New York Codes, Rules and Regulations
Title 21 - Miscellaneous
Chapter L - New York State Urban Development Corporation
Part 4230 - Minority And Women-owned Business Development And Lending Program
Section 4230.6 - Minority and women revolving loan trust fund
Universal Citation: 21 NY Comp Codes Rules and Regs ยง 4230.6
Current through Register Vol. 46, No. 12, March 20, 2024
(a) The corporation shall establish minority and women revolving loan trust fund accounts in such amounts as the corporation may determine.
(b) Administering corporations selected by the corporation in accordance with subdivision (d) of this section shall use funds deposited into a minority and women revolving loan trust fund account as set forth in subdivision (e) of this section. Such funds shall consist of:
(1) the funds deposited by
the corporation into the minority and women revolving loan trust account when
the account is established pursuant to subdivision (a) of this
section;
(2) repayments of the
principal amount of trust fund loans; and
(3) interest earned by the corporation from
the funds allocated to a particular minority and women revolving loan trust
fund account beginning in the second year of an administering corporation's
administration of same and thereafter.
(c) Administrative expense trust fund accounts.
(1) The corporation shall establish
an administrative expense trust fund account in an amount equal to $25,000 for
the benefit of each administering corporation. In addition to the foregoing
amount, the corporation shall deposit into the administrative expense trust
fund account:
(i) interest earned by the
corporation from the funds allocated to the corresponding minority and women
revolving loan trust fund account during the first year of an administering
corporation's administration of same; and
(ii) payments of interest accrued on trust
fund loans.
(2)
Semi-annually, the corporation shall disburse to the administering corporation
funds on deposit in the administering corporation's administrative expense
trust fund account. Such funds shall be used for the payment of net
administrative costs projected pursuant to a semi-annual budget approved by the
corporation as same may be updated from time to time with the approval of the
corporation. In no event shall an administering corporation request or receive
more than $25,000 from its administrative expense trust fund account during its
first year of administering its minority and women revolving loan trust fund
account.
(d) Selection of administering corporations.
(1) To be
eligible for selection by the corporation to administer a minority and women
revolving loan trust fund account, an administering corporation must:
(i) represent a service delivery
region;
(ii) have available to it
staff with sufficient expertise to analyze loan applications, to monitor
regularly trust fund loans, and have made arrangements to provide management or
technical assistance to its clients; and
(iii) has established a trust fund loan
committee.
(2) The
corporation shall prepare and disseminate a request for proposals from
administering corporations in the State seeking to be selected by the
corporation to administer a minority and women revolving loan trust fund
account. Said request for proposals shall require submission to the corporation
of information necessary for the corporation to determine the eligibility of
the administering corporation and the desirability of selecting a particular
administering corporation to administer a minority and women revolving loan
trust fund account.
(3) In
determining whether to select a particular administering corporation meeting
the criteria set forth in paragraph (1) of this subdivision to administer a
minority and women revolving loan trust fund account, the corporation shall
consider:
(i) the ability of the
administering corporation to administer the trust fund lending
program;
(ii) the extent of
coordination with other publicly supported financial assistance
programs;
(iii) the degree of
public and private support for the administering corporation; and
(iv) whether all or part of the service
delivery region is already being served by another administering corporation
administering the trust fund lending program.
(4) The corporation will enter into an
agreement with each administering corporation selected hereunder to administer
a minority and women revolving loan trust fund account, which agreement shall
set forth the terms and conditions for administering the account.
(e) Use of funds. An administering corporation may use funds deposited into a minority and women revolving loan trust fund account to provide trust fund loans for eligible trust fund projects undertaken by minority and women-owned business enterprises.
(f) Ineligible projects. Trust fund loans shall not be made available for the following projects:
(1) projects that would result in the
relocation of any business operation from one municipality within the State to
another, except under one of the following conditions:
(i) when a business is relocating within a
municipality with a population of at least one million, where the governing
body of such municipality approves such relocation; or
(ii) the administering corporation notifies
each municipality from which such business operation will be relocated and each
municipality agrees to such relocation;
(2) projects of newspapers, broadcasting or
other news media, medical facilities, libraries, community or civic centers, or
public infrastructure improvements;
(3) projects involving the refinancing of any
portion of the total eligible trust fund project cost or other existing loans
or debts of an applicant, except for the purpose of transferring to the
employees or to other local interests ownership of a company that would
otherwise depart from or cease or substantially reduce operations in the State.
For the purposes of this paragraph, a substantial reduction of operations in
the State shall mean:
(i) the loss by a
minority and/or women-owned business enterprise of 25 or more permanent jobs;
or
(ii) the loss by a minority
and/or women-owned business enterprise of fewer than 25 permanent jobs, if such
a loss would have a major adverse impact on the community in which the business
is located;
(4) projects
that would provide funds, directly or indirectly, for payment, distribution, or
loan to owners, partners or shareholders of an applicant, except as ordinary
income for services rendered;
(5)
retail projects, except where the administering corporation finds there will be
an increase in net new permanent jobs; and
(6) to the extent permitted by law, projects
involving the making of a trust fund loan to:
(i) a full-time employee of the State or any
agency, department, authority, public benefit corporation, or political
subdivision thereof; or
(ii) a
minority and/or women-owned business enterprise in which an employee described
in subparagraph (i) of this paragraph directly or indirectly controls a
majority ownership interest.
(g) Providing assistance. An administering corporation shall not approve a trust fund loan unless:
(1) the administering corporation has
determined that the trust fund loan applicant is a minority and/or women-owned
business enterprise, based upon a diligent investigation which may include,
without limitation:
(i) interviews with
persons holding ownership interests in or management positions with the trust
fund loan applicant;
(ii) visits to
the project site or to the site of the trust fund loan applicant's business
operations; and
(iii) the review of
the organizational documents and other books and records of the trust fund loan
applicant, and such other documents as may be provided by the trust fund loan
applicant pursuant to requests made by the administering corporation;
(2) the project being financed:
(i) is an eligible trust fund
project;
(ii) is feasible;
and
(iii) will comply with any
applicable environmental rules or regulations;
(3) there is a reasonable likelihood of
repayment of the trust fund loan; and
(4) the trust fund loan applicant has agreed
to first consider persons eligible to participate in Job Training Partnership
Act ( 29 U.S.C. 1501 et seq.) programs. Such persons shall be referred to the
Trust Fund Loan applicant by administrative entities of service delivery areas
created pursuant to such act or by the Job Service Division of the State
Department of Labor.
(h) Approval of eligible trust fund projects.
(1)
Each application for a trust fund loan shall be reviewed by the trust fund loan
committee. The trust fund loan committee shall determine the feasibility of the
project proposed in the application and the likelihood of repayment of the
trust fund loan requested and shall recommend to the board of directors or
other governing body of the administering corporation such action as the
committee deems appropriate.
(2)
The decision to approve or reject an application for a trust fund loan shall be
made by a majority of the directors of the administering corporation and such
decision shall be final.
(i) No member of the
board or other governing body of an administering corporation shall participate
in a decision on a project application when such member is a party to or has a
financial interest in such project. Any member who cannot participate in a
decision on a project application for such reason shall not be counted as a
member of the board or other governing body for purposes of determining the
number of members required for a majority vote on such application.
(ii) No employee or officer of any
administering corporation shall be a party to or have any financial interest in
any project that receives a trust fund loan.
(3) Upon approval of a trust fund loan and
the satisfaction by the trust fund loan applicant of the conditions precedent
to the closing of the trust fund loan, the administering corporation shall
provide the corporation:
(i) a certification
that the trust fund loan complies with the provisions of this section;
and
(ii) a report which provides:
(a) the amount, term and annual interest rate
of the trust fund loan, the collateral, if any, therefor, and the date
anticipated for the closing of the trust fund loan;
(b) the name of the trust fund loan
applicant;
(c) a description of the
methods used by the administering corporation to ascertain that the trust fund
loan applicant is a minority or women-owned business enterprise;
(d) a description of the project to be
funded;
(e) the total eligible
trust fund project cost. If the total eligible trust fund project cost exceeds
the trust fund loan, the administering corporation shall identify all other
sources of financing for the project, and the amount of financing to be
provided by each, and shall verify that written commitments for such assistance
have been obtained from each such source; and
(f) such other information as the corporation
may require.
(4) Upon acceptance by the corporation of the
administering corporation's certification, the administering corporation may
draw down proceeds from its minority and women revolving loan trust fund
account in the amount of any trust fund loan so accepted.
(i) Recordkeeping, auditing, and reporting.
(1) Each administering corporation shall
maintain adequate books and records of its activities hereunder and shall
submit annual reports to the corporation describing the financial assistance
provided pursuant to this section including:
(i) the number of projects
assisted;
(ii) the amount and type
of each trust fund loan approved and/or advanced;
(iii) a description of each project assisted
by each trust fund loan;
(iv) the
number of jobs created or retained by each project;
(v) the amount of principal and interest of
each trust fund loan paid and outstanding; and
(vi) such other information as the
corporation may require.
(2) The corporation shall periodically and
annually audit each administering corporation to ensure conformity to all
aspects of trust fund loan transactions with the substantive and procedural
provisions of this section.
(j) Fees and out-of-pocket expenses. An administering corporation may charge reasonable trust fund loan application and trust fund loan commitment fees pursuant to a schedule of fees adopted by the administering corporation and approved by the corporation, and may collect such out-of-pocket expenses as it may reasonably incur in connection with the processing of any trust fund loan application and the closing of any trust fund loan.
(k) Recapitalization of minority and women revolving loan trust fund accounts and administrative expense trust fund accounts.
(1) The
corporation may recapitalize any minority and women revolving loan trust fund
account and corresponding administrative expense trust fund account if:
(i) all funds initially deposited by the
corporation in the minority and women revolving loan trust fund account have
been disbursed or committed to finance eligible trust fund projects;
and
(ii) all funds initially
deposited by the corporation in the corresponding administrative expense trust
fund account have been expended.
(2) Each administering corporation seeking
recapitalization of its accounts shall submit an application for same developed
by the corporation.
(3) In
considering whether a minority and women revolving loan trust fund account or
administrative expense trust fund account will be recapitalized, the
corporation shall consider:
(i) the record of
the administering corporation in administering the minority and women revolving
loan trust fund account, including, without limitation, the number of projects
assisted with trust fund loans, the amount and type of each trust fund loan,
the types of projects assisted with trust fund loans, the number of jobs
created or retained by projects financed with a trust fund loan, the amount of
principal and interest of each trust fund loan paid and outstanding, and the
trust fund loan loss history of the minority and women revolving loan trust
fund account;
(ii) efforts made by
the administering corporation to secure funds from other sources for loans and
administrative costs; and
(iii)
such other matters as the corporation may determine.
(4) Following its review and evaluation of
any such recapitalization application, the corporation shall determine the
amount, if any, of the recapitalization of any minority and women revolving
loan trust fund account or administrative expense trust fund account, in its
sole discretion, provided, however, that no more than 10 percent provided to an
administering corporation hereunder shall be used to recapitalize its
administrative expense trust fund account.
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