs;\n (viii) notwithstanding any provision of law to the contrary, establish\na minority- and women-owned business investment fund to provide critical\nfinancial support to foster the development of new and emerging ideas\nand products of minority- and women-owned business enterprises as well\nas to promote the long-term financial performance and success of early\nstage enterprises that are minority- and women-owned start-ups. The\nselection of an eligible applicant and beneficiary companies for the\nminority- and women-owned business investment fund shall be selected by\nthe process established pursuant to subdivisions two through four of\nsection sixteen-u of this act. Minority- or women-owned business\nenterprises who participate in such minority- and women-owned business\ninvestment fund under this subdivision shall not be precluded from\nqualifying for any other assistance, grant or loan made available from\nthe state; and\n (ix) provide for the refinancing of commercial or business related\ndebt or equity invested in an enterprise or project, provided that the\ncorporation determines the terms of the original debt to be\nunreasonable. The applicant must submit a written justification to the\ncorporation for each loan explaining why the current loan is not on\nreasonable terms. Unreasonable terms of debt may include but are not\nlimited to:\n (1) a demand or balloon maturity feature in the existing note;\n (2) the current maturity is not appropriate for the original purpose\nof the loan;\n (3) the existing debt being refinanced is on a revolving line or a\ncredit card;\n (4) the interest rate is deemed unreasonable by the corporation; or\n (5) the loan is over-collateralized.\n (2) Minority and women revolving loan trust fund. For the purpose of\nestablishing programs in conjunction with locally and community based\nentities to decentralize lending for small loans and loans to start up\nminority- and women-owned businesses, the corporation shall establish\nminority and women revolving loan trust fund accounts and related\nadministrative expenses trust fund accounts.\n (a) Each minority and women revolving loan trust fund account shall be\nadministered by one or more of the following types of entities that\nprovide services to community businesses and have as one of their\nprimary purposes the provision of services and assistance to minority-\nand women-owned businesses:\n (i) empire zone capital corporations established pursuant to section\nnine hundred sixty-four of the general municipal law;\n (ii) community-based local development corporations or industrial\ndevelopment agencies that serve a municipality in which an empire zone\nhas been established pursuant to article eighteen-B of the general\nmunicipal law and have as their primary purpose assistance to minority-\nand women-owned businesses located or to be located in such empire zone;\nor\n (iii) local and community development corporations, industrial\ndevelopment agencies, or other not-for-profit entities, representative\nof the community.\n (b) To be eligible to administer a minority and women revolving loan\ntrust fund account, the entity must also: (i) have staff with sufficient\nexpertise to analyze applications for financial assistance, to regularly\nmonitor financial assistance to clients, and to provide management or\ntechnical assistance to clients; and (ii) have established a loan\ncommittee composed of six or more persons experienced in business\nmanagement, commercial lending or in the operation of a for-profit\nbusiness, at least one-half of whom shall be experienced in commercial\nlending, at least one-third of whom shall be minority persons and at\nleast one-third of whom shall be women. Such loan committee shall review\nevery application, determine the feasibility of the proposed project and\nthe likelihood of repayment of the requested financing and shall\nrecommend to the governing body of the entity such action on the\napplication as the loan committee deems appropriate. The corporation\nshall identify entities eligible to administer minority and women\nrevolving loan trust fund accounts through a competitive statewide\nrequest for proposal process.\n (c) Any entity selected to administer a minority and women revolving\nloan trust fund account shall be eligible to draw funds from the account\nas needed to provide the following types of financial assistance to\nminority- and women-owned businesses upon certification to and\nacceptance by the corporation that such assistance complies with rules\nand regulations promulgated by the corporation: (i) working capital\nloans, provided that the amount of the loan does not exceed thirty-five\nthousand dollars and the term of the loan does not exceed five years;\nand (ii) loans for the acquisition and/or improvement of real property\nand for the acquisition of machinery and equipment provided that the\namount of the loan does not exceed fifty thousand dollars and the term\nof the loan does not exceed the useful life of the equipment or\nproperty.\n (d) (i) Notwithstanding any provision of law to the contrary, the\ncorporation may establish an administrative expenses trust fund account\nfor the benefit of each entity selected to administer a minority and\nwomen revolving loan trust fund account. The initial deposit of funds to\nan administrative expenses trust fund account shall be an amount\ndetermined by the corporation but shall not exceed twenty-five thousand\ndollars.\n (ii) An entity selected to administer a minority and women revolving\nloan trust fund account may use the funds in the administrative expenses\ntrust fund account for costs incurred by it in the start up and\nadministration of the financial assistance program authorized pursuant\nto this subdivision.\n (iii) The corporation shall deposit into each administrative expenses\ntrust fund account:\n (A) all income earned from the moneys on deposit in the corresponding\nminority and women revolving loan trust fund account during the first\nyear of the entity's administration of said account; and\n (B) beginning with its second year in administering a minority and\nwomen revolving loan trust fund account, said amounts may be used for\ncosts incurred by the entity in administering the minority and women\nrevolving loan trust fund account; and\n (C) repayments of interest on loans made from the corresponding\nminority and women revolving loan trust fund account.\n (iv) Funds from the administrative expenses trust fund account may be\nused for costs incurred at any time by an administering entity in its\nadministration of a minority and women revolving loan trust fund account\npursuant to this section.\n (v) Funds deposited in an administrative expenses trust fund account\nshall be disbursed by the corporation to the entity that administers the\ncorresponding minority and women revolving loan trust fund account on a\nperiodic basis and shall be expended by the entity in accordance with an\nannual budget and any updates of same, approved by the corporation.\n (e) Any entity selected to administer a minority and women revolving\nloan trust fund account shall pay to the corporation for deposit any\nrepayments received in connection with financial assistance provided\nfrom its account. Payments consisting of the repayment of the principal\namount of a loan shall be deposited by the corporation into the minority\nand women revolving loan trust fund account from which the loan was\nmade. The interest earned by the corporation from the investment of\nmoneys in each minority and women revolving loan trust fund account\nduring and after the second year of a selected entity's administration\nof said account shall be deposited by the corporation into the\ncorresponding minority and women revolving loan trust fund account and\nused to provide the financial assistance to minority- and women-owned\nbusinesses as authorized pursuant to this section.\n (f) The provisions of subdivisions eight, nine, and fourteen through\nnineteen of section sixteen-a of this act pertaining to the regional\nrevolving loan trust fund shall also be applicable to the minority and\nwomen revolving loan trust fund, provided that: where the term "regional\ncorporation" appears therein it shall be interpreted to mean an entity\nselected to administer a minority and women revolving loan trust fund\naccount, and "regional revolving loans trust fund" shall mean a minority\nand women revolving loan trust fund, and where the term "this section"\nappears therein it shall mean this section sixteen-c.\n (g) The corporation may provide funds from an appropriation for the\nminority- and women-owned business development and lending program to\nany entity selected to administer a minority and women revolving loan\ntrust fund for the purposes of recapitalizing such account and the\nentity's corresponding administrative expenses trust fund account\nfollowing an evaluation by the corporation of the entity's\nadministration and use of such accounts.\n (h) Notwithstanding any provision of law to the contrary, the\ncorporation shall establish a minority and women revolving loan trust\nfund to pay into such fund any moneys made available to the corporation\nfor such fund from any source, including moneys appropriated by the\nstate and any income earned by, or increment to, the account due to the\ninvestment thereof, or any repayment of moneys advanced from the fund.\nThe corporation shall not commingle the moneys of such fund with any\nmoneys held in trust by the corporation, except for investment purposes.\n (i) Notwithstanding any other provisions of this subdivision, where\napplicable, the corporation is authorized to enter into agreements as\nmay be necessary for the administration and reporting of funds repaid,\nreceived, expended or collected in a manner consistent with the\nprovisions in section sixteen-t of this act. The use of such funds by\nthe corporation shall be consistent with the terms, conditions and\nrestrictions set forth under this subdivision, to provide financial\nassistance to eligible businesses as defined in subdivisions three and\nfive of section two hundred ten of the economic development law.\nOutstanding expenses, loans and other obligations executed prior to the\neffective date of this paragraph shall be subject to the terms and\nconditions of the original contract or contracts.\n (i) The lending organization shall submit to the corporation annual\nreports stating: the number of program loans made; the amount of program\nfunding used for loans; the use of loan proceeds by the borrower; the\nnumber of jobs created or retained; the status of each outstanding\nprogram loan, including fund balance; and such other information as the\ncorporation may require.\n (ii) Beginning April 1, 2019, the corporation shall publish on its\nwebsite the information contained in the annual reports required under\nsubparagraph (i) of this paragraph in aggregate form omitting borrower\nidentifiable information.\n (3) Micro-loan program. (a) For the purposes of this subdivision\n"micro-loan" shall mean a loan of under seven thousand five hundred\ndollars.\n (b) The corporation shall, pursuant to requests for proposals, enter\ninto agreements for other types of locally, community or regionally\nadministered loan programs than those set forth in subdivision two of\nthis section, including micro-loan programs to be administered by local\ndevelopment corporations, local industrial development organizations,\nmunicipalities and not-for-profit organizations, to provide micro-loans\nto small and high risk minority- and women-owned businesses located\nwithin their respective service areas, provided that loan review\ncommittees are established by such administering entity, including women\nand minority persons experienced in business management, business\ndevelopment, commercial lending, entrepreneurship, or in the operation\nof a for-profit business.\n (c) Agreements entered into pursuant to paragraph (b) of this\nsubdivision shall be governed by paragraphs (d) through (h) of\nsubdivision two of this section, and minority and women revolving loan\ntrust fund accounts and administrative expenses trust fund accounts\nshall be established in a similar fashion for entities selected to\nadminister micro-loan funds pursuant to this subdivision.\n (d) Notwithstanding any other provisions of this subdivision, where\napplicable, the corporation is authorized to enter into agreements as\nmay be necessary for the administration and reporting of funds repaid,\nreceived, expended or collected in a manner consistent with the\nprovisions in section sixteen-t of this act. The use of such funds by\nthe corporation shall be consistent with the terms, conditions and\nrestrictions set forth under this subdivision, to provide financial\nassistance to eligible businesses as defined in subdivisions three and\nfive of section two hundred ten of the economic development law.\nOutstanding expenses, loans and other obligations executed prior to the\neffective date of this paragraph shall be subject to the terms and\nconditions of the original contract or contracts.\n (e)(i) The lending organization shall submit to the corporation annual\nreports stating: the number of program loans made; the amount of program\nfunding used for loans; the use of loan proceeds by the borrower; the\nnumber of jobs created or retained; the status of each outstanding\nprogram loan, including fund balance; and such other information as the\ncorporation may require.\n (ii) Beginning April 1, 2019, the corporation shall publish on its\nwebsite the information contained in the annual reports required under\nsubparagraph (i) of this paragraph in aggregate form omitting borrower\nidentifiable information.\n (4) Minority and women contracting program. For the purpose of\nestablishing a comprehensive program to assist minority and women\ncontractors, the corporation may provide loans, loan guarantees,\ntechnical assistance and bonding assistance, the corporation may enter\ninto cooperative agreements with cities, counties, municipalities,\nauthorities, agencies, federally and state chartered credit unions in\nNew York state and federally insured banking organizations and financial\ninstitutions for such purposes.\n (a) To be eligible for a contractor loan, the borrower must have\neither (i) a construction contract with, or a contract to provide goods\nor services to, a governmental entity or authority, (ii) a subcontract\non a government-sponsored construction contract, (iii) a contract or\nsubcontract on a government sponsored residential project, or (iv) a\ncontract or subcontract on a construction project previously approved by\nthe corporation pursuant to section ten of this act.\n (b) The corporation shall provide technical assistance specifically\noriented to minority and women-owned government contractors as part of\nits comprehensive technical assistance program.\n (c) The corporation is authorized to provide assistance through the\ncreation of, or assistance to, a minority and women bonding guarantee\nprogram to enable minority and women contractors and subcontractors to\nmeet payment or performance bonding requirements.\n (i) Through such program, assistance in the form of working capital\nloans and loan guarantees pursuant to subdivision six of this section\nmay also be provided to minority and women contractors and\nsubcontractors who have secured contracts by participating in the\nprogram.\n (ii) The corporation shall either establish criteria for the bonding\nguarantee program and for any required escrow funds which shall include\ndetailed provisions for eligibility; or if the corporation is providing\nassistance to a program other than one established by the corporation,\nreview and approve the criteria established for such other program.\n (5) Direct financial assistance for minority- and women-owned\nbusinesses. For the purpose of establishing a program to provide direct\nfinancial assistance to minority- and women-owned businesses, the\ncorporation is authorized to provide assistance in the form of:\n (a) Business development loans and loan guarantees pursuant to\nsubdivision six of this section to eligible enterprises for the\nacquisition or improvement of real property, machinery, equipment or\nworking capital, provided that to be eligible for a business development\nloan, the borrowers must have been in business for at least three years\nand provided that the loans must be in an amount equal to or in excess\nof fifty thousand dollars;\n (b) Franchise loans to eligible enterprises seeking to acquire or\nexpand franchises of nationally recognized corporations, provided that\ndisbursements by the corporation of such loans shall be conditioned on\nobtaining such franchises;\n (c) Equity assistance for eligible minority and women-owned\nenterprises to match equity contributions to such enterprises by\nfinancial institutions and community development equity capital funds,\nprovided, however, that such assistance shall be targeted to start-up\nand early stage enterprises in the manufacturing, retail and service\nsectors located in economically distressed areas.\n (6) Deposits and loan guarantees. For the purpose of encouraging\nprivate financial institutions to make loans to eligible enterprises\npursuant to this section for any of the eligible projects pursuant to\nsubdivisions four and five of this section, the corporation is\nauthorized to:\n (a) Make linked deposits of funds into federally and state chartered\ncredit unions in New York state, in order to encourage such\norganizations to make small loans to minority and women-owned\nbusinesses; and\n (b) Provide loan guarantees to private financial institutions for\nloans made to eligible minority- and women-owned businesses pursuant to\nthis subdivision for eligible projects, provided that the guarantee\nshall be at least fifty percent backed by funds of the corporation. Any\nsuch loan guaranteed by the corporation shall be made to borrowers that\nare approved by the corporation and substantially meet the underwriting\ncriteria the credit union or financial institution customarily applies\nto similar borrowers for similar loans supported by similar guarantees,\nand no guaranteed loan funds shall be disbursed until the corporation\nhas received, reviewed and concurred, in writing, with the\nrecommendation of the credit union or banking or financial institution\nto make a loan.\n (7) Minority and women small business incubator program. (a) The\ncorporation shall establish a minority and women small business\nincubator program for the purpose of providing financial support for the\ncreation of incubators to nurture minority and women-owned business\nenterprises with growth potential.\n (b) Under this subdivision the corporation is authorized to provide\nlow-interest loans and grants for construction financing and permanent\nfinancing of up to seventy-five percent of project costs up to a maximum\nof six hundred fifty thousand dollars per project, provided that the\ntotal amount of grant assistance provided pursuant to this paragraph\nshall not exceed twenty percent of an appropriation provided for the\npurposes of this section.\n (c) Incubator projects eligible for such assistance shall involve the\nrenovation or reconstruction of existing facilities or the acquisition\nof equipment, except that construction shall be allowable in cases in\nwhich an applicant can demonstrate to the satisfaction of the\ncorporation that an existing facility is unavailable in the area to be\nserved by the new incubator facility.\n (d) Incubator projects are not eligible to receive loans for the\npurpose of covering operating costs or supplying incubator support\nservices, except that incubators in their first eighteen months of\noperation may receive one-time grants not to exceed forty thousand\ndollars, which costs may include administrative costs of employing a\nresident administrator/advisor to the incubator, provided that the\ncorporation shall not expend a sum greater than two hundred fifty\nthousand dollars in any one state fiscal year, or so much as may be\nspecifically appropriated for this purpose.\n (e) Eligible incubator projects shall be required to demonstrate to\nthe corporation's satisfaction:\n (i) public or private support and involvement sufficient to complete\nthe renovation of existing facilities or the construction of new\nfacilities and the acquisition of equipment;\n (ii) significant community support for the project;\n (iii) the existence of prospective tenants for such incubator space;\n (iv) demand for such incubator space, which may include evidence of\nthe unavailability of suitable space for prospective tenants at\nappropriate rental or lease costs in the community in which such\nprospective tenants are located; and\n (v) the inability of the project to occur without financial assistance\nfrom the corporation.\n (f) The corporation shall establish criteria for eligibility for\nfunding for incubator projects, including but not limited to the\nfollowing:\n (i) the project must be designed to provide low-cost space and support\nservices to incubator tenants, coordination with other sources of\nassistance and flexible leasing arrangements for tenants;\n (ii) the project sponsors must provide a management plan and a\nbusiness plan for operating the incubator satisfactory to the\ncorporation; and\n (iii) the project gives preference for incubator space and assistance\nto minority- and women-owned businesses which currently receive, or have\nreceived, assistance from the corporation pursuant to this section and\nto incubator projects proposed to be located in economically distressed\nareas.\n (8) Minority- and women-owned business technical assistance program.\n(a) The corporation shall establish a comprehensive technical assistance\nprogram within the minority and women business development office, in\ncooperation with the department of economic development's division of\nminority- and women-business development established pursuant to article\nfour-A of the economic development law, to provide technical assistance\nto minority- and women-owned business enterprises and to prospective\nminority- and women-business entrepreneurs through third party service\nproviders, which assistance shall include, but not be limited to: (i)\ntechnical assistance in development and execution of business plans,\nincluding the formation of, acquisition of, management of, or\ndiversification of a minority- or women-owned business enterprise; (ii)\ntechnical assistance with applications for obtaining funds from public\nand private financing sources; (iii) technical assistance in the\ndevelopment of a working capital budget; (iv) referrals to other\nproviders of technical assistance to minority- and women-owned\nbusinesses and minority and women entrepreneurs, where appropriate,\nincluding the entrepreneurial assistance program established pursuant to\narticle nine of the economic development law; and (v) technical\nassistance through education programs directed primarily at women and\nminority entrepreneurs.\n (b) Technical assistance may be provided through direct corporate\nsupport, through grants to or contracts with service providers or\ngovernmental entities, and minority- and women-owned business\nenterprises and individuals.\n (9) Priorities. The corporation shall give priority to applications\nfor assistance pursuant to this section in which the business seeking\nsuch assistance indicates a commitment to first consider persons\neligible to participate in federal job training partnership act (P.L.\n97-300) programs.\n (10) Non-application of certain provisions. The provisions of section\nten and subdivision two of section sixteen of this act shall not apply\nto assistance or projects authorized pursuant to this section.\n (11) Rules and regulations. The corporation shall, assisted by the\ncommissioner of economic development and in consultation with the\ndepartment of economic development, promulgate rules and regulations in\naccordance with the state administrative procedure act. Such rules and\nregulations shall be consistent with the program plan required by\nsubdivision nineteen of section one hundred of the economic development\nlaw. No funds shall be disbursed under this program until such rules and\nregulations have been reviewed and approved by the corporation. All\nassistance and projects funded under this program shall be funded in\naccordance with the rules and regulations in effect on the date the\ncompleted application for such assistance shall be received by the\ncorporation.\n (12) Minority and women business development and lending account.\nNotwithstanding any provision of law to the contrary, the corporation\nshall establish within the treasury of the corporation a minority and\nwomen business development and lending account, and shall pay into such\naccount any moneys which may be made available to the corporation for\nthis purpose from any source including, but not limited to, moneys\nappropriated by the state and any repayment of principal and interest on\nloans made by the corporation pursuant to the minority- and women-owned\nbusiness development and lending program. Funds in the minority and\nwomen business development and lending account, including funds from the\nrepayment of principal and interest on loans made by the corporation,\nmay be used for any form of assistance authorized hereunder. The amounts\ndeposited in the minority and women business development and lending\naccount may not be interchanged with any other account, but may be\ncommingled with any other account for investment purposes. All loans\ndisbursed by the corporation shall be repaid into the account. The\ncorporation shall enter into a written agreement with the director of\nthe budget for repayment, to the state comptroller to the credit of the\ncapital projects fund, of all moneys in the account after a period of\ntime to be determined by the corporation and the director of the budget.\nThe corporation shall transfer to the minority and women business\ndevelopment and lending account: all moneys appropriated or\nreappropriated by New York state for the minority and women revolving\nloan trust fund that have not been committed prior to the effective date\nof the appropriation for the program in the current fiscal year, or\nbecome uncommitted subsequent to the effective date of the program's\nappropriation for the current fiscal year; and all repayments of\nprincipal and interest on loans made by the corporation which are\ncurrently on deposit in, or payable to, the minority and women business\ndevelopment and lending account.\n (13) Standardization. The corporation shall streamline the review and\napproval process for projects and wherever possible standardize all\nrelevant attendant documentation and legal documents.\n (14) Approval cycle. The corporation shall approve eligible loans or\ngrants on at least a four-month cycle and shall give priority\nconsideration to the comparative degree of economic distress within the\nareas in which the project is located. Other factors to be considered by\nthe corporation shall include the impact of the project on the\nemployment and economic condition of the community and the financial\nfeasibility of the project.\n (15) Repayment. Notwithstanding the provisions of section forty-a of\nthe state finance law and any other general or special law, no written\nagreement under this program shall require repayment at any time or on\nany terms inconsistent with the provisions of this act or the New York\nstate project finance agency act; except, however, that the corporation\nmay make grants to projects using funds appropriated for this purpose\nand that the repayment provision may not apply to such grants.\n (16) Reports. The chairman of the corporation shall submit to the\ndirector of the budget, the speaker of the assembly and the temporary\npresident of the senate an evaluation of the effectiveness of the\nprogram prepared by an entity independent of the corporation. The\ncorporation shall select the program evaluator through a request for\nproposal process. Such evaluation shall determine whether the assistance\nprovided has enhanced the economic condition of assisted companies or\ncommunities, and shall make recommendation for improvements which would\nmake the program more effective. Such evaluation shall be submitted by\nSeptember first, nineteen hundred ninety-five and September first every\ntwo years thereafter.\n