Relates to financial assistance to small businesses for the purpose of environmental compliance and pollution prevention

Section 2 would establish the Small Business Clean Environment Fund within the New York State Environmental Facilities Corporation (EFC), to assist small businesses in leveraging loans from private lenders to achieve pollution prevention and/or comply with federal or state environmental laws, The EFC would administer a loan loss reserve to support private sector loans to small businesses seeking to achieve pollution prevention and/or comply with federal or state environmental laws. The fund would back up to ninety percent of a loan, with the size of the loan capped at $500,000 and a maximum term of seven years.

The fund would be capitalized through appropriations, any bonds issued by EFC for the fund, and a loan origination fee paid by small businesses at the closing of a loan. The EFC would enter into agreements with financial institutions in each economic development region of the State. Loan decisions would be made solely by the financial institution, with applications pre-approved by EFC.

Preferences for assistance would be extended to certified businesses in economic development zones and highly distressed areas and to minority-owned or women-owned business enterprises,

Section 3 would allow the Small Business Clean Environment Fund to be an authorized expenditure of the UDC Strategic Resurgence Fund order that such fund be initially capitalized. Section 4 provides for the effective date.

Justification

Recent amendments to federal and state environmental laws, including the federal Clean Air Act of 1990 and State Clean Air Compliance Act of 1993, have imposed considerable new burdens on many small businesses across New York State. As a result of these new regulatory activities, many small firms must now invest in changes in production methods or equipment at a time when access to capital for small businesses is generally difficult.

Both private and public sources of financing have historically avoided small business lending because of the relatively higher risks and administrative costs of those loans. This bill would build upon existing relationships between the small business and the financial institution and involve the expenditure of State funds only in the event of default on the loan, The fund would not only assist small businesses and New York State in achieving compliance with environmental law, but would also assist many businesses in developing better credit relationships with private lenders.

This bill explicitly fosters investment in pollution prevention activities,since such activities are the most effective way to achieve compliance and enhance environmental performance. Often, pollution prevention projects undertaken in an effort to comply with environmental laws take a company beyond compliance, reducing or eliminating the discharge of pollutants into the environment and saving the company beyond compliance, reducing or eliminating the discharge of pollutants into the environment and saving the company considerable money through increased efficiency and productivity, and reduced waste treatment, storage, transportation disposal and liability costs. For these reasons, the bill would enhance access to capital for smalls businesses seeking to pursue pollution prevention, even when compliance is not an immediate issue.

Prior legislative history

2008: A.1062 - Passed Assembly; Died in Senate Rules Committee 2007: A.1062 - Referred to Assembly Small Business Committee 2006: A.2657-A - Passed Assembly; Died in Senate 2005: A.2657 - Passed Assembly; Died in Senate 2004: A.1382-A - Passed Assembly; Died in Senate 2003: A.1382 - Referred to Assembly Small Business Committee

Fiscal implications

Approximately $6 million would be required to capitalize the funds authorized by this bill, available from existing appropriations and re-appropriations to the UDC Strategic Resurgence Fund.

Effective date

One hundred and eighty days after enactment; provided, however, that effective immediately, the addition, amendment and/or repeal of any rules or regulations necessary for the implementation of this act on its effective date are authorized and directed to be made and completed on or before such date.