S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10208
 
                           I N  A S S E M B L Y
 
                              March 24, 2020
                                ___________
 
 Introduced by M. of A. BUCHWALD -- read once and referred to the Commit-
   tee on Banks
 
 AN  ACT in relation to establishing the coronavirus pandemic small busi-
   ness and not-for-profit organization loan program
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. Definitions. As used in this act, the following terms shall
 have the following meanings:
   (a)  "Affected  business  or  organization"  means and includes both a
 small business and a small not-for-profit  organization  located  within
 this state during the coronavirus pandemic;
   (b)  "Bank"  means  a bank as such term is defined in subdivision 1 of
 section 2 of the banking law;
   (c) "Credit union" means a credit union as such  term  is  defined  in
 subdivision 9 of section 2 of the banking law;
   (d) "Department" means the department of financial services;
   (e) "Eligible financial institution" means a bank or credit union that
 has a physical presence in this state and is in good standing;
   (f)  "Grace  period" means the ninety-day period after the coronavirus
 pandemic is over;
   (g) "Small business" means a business with not more than  one  hundred
 employees  that has experienced a loss in sales of 25 percent or more as
 a result of the coronavirus pandemic;
   (h) "Small not-for-profit organization" means a not-for-profit  organ-
 ization with not more than one hundred employees; and
   (i)  "Coronavirus  pandemic" means the period of time during which the
 presence of coronavirus disease 2019 in this state exists in significant
 enough numbers for which the threat of the spread  of  such  disease  is
 considered a pandemic.
   §  2. Coronavirus pandemic small business and not-for-profit organiza-
 tion loan program. (a) The department  shall  administer  a  coronavirus
 pandemic small business and not-for-profit loan program to guarantee the
 repayment  of  loans  made  by  an  eligible financial institution to an
 eligible  affected  business  or  organization  pursuant  to  this  act.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD15943-03-0

 A. 10208                            2
 
 Subject to the cessation of new claim approvals under subdivision (d) of
 section  five  of  this  act,  the  department shall submit all approved
 claims to the comptroller, who shall pay from the general fund  any  and
 all claims submitted by the department.
   (b)  Any  bank  or credit union may apply to the department to partic-
 ipate in the loan guarantee program. Not later  than  one  business  day
 after  receiving the application, the department shall determine whether
 the financial institution is an eligible financial institution and imme-
 diately notify the bank or  credit  union  of  such  determination.  Any
 eligible financial institution may make loans to affected businesses and
 organizations in accordance with this act.
   (c)  Each eligible financial institution that makes a loan pursuant to
 this act, shall notify the department in  writing  not  later  than  one
 business  day  after  making the loan, specifying such information about
 the borrower as the department may request.
   § 3. Loan eligibility. An eligible financial institution  may  make  a
 loan to an affected business or organization, provided:
   (a) The affected business or organization has provided to the eligible
 financial  institution  proof satisfactory to such institution that such
 affected business or organization is an affected business  or  organiza-
 tion located within the state of New York.
   (b)  The  amount  of  the  loan shall not exceed seventy-five thousand
 dollars.
   (c) The loan is made in accordance with the eligible financial  insti-
 tution's  underwriting  policy  and standards, provided further that the
 affected business or organization's  creditworthiness  shall  not  be  a
 factor used for the purposes of determining eligibility.
   (d)  The  loan  agreement  shall  not (i) require repayment during the
 grace period, or (ii) charge interest on the principal amount before  or
 during  the  grace period or for one hundred eighty days after the grace
 period, provided after such one hundred eighty-day period, the  eligible
 financial  institution  may  charge  interest or fees in accordance with
 such financial institution's lending policy and the terms of the  under-
 lying loan agreement.
   (e)  The  loan  agreement  shall require that the affected business or
 organization repay the loan in full not later than  one  hundred  eighty
 days  after the end of the grace period by making at least three, and no
 more than six, equal installment payments. The loan agreement shall  not
 contain  a  fee  or  penalty  for the prepayment or early payment of the
 loan.
   (f) The eligible financial institution shall offer  credit  counseling
 services  or  refer  such affected business or organization to nonprofit
 credit counselors.
   § 4. Additional loans. An affected business or  organization  who  has
 received  a  loan  pursuant  to  this act may apply to the same eligible
 financial institution for an additional loan for each thirty-day  period
 such  small  business or not-for-profit organization remains an affected
 business or organization, provided no affected business or  organization
 may  receive  more  than  three loans under the program. Each additional
 loan shall be made in accordance with section three of this  act.    The
 total  amount of all loans received by an affected business or organiza-
 tion shall not exceed seventy-five thousand dollars.
   § 5. Collection of loans. (a) On and after  one  hundred  eighty  days
 from the end of the grace period, an eligible financial institution that
 has made a good-faith effort to collect the outstanding principal from a
 loan  issued pursuant to this act may make a claim to the department for

 A. 10208                            3
 
 recovery of an amount equal to the outstanding principal for such  loan.
 Prior  to the department's approving and submitting a claim to the comp-
 troller, such eligible financial institution shall  demonstrate  to  the
 satisfaction  of  the department that the eligible financial institution
 has made a good-faith effort to collect the outstanding  principal  from
 the  eligible  small business or not-for-profit organization employee in
 accordance  with  such  financial  institution's  loan   servicing   and
 collection policies. Upon payment of a claim, the loan shall be assigned
 to  the  state,  and  the  department  shall  have the right to continue
 collection efforts on the loan.
   (b) The department shall maintain records in  the  regular  course  of
 administration  of  the  loan  guarantee  program, including a record of
 loans issued and of payments made to honor loan guarantees issued  under
 this  act.  The department shall regularly review such records to deter-
 mine total loans issued and identify duplicative applications.
   (c) The department may terminate any loan guarantee  if  the  eligible
 financial  institution  misrepresents  any information pertaining to the
 guarantee or fails to comply  with  any  requirements  of  this  act  in
 connection with the guarantee of the underlying loan.
   (d) If the amounts expended to honor loan guarantees under the program
 exceed  ten  percent  of  total loans issued, the department shall imme-
 diately cease to approve claims and shall  notify  the  comptroller  and
 each eligible financial institution of the total amount of payments made
 and that the department has ceased honoring loan guarantees.
   (e)  Any  interest  deferred  or  not charged related to a loan issued
 pursuant to this act shall be exempt from all state taxes  that  may  be
 applicable  to such interest amounts as they relate to an affected busi-
 ness or organization.  Eligible financial institutions shall disclose to
 affected business or organization borrowers in the signed  affidavit  or
 loan documents that there may be federal tax consequences to the program
 loans.
   (f)  No  new  loan  applications  shall be submitted under the program
 after the coronavirus pandemic ends. The program shall expire  upon  the
 repayment  of  all  loans  made  under the program and, for all loans in
 default, the repayment of claims made under the program, or  the  cessa-
 tion of new claim approvals under subdivision (d) of this section.
   § 6. This act shall take effect immediately.