Relates to the small business revolving loan fund program

2. Summary of Provisions:

Section 1 of the bill amends Urban Development Corporation Act section 16-t, that established the Small Business Revolving loan Trust Fund program, in order to add to that section a new subdivision 17 that, among other things, reallocates to that program monies from: (a) the Minority and Women Revolving Loan Trust Fund of the Minority- and Woman-owned Business Development Program; (b) the Micro Enterprises Revolving Loan Trust Fund of the Micro-loan program of the Minority- and Woman-owned Business Development Program; (c) the Urban and Community Commercial Revitalization Revolving Loan and Loan Guarantee Fund of the Urban and Community Development Program; and (d) the Regional Revolving Loan Fund Program, in order to allow more expeditious and efficient deployment of these monies while preserving and strengthening the economic development goal of the programs from which the monies are reallocated. At least 50 % of the reallocated funds must be utilized for loans to minority-owned business enterprises and women-owned enterprises as those terms are defined respectively in subdivision three and five of section 210 of the Economic Development Law.

Subpart (a), of subdivision 17, requires that monies reallocated from the Minority and Women Revolving Loan Trust Fund must be used with respect to loans made to minority-owned business enterprises and women-owned enterprises as those terms are defined respectively in subdivision three and five of section 210 of the Economic Development Law.

Subpart (b), of subdivision 17, requires that monies reallocated from the Microenterprises Revolving Loan Trust Fund must be used with respect to loans made to minority-owned business enterprises and women-owned enterprises as those terms are defined respectively in subdivision three and five of section 210 of the Economic Development Law and that the amount of each such loan shall be equal to or less than $7,000.

Subpart (c), of Subdivision 17, requires that monies reallocated from the Commercial District Revolving Loan Trust Fund shall be used for

loans to retails businesses within a commercial district (i.e., a business district or central business district or commercial strip as defined in Urban Development Corporation Act section 16-d(1)(b) and (c)).

Subpart (d), of Subdivision 17, requires that monies reallocated from the Regional Revolving Loan Trust Fund to the extent feasible so that eligible borrowers in all regions of the State will have access to loans funded with the reallocated funds.

Subpart (e), of subdivision 17, allows the corporation to authorize a lending organization to use the reallocated monies that in order to fund up to 100% of each loan made with reallocated funds.

Subpart (f), of subdivision 17, allows organizations currently participating in the Minority and Women Revolving Loan Trust Fund, the Micro Enterprises Revolving Loan Trust Fund, the Urban and Community Commercial Revitalization Revolving Loan and Loan Guarantee Fund, Regional Revolving Loan Fund Program, or the Small Business Revolving Loan Fund to receive the reallocated funds without participating in an new competitive solicitation.

Subpart (g), of subdivision 17, applies all provisions of section 16-t to the reallocated funds, subject to the provisions of subdivision 17.

3. Existing Law: The Minority and Women Revolving Loan Trust Fund, the Micro Enterprises Revolving Loan Trust Fund, the Urban and Community Commercial Revitalization Revolving Loan and Loan Guarantee Fund, the Regional Revolving Loan Fund Program, and the Small Business Revolving Loan Fund serve as means for the State to promote and encourage the growth of small businesses in New York.

4. Prior Legislative History: S4359/A6916 - Introduced in 2013 and 2014. Passed Senate in 2013.

5. Justification: The current statutory language of the Minority- and Woman-owned Business Development Program, Urban and Community Development Program; and the Regional Revolving Loan Fund Program, which was approved over a number of years does not contain uniform administrative provisions and inhibit expeditious and efficient disbursement of loan funds to eligible lending institutions and borrowers. The proposed consolidation of loan components of these programs under the Small Business Revolving Loan Fund will: (i) allow uniform, expeditious, and efficient administration of the corporation's disbursement to eligible lending organization and the making of loans by such organizations to their program eligible borrowers; and (ii) preserve the economic development goals of each program.

The success of the Small Business Revolving Loan fund is in stark contrast to the declining performance of the trust fund lending programs. Largely due to accessibility of other lending capital, inflexible term guidelines, burdensome administrative requirements and limited financial risk for lenders, the trust fund lending program output has steadily declined. Only a handful of loans close every year and there is over $6 million in unutilized funds available. Write-off rates for the trust funds have been much higher than industry

standards. Reallocating funds to the Small Business Revolving Loan Fund would alleviate these challenges.

Minority-owned business enterprises and woman-owned business enterprises will continue to be the only eligible borrowers for all monies reallocated from the Minority- and Woman-owned Business Development Loan Program and at least 50% of monies reallocated from the trust funds in aggregate must go to Minority- and Woman-owned businesses, which would exceed historical rates. Lending organizations will be allowed to fully fund loans with the reallocated monies, which will allow for more expeditious and aggressive lending to small businesses by lending organizations.

6. Fiscal Implications: There would be no additional cost to the State.

7. Effective Date: Immediately.