§ 16-K — Capital access program

§ 16-k. Capital access program. 1. Definitions. For the purposes of\nthis section:\n (a) "Financial institution", means any bank, trust company, savings\nbank, savings and loan association or cooperative bank chartered by the\nstate or any national banking association, federal savings and loan\nassociation or federal savings bank or any community development\nfinancial institution or community-based lending organization; provided,\nhowever, that the financial institution has its principal office located\nin the state.\n (b) "Participating financial institution" shall mean any financial\ninstitution participating in the program established by this section.\n (c) "Small business" shall have the same meaning as set forth in\nsection 131 of the economic development law, whose primary place of\nbusiness is in New York state.\n 2. (a) The corporation, or its agent, shall establish a capital access\nprogram to provide a loan loss reserve to assist small businesses that\notherwise find it difficult to obtain regular bank financing.\n (b)(i) Assistance under the capital access program shall be provided\nfor a capital access program under which the corporation or its agent\nshall be authorized to assist small businesses that otherwise find it\ndifficult to obtain regular or sufficient bank financing. Such\nassistance shall take the form of deposits by the corporation or its\nagent in the reserve funds in participating financial institutions to\nfund loan loss reserves for loans made to such small businesses.\n (ii) Any financial institution desiring to become a participating\nfinancial institution shall execute an agreement in such form as the\ncorporation or its agent may prescribe, which agreement shall contain\nthe terms and provisions set forth in paragraph (c) of this subdivision\nand such other terms and provisions as the corporation or its agent may\ndeem necessary or appropriate.\n (c) A participating financial institution originating a loan to a\nsmall business pursuant to this section shall:\n (i) provide a plan to the corporation or its agent for the marketing\nof the capital access program to small businesses, including those in\nhighly distressed areas and to minority- and women-owned businesses,\nwith appropriate lending objectives identified by the financial\ninstitution for such areas and businesses;\n (ii) disperse funds for the purposes of expansion, facility/technology\nupgrading, start-up and working capital;\n (iii) not disperse funds which exceed an amount greater than five\nhundred thousand dollars;\n (iv) set aside an amount, specified or agreed to by the corporation or\nits agent, from both the participating financial organization and the\nsmall business, not less than three percent nor more than seven percent\nof the principal amount of the loan, whereby the amount contributed by\nthe small business does not exceed fifty percent of the total amount\ncontributed by the small business and the financial institution, into a\nloan loss reserve which the institution shall maintain, applicable to\nall such loans by said institution to small businesses pursuant to this\nsection; and\n (v) certify to the corporation or its agent in such a fashion and with\nsuch supporting information as the corporation or its agent shall\nprescribe, that it has made such loan and has set aside its contribution\nand the contribution of the small business.\n (d) The corporation or its agent shall after such certification as\nprovided in subparagraph (v) of paragraph (c) of this subdivision,\ntransfer to the participating financial institution an amount equal to\nthe total of the contributions of the participating financial\ninstitution and the small business or such additional amount up to one\nhundred fifty percent of such contributions as determined by the\ncorporation or its agent. The participating financial institution shall\nset aside such amount so received into said loan loss reserve.\n (e) In the event the participating financial institution suffers a\nloss on any such loan, it may in its discretion draw upon the funds in\nsuch loan loss reserve to repay the loan in whole or in part.\n (f) All amounts set aside by the participating financial institution\ninto said loan loss reserve shall be in an account at said institution.\n (g) Earnings or interest from the principal of said loan loss reserve\naccounts shall be:\n (i) maintained in the account and held as additional loan loss\nreserves; and\n (ii) available to the corporation or its agent at any time and from\ntime to time, to be used to defray the costs of administering the\nprogram or to replenish the loan loss reserve account of the corporation\nor its agent.\n (h) The corporation shall assure adequate geographic distribution of\nparticipating financial institutions throughout the state to the extent\nfeasible.\n 3. Administration of the capital access program. (a) The corporation\nis hereby authorized to do the following:\n (i) enter into a contract with a third party financial institution,\nwhich may be the New York business development corporation, established\nunder section 210 of the banking law, to act as the agent of the\ncorporation with respect to the administration of the program, provided\nthat the selection of a third party other than the New York business\ndevelopment corporation shall be made pursuant to a competitive process;\n (ii) conduct an annual review and assessment of the performance of the\nthird party in its capacity as agent for the corporation to determine\nwhether the contract referenced in subparagraph (i) of this paragraph\nshould be renewed for an additional two year period. The review shall be\nbased on whether the third party agent has satisfactorily met the terms\nand conditions of the contract;\n (iii) where an initial determination finds that the third party\nagent's performance is unsatisfactory, allow the third party agent the\nopportunity to take corrective action;\n (iv) where a final review of the third party agent's performance\ncontinues to conclude that the third party agent's performance is\nunsatisfactory, submit to the speaker of the assembly and the temporary\npresident of the senate its recommendation to terminate the contract\nwith the third party agent and transfer the contract to another agent;\nand\n (v) promulgate rules and regulations with respect to the\nimplementation of the capital access program established by this section\nand any other rules and regulations necessary to fulfill the purposes of\nthis section, in accordance with the state administrative procedure act,\nand which shall be consistent with the program plan required by\nsubdivision 19 of section 100 of the economic development law.\n (b) Any contract entered into pursuant to subparagraph (i) of\nparagraph (a) of this subdivision shall:\n (i) be for a period of two years and shall be renewed for an\nadditional two year period subject to requirements of subparagraph (ii)\nof paragraph (a) of this subdivision;\n (ii) provide for compensation for expenses incurred by the third party\nagent in connection with its services as agent and for such other\nservices as the New York business development corporation may deem\nappropriate including, but not limited to the use of the premises,\npersonnel and personal property of the third party agent; and\n (iii) notwithstanding any law, rule or regulation to the contrary, use\nthe guidelines, related to, but not limited to underwriting standards\nprovided for in subdivision four of this section to evaluate\napplications for loans pursuant to the program filed by a minority and\nwomen-owned business enterprises, or a small business whose principal\nplace of business is in a highly distressed area.\n (c) The corporation, and any third party it contracts with pursuant to\nparagraph (a) of this subdivision, shall collaborate, to the extent\npracticable, to increase minority and women-owned businesses' and small\nbusinesses' whose principal place of business is in a highly distressed\narea, awareness of, participation in, and referrals to the capital\naccess loan program.\n 4. Notwithstanding any law, rule or regulation to the contrary, the\ndepartment of financial services, the empire state development\ncorporation and the New York business development corporation, in\nconsultation with relevant stakeholders, shall jointly establish\nguidelines relating to, but not limited to, underwriting standards to\nassist minority and women-owned business enterprises and small\nbusinesses in highly distressed areas in accessing and participating in\nthe capital access program. In addition to other factors, such\nguidelines should incorporate verifiable alternative indications and\nbest practices of creditworthiness presented or made available by the\napplicant.\n 5. Pursuant to subparagraph (v) of paragraph (b) of subdivision 1 of\nsection 212 of the banking law, the New York business development\ncorporation and the empire state development corporation shall enter\ninto an agreement pursuant to which the New York business development\ncorporation shall authorize, maintain and administer the program\nestablished in such subparagraph.\n