S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10924
 
                           I N  A S S E M B L Y
 
                              August 17, 2020
                                ___________
 
 Introduced  by COMMITTEE ON RULES -- (at request of M. of A. Dickens) --
   read once and referred to the Committee on Small Business
 
 AN ACT establishing the New York state small business protection program
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Legislative findings. a. In April 2020, the Federal Govern-
 ment  enacted  two Coronavirus Aid, Relief and Economic Security (CARES)
 Act stimulus  packages  where  it  introduced  the  Paycheck  Protection
 Program  (PPP) totaling $659 billion dollars to financially assist small
 businesses, and to prevent the loss of jobs and  the  failure  of  small
 businesses due to financial losses caused by the COVID-19 pandemic.
   b.  Many  local  small  businesses including minority- and women-owned
 businesses (MWBEs) in our state did  not  receive  any  federal  funding
 under  the  federal PPP in either of the two rounds of funding. In fact,
 most of the first round of funding  totaling  $349  billion,  which  was
 exhausted in 2 weeks, went to large publicly traded businesses.
   c. According to a report issued by the Federal Small Business Adminis-
 tration  Inspector  General, the Small Business Administration (SBA) was
 faulted in administering the PPP, in that the SBA did not  issue  guide-
 lines  for  banks  to  prioritize businesses in rural markets, companies
 that have only been in business for two years  or  less,  or  businesses
 owned  by  veterans,  minorities,  women  and economically disadvantaged
 individuals. Moreover, the PPP application did not  include  demographic
 information making it difficult or near impossible to determine how much
 money went into the markets.
   d.  As  New  York state is reopening regionally post COVID-19, many of
 our small businesses, including MWBEs and farmers who  did  not  receive
 any  PPP  funding  are in desperate need of funding to employ and/or pay
 staff, purchase inventory, and pay rent and utilities.
   § 2. Establishment.  Notwithstanding  any  provision  of  law  to  the
 contrary,  the  legislature  shall  authorize the establishment of a New
 York State Small Business Protection Program (NYSSBPP) to be  funded  in
 the  amount of 100 million dollars from future federal stimulus funding.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD16401-04-0

 A. 10924                            2
 
 Such funding shall reimburse any moneys used from any  state  funds  for
 the purposes described under sections four or five of this act.
   §  3. Eligibility. Entities shall be eligible for the NYSSBPP provided
 such entity has less than 100 employees per location,  did  not  receive
 any  federal funding from the Federal CARES Act, was in existence in New
 York state by the first day the  state  disaster  emergency  related  to
 COVID-19 was declared by the governor, can document actual economic harm
 or  revenue  shortfall as a direct result of the pandemic, and has filed
 2018 or 2019 tax returns. The lending priority shall be as follows:
   a. small businesses,  including  minority-  and  women-owned  business
 enterprises,  owned  by veterans, minorities, women, economically disad-
 vantaged individuals and farmers;
   b. businesses in the restaurant, luxury service,  retail,  transporta-
 tion, hospitality and farming industries;
   c.  small businesses located in economically distressed or underserved
 communities and rural markets;
   d. non-profit organizations having tax  exempt  status  under  section
 501(c)(3),  or  a  veterans  organization having tax exempt status under
 section 501(c)(19) of the United States Internal Revenue Code;
   e.  sole  proprietors,  independent  contractors,  and   self-employed
 persons;
   f. small businesses that have been in existence for two years or less;
 and
   g.  new  businesses  formed  or  incorporated within 30 days after the
 expiration of the state of emergencies or the region of the state  where
 the business is located has reopened post COVID-19.
   §  4.  Loan details and forgiveness. a. All eligible entities pursuant
 to section three of this act, shall submit an application through commu-
 nity development financial  institutions  (CDFIs),  minority  depository
 institutions  (MDIs),  local  community  banks  or credit unions located
 within the  state.  No  applications  shall  be  processed  through  any
 merchant cash advance or any financial technology companies. All lending
 institutions  in  this  program shall collect and provide data about the
 borrowers' demographics and loan amount.
   b. The loan amount shall equal 60% of the prior year eligible expenses
 not to exceed $100,000.00.
   c. Such loan shall be forgiven if funds are used for payroll  or  1099
 employees, interest on mortgages, rent, utilities and inventory.
   d.  Purchases  of new equipment are permissible under this program but
 such loan will not be forgiven as a grant.
   e. All loan payments shall be deferred for  6  months,  which  can  be
 deferred  for  an  additional 6 months but not to exceed 1 year from the
 date of the loan.
   f. No collateral or personal  guarantees  are  required.  Neither  the
 government  nor  financial institutions shall charge qualifying entities
 any fees.
   g. Forgiveness is based on the qualifying small  business  maintaining
 or quickly rehiring employees and maintaining salary levels. Forgiveness
 will  be  reduced  if  full-time  headcount declines, or if salaries and
 wages decrease within 12 weeks of receiving such  funding.  The  12-week
 rule  shall  not  apply to any entity if such entity paid its employees'
 salaries during the COVID-19 state of disaster emergencies or when  such
 entity  was  closed.  Documented  proof of such payroll payment shall be
 required.

 A. 10924                            3
 
   h. All loans not forgiven under subdivision b of  this  section  shall
 have  a maturity of 2 years and an interest rate of 1% or 3 years of the
 loan payments have been deferred.
   i. The department of financial services shall have oversight and moni-
 tor  the  application  process pursuant to this section. Such department
 shall create the application and  promulgate  rules  necessary  for  the
 administration of this program.
   §  5.  Grants.  The  NYSSBPP shall provide the following grants to all
 qualified small businesses,  not-for-profits  and  charitable  organiza-
 tions:
   a.  A  rent  reimbursement  grant to reimburse qualifying entities for
 rent paid during the COVID-19 pandemic, provided such entity  has  docu-
 mentary  proof of such paid rent. This rent reimbursement grant shall be
 capped at 3 months of paid rent during the state of emergencies;
   b. A grant to reimburse qualifying entities for  perishable  inventory
 purchased  before  the  COVID-19  state  of  disaster emergency that was
 thrown out due to the forced shut down of such entity and/or to  replace
 food inventory to help such entity reopen; and
   c. A grant subsidy for farmers to pay for gas and tolls to deliver the
 products throughout the state.
   §  6.  Oversight.  The  state comptroller shall monitor the NYSSBPP to
 ensure the provisions of this act are properly executed. The state comp-
 troller shall submit a report on  such  program  to  the  governor,  the
 temporary  president  of the senate and the speaker of the assembly, and
 shall post such on  the  comptroller's  website  on  a  quarterly  basis
 describing any loans granted under such program.
   § 7. This act shall take effect immediately.