N.Y. Comp. Codes R. & Regs. tit. 21 § 4212.6

Current through Register Vol. 46, No. 50, December 11, 2024

Section 4212.6 - Business terms for project loans, collateral deposits and grants

(a) No project loan in an amount greater than $1 million will be considered. Security arrangements will be established on a case-by-case basis, taking into account the type of loan and the particular characteristics of a project. Most project loans will be secured by fixed assets. Personal and corporate guarantees of payment and completion also may be required as the corporation deems appropriate.

(b) Written commitments from other funding sources necessary for completion of the project will be required before disbursement by the corporation of the project loan or project collateral deposit proceeds. Approved construction loans will not be funded before secure commitments for financing all construction costs and for permanent financing have been obtained.

(c) Interest rates on project loans will be set at the time the corporation's directors approve an application. Interest rates and repayment schedules will reflect market conditions, the applicant's ability to repay, job creation incentives and other project requirements.

(d) The standard maturities for project loans generally will be as follows:

(1) project loans for which the proceeds are used to acquire or improve real estate generally will be made for a term not to exceed 20 years or the useful life of the project, whichever is less;

(2) project loans for which the proceeds are used to acquire or improve machinery and equipment generally will be made for a term of from three to seven years, or the useful life of the collateral, whichever is less; and

(3) project loans for construction generally will not exceed 24 months, plus a period to be determined by the corporation as a maximum delay attributable to force majeure.

(e) Standard repayment terms generally will include level debt service payments over the term of the project loan. Deferred or graduated payments may be permitted in specific, appropriate instances (which shall be determined in light of such factors as the project's debt servicing capability, the relative importance of the project's public purpose and the likely economic and sociological consequences of a failure to permit deferred or graduated payments), provided that the project loan will be fully amortized over the remainder of the loan term.

(f) No project collateral deposit in an amount less than $100,000 or greater than $1 million will be considered. Interest earned on such deposit will accrue, and shall be periodically paid, to the corporation. No more than 90 percent of the principal amount of a bank loan shall be secured by a project collateral deposit. Loan documents securing the bank loan shall be collaterally assigned to the corporation. The interest rate charged to the borrower of any bank loan secured by a project collateral deposit shall be below the prevailing interest rate ordinarily set by the bank loan lender. The collateral and underwriting terms for a bank loan secured by a project collateral deposit shall be acceptable to the corporation.

(g) The corporation policy is to encourage the creation of new employment opportunities for poor and chronically unemployed residents of the State. Recipients of project loans of $100,000 or more or bank loans secured by project collateral deposits, that are expected to create 50 or more new jobs over a three-year period, will be encouraged to consider, for new employment opportunities generated as a result of the project, individuals on public assistance and those eligible for benefits under the provisions of the Job Training Partnership Act ( 29 USC 1501 et seq.).

(h) The corporation policy is to require employers that receive significant assistance from the State to agree to provide notification of plant closing or major layoffs. Recipients of project loans of $100,000 or more or bank loans secured by project collateral deposits, that are expected to have an employment level of 50 or more persons at the project site within one year of the disbursement of such loan, will be encouraged to give a minimum of 90 days' notice to its employees and the corporation prior to the reduction of its permanent work force over a one-year period by the greater of (1) 50 employees, or (2) 50 percent of its work force.

(i) Recipients of project loans in an amount equal to or greater than $100,000, for a term of three years or more and who are expected to employ 50 or more permanent employees by a projected employment date, will be encouraged to agree to comply with the corporation's interest rate adjustment policy. That corporate policy provides that, in the event such recipient's work force falls short of the projected work force on the projected employment date by a percentage of 15 percent or more, then the interest rate for the project loan shall be increased to a rate equal to two percent above the prevailing prime interest rate at the time of the increase. Interest rate adjustments, if any, will be made on an annual basis.

(j) Project grants shall be made from available program funds on a matching basis, except that the matching requirement shall be reduced or eliminated on a case-by-case basis where the applicant demonstrates to the UDC's satisfaction that the applicant was unsuccessful, after diligent effort, in its attempt to secure such matching funds.

(k) If the corporation later approves a hard cost loan for a facility which was the subject of a study which received program grant assistance, then the corporation may convert the program grant to a loan, to be made in accordance with the terms of the hard cost loan.

N.Y. Comp. Codes R. & Regs. Tit. 21 § 4212.6