N.Y. Comp. Codes R. & Regs. tit. 5 § 70.6

Current through Register Vol. 46, No. 45, November 2, 2024

Section 70.6 - Loan guarantees

(a) Maximum amount of loan guarantee.

(1) Loan guarantees may be provided to program recipients on loan amounts not exceeding $250,000 or 75 percent of the outstanding principal on a loan, whichever is less.

(2) In the sole discretion of the department, the maximum percentage of the outstanding principal on a loan to be guaranteed may be adjusted, and different maximum percentages may be established for different types of applicants, to reflect market changes, loan demand, applicant need, and the possible need to stimulate participation in the program by certain audiences.

(b) Term. The term for a loan guarantee shall be determined by the department, in its sole discretion, but shall not exceed 10 years.

(c) Applications for loan guarantees. Applications for loan guarantees shall be submitted by the financing institution on behalf of the applicant. In addition to the application requirements set forth in section 70.10 of this Part, applications for loan guarantees shall include the following:

(1) a statement by the financing institution that the loan application will be rejected unless a loan guarantee is provided, together with an analysis prepared by the financing institution which explains why a loan guarantee is required;

(2) a copy of the applicant's loan application and the loan analysis report prepared for the financing institution, and a copy of the financing institution's written approval or disapproval of the loan with respect to the applicant, if available; and

(3) a statement signed by the applicant requesting the loan guarantee and authorizing the release of bank records, credit reports, and other pertinent information to the department.

(d) Personal guarantees. The department may require, as a condition to providing a loan guarantee, that the proprietors, partners, officers, directors, or holders of 20 percent or more of the stock of a program recipient personally guarantee repayment of all or a portion of the loan.

(e) Payment of guarantee. The department shall make payment to a financing institution under a loan guarantee after the occurrence of an event of default pursuant to the loan agreement between the program recipient and the financing institution, upon the financing institution delivering a written request for payment to the department by certified mail, return receipt requested, accompanied by a loan history report and evidence satisfactory to the department that the financing institution has taken all reasonable and necessary action to protect its rights and collect the defaulted payments from all available sources.

(f) Calculating the loss. The amount to be paid by the department to the financing institution under a loan guarantee shall be the amount of outstanding principal remaining on the loan, multiplied by the percentage of such outstanding principal guaranteed by the department, less the net proceeds from the sale of secured property and any amounts paid under any other guarantees given to secure the loan.

(g) Guarantee termination. The guarantee of the department shall automatically terminate if:

(1) the claim of loss filed by the financing institution is satisfied; or

(2) the loan is satisfied; or

(3) any provisions of the loan are modified or waived by the financing institution without the prior written approval of the department.

N.Y. Comp. Codes R. & Regs. Tit. 5 § 70.6