1. The Laws of New York
  2. Unconsolidated Laws
  3. Urban Development Corporation Act 174/68


Section 16-K Capital access program

Urban Development Corporation Act 174/68 (UDA)

1. Definitions. For the purposes of this section:

  (a) "Financial institution", means any bank, trust company, savings bank, savings and loan association or cooperative bank chartered by the state or any national banking association, federal savings and loan association or federal savings bank or any community development financial institution or community-based lending organization; provided, however, that the financial institution has its principal office located in the state.

  (b) "Participating financial institution" shall mean any financial institution participating in the program established by this section.

  (c) "Small business" shall have the same meaning as set forth in section 131 of the economic development law, whose primary place of business is in New York state.

  2. (a) The corporation, or its agent, shall establish a capital access program to provide a loan loss reserve to assist small businesses that otherwise find it difficult to obtain regular bank financing.

  (b)(i) Assistance under the capital access program shall be provided for a capital access program under which the corporation or its agent shall be authorized to assist small businesses that otherwise find it difficult to obtain regular or sufficient bank financing. Such assistance shall take the form of deposits by the corporation or its agent in the reserve funds in participating financial institutions to fund loan loss reserves for loans made to such small businesses.

  (ii) Any financial institution desiring to become a participating financial institution shall execute an agreement in such form as the corporation or its agent may prescribe, which agreement shall contain the terms and provisions set forth in paragraph (c) of this subdivision and such other terms and provisions as the corporation or its agent may deem necessary or appropriate.

  (c) A participating financial institution originating a loan to a small business pursuant to this section shall:

  (i) provide a plan to the corporation or its agent for the marketing of the capital access program to small businesses, including those in highly distressed areas and to minority- and women-owned businesses, with appropriate lending objectives identified by the financial institution for such areas and businesses;

  (ii) disperse funds for the purposes of expansion, facility/technology upgrading, start-up and working capital;

  (iii) not disperse funds which exceed an amount greater than five hundred thousand dollars;

  (iv) set aside an amount, specified or agreed to by the corporation or its agent, from both the participating financial organization and the small business, not less than three percent nor more than seven percent of the principal amount of the loan, whereby the amount contributed by the small business does not exceed fifty percent of the total amount contributed by the small business and the financial institution, into a loan loss reserve which the institution shall maintain, applicable to all such loans by said institution to small businesses pursuant to this section; and

  (v) certify to the corporation or its agent in such a fashion and with such supporting information as the corporation or its agent shall prescribe, that it has made such loan and has set aside its contribution and the contribution of the small business.

  (d) The corporation or its agent shall after such certification as provided in subparagraph (v) of paragraph (c) of this subdivision, transfer to the participating financial institution an amount equal to the total of the contributions of the participating financial institution and the small business or such additional amount up to one hundred fifty percent of such contributions as determined by the corporation or its agent. The participating financial institution shall set aside such amount so received into said loan loss reserve.

  (e) In the event the participating financial institution suffers a loss on any such loan, it may in its discretion draw upon the funds in such loan loss reserve to repay the loan in whole or in part.

  (f) All amounts set aside by the participating financial institution into said loan loss reserve shall be in an account at said institution.

  (g) Earnings or interest from the principal of said loan loss reserve accounts shall be:

  (i) maintained in the account and held as additional loan loss reserves; and

  (ii) available to the corporation or its agent at any time and from time to time, to be used to defray the costs of administering the program or to replenish the loan loss reserve account of the corporation or its agent.

  (h) The corporation shall assure adequate geographic distribution of participating financial institutions throughout the state to the extent feasible.

  3. Administration of the capital access program. (a) The corporation is hereby authorized to do the following:

  (i) enter into a contract with a third party financial institution, which may be the New York business development corporation, established under section 210 of the banking law, to act as the agent of the corporation with respect to the administration of the program, provided that the selection of a third party other than the New York business development corporation shall be made pursuant to a competitive process;

  (ii) conduct an annual review and assessment of the performance of the third party in its capacity as agent for the corporation to determine whether the contract referenced in subparagraph (i) of this paragraph should be renewed for an additional two year period. The review shall be based on whether the third party agent has satisfactorily met the terms and conditions of the contract;

  (iii) where an initial determination finds that the third party agent's performance is unsatisfactory, allow the third party agent the opportunity to take corrective action;

  (iv) where a final review of the third party agent's performance continues to conclude that the third party agent's performance is unsatisfactory, submit to the speaker of the assembly and the temporary president of the senate its recommendation to terminate the contract with the third party agent and transfer the contract to another agent; and

  (v) promulgate rules and regulations with respect to the implementation of the capital access program established by this section and any other rules and regulations necessary to fulfill the purposes of this section, in accordance with the state administrative procedure act, and which shall be consistent with the program plan required by subdivision 19 of section 100 of the economic development law.

  (b) Any contract entered into pursuant to subparagraph (i) of paragraph (a) of this subdivision shall:

  (i) be for a period of two years and shall be renewed for an additional two year period subject to requirements of subparagraph (ii) of paragraph (a) of this subdivision; and

  (ii) provide for compensation for expenses incurred by the third party agent in connection with its services as agent and for such other services as the corporation may deem appropriate including, but not limited to the use of the premises, personnel and personal property of the third party agent.