BILL NUMBER:S4828

TITLE OF BILL:  An act to amend the New York state urban development
corporation act, in relation to the small business revolving loan fund
program

1. Purpose of Bill:  This bill would reallocate to the Small Business
Revolving Loan Fund program monies from: (a) the Minority and Women
Revolving Loan Trust Fund of the Minority- and Woman-owned Business
Development Program; (b) the Micro Enterprises Revolving Loan Trust
Fund of the Micro-loan program of the Minority- and Woman-owned
Business Development Program; (c) the Urban and Community Commercial
Revitalization Revolving Loan and Loan Guarantee Fund of the Urban and
Community Development Program; and (d) the Regional Revolving Loan
Fund Program, in order to allow more expeditious and efficient
deployment of these monies while preserving and strengthening the
economic development goals for the Small Business Revolving Loan Fund
and of the programs from which the monies are reallocated.

2. Summary of Provisions:

Section 1 of the bill amends Urban Development Corporation Act section
16-t, that established the Small Business Revolving loan Trust Fund
program, in order to add to that section a new subdivision 17 that,
among other things, reallocates to that program monies from: (a) the
Minority and Women Revolving Loan Trust Fund of the Minority- and
              

Woman-owned Business Development Program; (b) the Micro Enterprises
Revolving Loan Trust Fund of the Micro-loan program of the Minority-
and Woman-owned Business Development Program; (c) the Urban and
Community Commercial Revitalization Revolving Loan and Loan Guarantee
Fund of the Urban and Community Development Program; and (d) the
Regional Revolving Loan Fund Program, in order to allow more
expeditious and efficient deployment of these monies while preserving
and strengthening the economic development goal of the programs from
which the monies are reallocated. At least 50 % of the reallocated
funds must be utilized for loans to minority-owned business
enterprises and women-owned enterprises as those terms are defined
respectively in subdivision three and five of section 210 of the
Economic Development Law.

Subpart (a), of subdivision 17, requires that monies reallocated from
the Minority and Women Revolving Loan Trust Fund must be used with
respect to loans made to minority-owned business enterprises and
women-owned enterprises as those terms are defined respectively in
subdivision three and five of section 210 of the Economic Development
Law.

Subpart (b), of subdivision 17, requires that monies reallocated from
the Microenterprises Revolving Loan Trust Fund must be used with
respect to loans made to minority-owned business enterprises and
women-owned enterprises as those terms are defined respectively in
subdivision three and five of section 210 of the Economic Development
Law and that the amount of each such loan shall be equal to or less
than $7,000.

Subpart (c), of Subdivision 17, requires that monies reallocated from
the Commercial District Revolving Loan Trust Fund shall be used for


loans to retails businesses within a commercial district (i.e., a
business district or central business district or commercial strip as
defined in Urban Development Corporation Act section 16-d(1)(b) and
(c)).

Subpart (d), of Subdivision 17, requires that monies reallocated from
the Regional Revolving Loan Trust Fund to the extent feasible so that
eligible borrowers in all regions of the State will have access to
loans funded with the reallocated funds.

Subpart (e), of subdivision 17, allows the corporation to authorize a
lending organization to use the reallocated monies that in order to
fund up to 100% of each loan made with reallocated funds.

Subpart (f), of subdivision 17, allows organizations currently
participating in the Minority and Women Revolving Loan Trust Fund, the
Micro Enterprises Revolving Loan Trust Fund, the Urban and Community
Commercial Revitalization Revolving Loan and Loan Guarantee Fund,
Regional Revolving Loan Fund Program, or the Small Business Revolving
Loan Fund to receive the reallocated funds without participating in an
new competitive solicitation.

Subpart (g), of subdivision 17, applies all provisions of section 16-t
to the reallocated funds, subject to the provisions of subdivision 17.

3. Existing Law:  The Minority and Women Revolving Loan Trust Fund,
the Micro Enterprises Revolving Loan Trust Fund, the Urban and
Community Commercial Revitalization Revolving Loan and Loan Guarantee
Fund, the Regional Revolving Loan Fund Program, and the Small Business
Revolving Loan Fund serve as means for the State to promote and
encourage the growth of small businesses in New York.

4. Prior Legislative History:  S4359/A6916 - Introduced in 2013 and
2014. Passed Senate in 2013.

5. Justification:  The current statutory language of the Minority- and
Woman-owned Business Development Program, Urban and Community
Development Program; and the Regional Revolving Loan Fund Program,
which was approved over a number of years does not contain uniform
administrative provisions and inhibit expeditious and efficient
disbursement of loan funds to eligible lending institutions and
borrowers. The proposed consolidation of loan components of these
programs under the Small Business Revolving Loan Fund will: (i) allow
uniform, expeditious, and efficient administration of the
corporation's disbursement to eligible lending organization and the
making of loans by such organizations to their program eligible
borrowers; and (ii) preserve the economic development goals of each
program.

The success of the Small Business Revolving Loan fund is in stark
contrast to the declining performance of the trust fund lending
programs. Largely due to accessibility of other lending capital,
inflexible term guidelines, burdensome administrative requirements and
limited financial risk for lenders, the trust fund lending program
output has steadily declined. Only a handful of loans close every year
and there is over $6 million in unutilized funds available. Write-off
rates for the trust funds have been much higher than industry


standards. Reallocating funds to the Small Business Revolving Loan
Fund would alleviate these challenges.

Minority-owned business enterprises and woman-owned business
enterprises will continue to be the only eligible borrowers for all
monies reallocated from the Minority- and Woman-owned Business
Development Loan Program and at least 50% of monies reallocated from
the trust funds in aggregate must go to Minority- and Woman-owned
businesses, which would exceed historical rates. Lending organizations
will be allowed to fully fund loans with the reallocated monies, which
will allow for more expeditious and aggressive lending to small
businesses by lending organizations.

6. Fiscal Implications:  There would be no additional cost to the
State.

7. Effective Date: Immediately.