Creates a program to provide hi-tech working capital loan guarantees

Establishes a "high-technology working capital loan";

Guarantees funds, and defines a "High-technology business";

Defines "eligible business" as a high-technology business that is a resident in this state, is independently owned and operated, and employs two hundred or fewer persons on a full-time basis;

Defines "Eligible regional technology development organization" as an organization established pursuant to section 3102-d of the public authorities law;

Defines a "Loan guarantee" as the guarantee of up to eighty percent or a working capital loan made to an eligible business by a commercial bank, provided that no more than eighty thousand dollars may be guaranteed for anyone loan;

Authorizes the corporation to allocate the authority to approve loan guarantees, in an amount up to four times the amount of the monies in the fund, to regional technology development organizations, with fifty percent divided equally among the regional technology development organizations applying for and provided with such authority, and fifty percent according to a formula weighted in favor of those regional development organizations serving areas with the greatest levels of need and of high-technology economic activity as determined by the Corporation; Requires a regional technology development organization to which loan guaranty authority is allocated to have available to it staff with sufficient expertise to analyze applications for financial assistance, monitor clients, and have made arrangements to provide management or technical assistance to clients, including the ability to assist a client receiving a loan guarantee to prepare an application for a loan from a commercial bank. Each organization is also required to demonstrate that it can market the program effectively, and to establish a loan guarantee review committee composed of six or more persons experienced in commercial lending or in the operation of a for-profit, high technology business;

Permits loan guarantees to be made for projects that demonstrate a substantial likelihood of providing increases in net new permanent jobs or retaining jobs in businesses that need such financial assistance to remain viable. Loan guarantees can be approved for a working capital loans with terms of up to 5 years;

Stipulates that loan guarantees must be backed by a minimum reserve, held by the Corporation in the minority and women working capital loan A guarantee fund; Gives the regional technology development organizations final authority in determining whether or not to issue a loan guarantee;

Sets forth certain conditions which must be met in issuing guarantees; prohibits loan guarantees from being made for relocations unless specific conditions are met, and for projects that involve refinancing or for payments or distribution or loans to owners, partners or shareholders of the applicant enterprise;

Permits the regional technology development organization to charge application and loan guarantee fees;

Permits a regional technology development organization to reissue any of its loan guarantee allocation after any loan for which it initially issued a guarantee has been retired, unless its allocation has been withheld or revoked pursuant because of noncompliance with the provisions of this act, or unless the reserve that corporation is required to maintain is deemed by the corporation to be insufficient to provide adequate security for authorized and allocated loan guarantees;

Requires annual reports to be submitted to the Corporation;

Authorizes the Corporation to promulgate rules and regulations;

Requires the corporation to periodically annually audit each regional technology development organization, and authorizes it to withhold authorization to issue guarantees if it finds noncompliance with the provisions of this act; and

Requires the corporation to report to the governor and the legislature on the operations and accomplishments of the high technology working capital loan guarantee program.

Justification

Economic expansion in tomorrow's economy will flow from scientific and technological advances. Indeed, technological innovation has been at the root of nearly all job creation throughout the twentieth century and will remain the engine of economic growth in the twenty-first, leading to the creation of a broad spectrum of higher paying jobs.

Therefore, high-technology economic development must have a high priority for immediate action to set the stage for retooling our industrial base to meet the challenges of tomorrow's technology-based economy. Small businesses traditionally have had difficulty in gaining access to capital markets and which are severely hampered in their expansion activities by their diminished access to capital. New and innovative approaches to financing such companies would serve the economic well-being of the State. The State has already sought to decentralize economic development programs that seek to reach out to the many thousands of small businesses throughout New York through such mechanisms as the Regional Revolving Loan Funds and other similar programs operated by the State which enlist the hands-on expertise of the local economic development communities. These have proven to be much better able to serve small, local businesses than centralized state programs.

However, when direct lending authority is decentralized, the corporation must provide the full amount of the loans authorized. Under this loan guaranty bill, only twenty-five percent of the full loan authority must be appropriated, and that twenty-five percent will not necessarily be used.

Finally, this program differs from state-sponsored direct loan programs by enlisting the expertise of the private sector, in this case the commercial banks, which have final approval of any loans. PRIOR LEGISLATIVE HISTORY : 2005-06: A.1346 - Passed Assembly 2007-08: A.236 - Passed Assembly

Fiscal implications

To be determined.

Effective date

Immediately.