Authorizes the job development authority to create and administer the bank export incentive program for the investment and lending of monies which may be borrowed by certain eligible New York firms for business projects; directs the commissioner of the department of economic development to assist in the promotion of such program; defines terms.

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S354-2011 Actions

• Jan 4, 2012: REFERRED TO COMMERCE, ECONOMIC DEVELOPMENT AND SMALL BUSINESS
• Jan 5, 2011: REFERRED TO COMMERCE, ECONOMIC DEVELOPMENT AND SMALL BUSINESS

S354-2011 Memo

BILL NUMBER:S354

TITLE OF BILL:
An act
to amend the economic development law and the public authorities
law, in relation to authorizing the job
development authority to
create and administer the bank export incentive program with the
technical assistance of the
department of economic development

PURPOSE:
To encourage banking organizations to provide medium term loans at
competitive interest rates for relatively small amounts of money
borrowed for short periods of time.

SUMMARY OF PROVISIONS:
This legislation permits the Job Development Authority (JDA) to create
a program in which monies will be placed with cooperating banking
organizations. Such corporations will be permitted to invest these
monies on the condition that they lend an amount equal to two times
the amount of money provided them to eligible applicants for eligible
projects. Eligible applicants is defined as New York State firms with
less than 500 workers. Eligible projects means a product manufactured
or service delivered by an eligible applicant to a customer residing
in or representing a nation other than the united States or its
territories. The bill permits JDA to authorize such loans to be
between $25,000 and $500,000 and to be at a competitive interest rate
under the terms negotiated by the authority with the banking
organization involved. The authority is permitted to terminate such
agreement 30 days after that banking organization involved has been
notified that they have not lived up to the terms of the agreement.
Once each fiscal year the authority shall report to the Governor and
the fiscal committees of the Legislature as to the number of loans
made to eligible projects, the amount of each loan and its repayment
terms include interest charged
and duration of the loan, the principal product or services involved
in the eligible project, the nation in which the product or services
was sold, and the number of banking organizations participating in
the program.

JUSTIFICATION:
Small and medium-sized corporations seeking to export products find it
virtually impossible to secure financing when the sale of a product
involved is to a foreign customer. The primary reasons that such
funds have been unavailable is that the processing of such a loan
involved hi~h overhead cost because of the need to evaluate the
foreign customer and estimate the fluctuations of foreign currencies
and other variables involved in an export sale. These high
transaction costs cannot be recovered because the interest rate that
must be offered in order for the seller to remain competitive must be
relatively low and the terms of the loan are relatively short in
duration (one to five years) and the principal amount is also low due
to the size of the transaction. Thus, the banking organization finds
it impossible to make money offering these "export credits" to small
and medium-sized businesses seeking to sell overseas.


This legislation is designed to provide a pool of money which the
banking organization can invest as it chooses and use the income from
such investment organization to subsidize the cost of small loans to
medium and small-sized exporters. The legislation requires that at
least two times the amount of money placed with the bank shall be
lent out to these small and medium sized firms. While medium-term
financing represents only roughly 10% of the export financing needs
of corporations in our country, it is the portion of export financing
which is being met least well by the banking community. It is the
intent of this legislation to use the expertise that resides within
the banking community to evaluate the quality of the loans and make
the financial judgments about each loan. Such expertise does not,
reside within the public sector and would therefore be done in a less
efficient manner by a public sector organization. While the end
result of this legislation will be to make New York exporters more
competitive to the world market, it is necessary to provide such
competition through the intermediary of the banking community because
of their ability to evaluate the risk.

LEGISLATIVE HISTORY:
2007-2008: S.2027 Referred to Commerce, Economic Development and Small
Business
2009-2010: S.363 Referred to Commerce, Economic Development
and Small Business

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
On the one hundred twentieth day after it shall have become a law,
with provisions.

S354-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                     354

                         2011-2012 Regular Sessions

                              I N  SENATE

                                 (PREFILED)

                               January 5, 2011
                                 ___________

  Introduced  by  Sen.  ROBACH -- read twice and ordered printed, and when
    printed to be committed to the Committee on Commerce, Economic  Devel-
    opment and Small Business

  AN  ACT to amend the economic development law and the public authorities
    law, in relation to  authorizing  the  job  development  authority  to
    create and administer the bank export incentive program with the tech-
    nical assistance of the department of economic development

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1.  Legislative  intent.  The  legislature  hereby  finds  and
  declares  that the economy of the state of New York can be bolstered and
  enhanced through the sale of additional products and services  from  New
  York  state  to  customers in foreign countries. The legislature further
  finds that one of the impediments to an increase in  export  sales  from
  New  York state is the unavailability of loans at a competitive interest
  rate for relatively small amounts of money  borrowed  for  time  periods
  between  one  and  five years from the commercial banks of our state and
  nation. It is further found that one of  the  major  reasons  that  such
  monies  are  unavailable  is  the  high cost of processing such loans by
  banking organizations because of the complexities of international tran-
  sactions. The legislature, therefore, finds and declares that it  is  in
  the  interest of a stronger and more viable economy for the state of New
  York to encourage the banking industry of our state to  provide  medium-
  term  financing  for  low  dollar volume export transactions through the
  creation of a bank export incentive program.
    S 2.  Subdivision 47 of section 100 of the economic  development  law,
  as renumbered by chapter 427 of the laws of 2008, is renumbered subdivi-
  sion 48 and a new subdivision 47 is added to read as follows:

    47.  MAKE  POTENTIAL  ELIGIBLE APPLICANTS AWARE OF, THROUGH THE USE OF
  SEMINARS, WORKSHOPS,  ADVERTISING  OR  OTHER  APPROPRIATE  METHODS,  THE

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD01881-01-1

 S. 354                              2

  EXPORT  FINANCE  FUND  AND  OF  ITS  POTENTIAL  USE  TO SUCH APPLICANTS.
  FURTHER, THE COMMISSIONER SHALL MAKE BANKING ORGANIZATIONS PARTICIPATING
  IN THE USE OF THE EXPORT FINANCE FUND AWARE OF POTENTIAL ELIGIBLE APPLI-
  CANTS  AND SHALL ASSIST BOTH SUCH ELIGIBLE APPLICANTS AND BANKING ORGAN-
  IZATIONS AS MAY BE REQUIRED IN ORDER TO HELP FACILITATE  FURTHERANCE  OF
  THE SALES OF MANUFACTURED PRODUCTS TO THE INTERNATIONAL MARKETPLACE.
    S  3.  Section 1801 of the public authorities law is amended by adding
  six new subdivisions 20, 21, 22, 23, 24 and 25 to read as follows:

    20. "COMPETITIVE INTEREST RATE" SHALL MEAN A RATE  OF  INTEREST  WHICH
  MUST  BE APPLIED TO A LOAN MADE TO AN ELIGIBLE APPLICANT FOR AN ELIGIBLE
  PROJECT, AT A LEVEL OF INTEREST DESIGNED TO INDUCE  ELIGIBLE  APPLICANTS
  TO RETAIN A COMPETITIVE POSITION IN THE WORLD MARKETPLACE.
    21.  "BANKING ORGANIZATION" SHALL MEAN (A) ANY ORGANIZATION DEFINED BY
  SUBDIVISION ELEVEN OF SECTION TWO OF THE BANKING LAW, (B) ANY AGENCY  OR
  BRANCH  OF A FOREIGN BANKING CORPORATION LICENSED BY THE BANKING DEPART-
  MENT UNDER ARTICLE FIVE OF THE  BANKING  LAW,  (C)  ANY  NATIONAL  BANK,
  FEDERAL  SAVINGS  AND LOAN ASSOCIATION AND FEDERAL CREDIT UNION, (D) ANY
  AUTHORIZED INSURER DEFINED BY PARAGRAPH TEN OF SUBSECTION (A) OF SECTION
  ONE HUNDRED SEVEN OF THE INSURANCE LAW, AND (E)  ANY  OTHER  INSTITUTION
  WITHIN  THE  STATE  AUTHORIZED TO ORIGINATE AND SERVICE LOANS INCLUDING,
  BUT NOT LIMITED TO, CREDIT UNIONS AND MORTGAGE LOAN COMPANIES.
    22. "ELIGIBLE APPLICANT" SHALL MEAN A FIRM  WHICH  EMPLOYS  LESS  THAN
  FIVE HUNDRED WORKERS AND WHOSE PRINCIPAL PLACE OF BUSINESS IS WITHIN THE
  BORDERS OF NEW YORK STATE OR AN EXPORT TRADING COMPANY AS DEFINED IN THE
  EXPORT  TRADING COMPANY ACT (P.L. 97-290) PRESENTING AN ELIGIBLE PROJECT
  ON BEHALF OF SUCH FIRM.
    23. "ELIGIBLE PROJECT" SHALL MEAN A SALE OF A PRODUCT MANUFACTURED  OR
  SERVICE DELIVERED BY AN ELIGIBLE APPLICANT TO A CUSTOMER RESIDING IN AND
  REPRESENTING  A  BUSINESS,  NATURAL  PERSON, OR GOVERNMENTAL ENTITY OF A
  NATION OTHER THAN THE UNITED STATES OR ITS TERRITORIES, WHICH (A) IS  TO
  BE FINANCED FOR A PERIOD NOT LESS THAN ONE YEAR NOR MORE THAN FIVE YEARS
  FROM  THE POINT OF SALE, (B) IS INSURED BY THE FCIA OR THE EXPORT-IMPORT
  BANK OF THE UNITED STATES.
    24. "PROJECT LOAN" SHALL MEAN MONIES LENT TO AN ELIGIBLE APPLICANT FOR
  AN ELIGIBLE PROJECT AT A COMPETITIVE INTEREST RATE  FROM  A  COOPERATING
  BANKING ORGANIZATION.
    25.  "EXPORT FINANCE FUND" OR "FUND" SHALL MEAN MONIES PROVIDED BY THE
  AUTHORITY TO A COOPERATING  BANKING  ORGANIZATION  OR  ORGANIZATIONS  IN
  ORDER  THAT  SUCH  ORGANIZATION  OR  ORGANIZATIONS SHALL BE ABLE TO MAKE
  LOANS TO ELIGIBLE APPLICANTS FOR ELIGIBLE PROJECTS AT COMPETITIVE INTER-
  EST RATES BY INVESTING SUCH FUND IN INTEREST-BEARING  INVESTMENTS  WHICH
  THE AUTHORITY MAY AUTHORIZE.
    S  4.  The  public  authorities law is amended by adding a new section
  1835-bb to read as follows:

    S 1835-BB. ADDITIONAL POWERS OF THE AUTHORITY. THE AUTHORITY IS HEREBY
  DIRECTED TO ESTABLISH THE NEW YORK STATE BANK EXPORT INCENTIVE  PROGRAM.
  1. IN ORDER TO IMPLEMENT THE PROGRAM, THE AUTHORITY MAY ENTER INTO COOP-
  ERATIVE  AGREEMENTS  WITH  ONE  OR MORE BANKING ORGANIZATIONS WITHIN THE
  STATE TO PROVIDE THEM WITH AN EXPORT FINANCE FUND  IN  ORDER  THAT  SUCH
  COOPERATING  BANKING ORGANIZATIONS MAY LEND THEIR OWN ASSETS TO ELIGIBLE
  APPLICANTS FOR ELIGIBLE PROJECTS AT COMPETITIVE INTEREST RATES.
    2. SUCH  AGREEMENT  WITH  A  COOPERATING  BANKING  ORGANIZATION  SHALL
  INCLUDE BUT NOT BE LIMITED TO:

    (A)  A REQUIREMENT THAT AN AMOUNT EQUAL TO NOT LESS THAN TWO TIMES THE
  AMOUNT OF MONIES ON DEPOSIT WITH SUCH COOPERATING  BANKING  ORGANIZATION
  MUST  BE  LENT  TO  ELIGIBLE APPLICANTS FOR ELIGIBLE PROJECTS WITHIN THE

 S. 354                              3

  AGREED UPON TIME PERIOD FOLLOWING DEPOSIT OF SAID MONIES WITH THE  BANK-
  ING CORPORATION.
    (B)  THE  CRITERIA  AND  STANDARDS WITHIN WHICH THE TERMS AND INTEREST
  RATES OFFERED TO  ELIGIBLE  APPLICANTS  FOR  ELIGIBLE  PROJECTS  MAY  BE
  CONSIDERED TO BE COMPETITIVE.
    (C)  A  REQUIREMENT  THAT LOANS TO ELIGIBLE APPLICANTS BE MADE FOR NOT
  LESS THAN TWENTY-FIVE THOUSAND DOLLARS NOR MORE THAN FIVE HUNDRED  THOU-
  SAND DOLLARS.
    3.  IN  ORDER  TO  MAKE  SUCH  FINANCING POSSIBLE, THE AUTHORITY SHALL
  ESTABLISH CRITERIA FOR THE SELECTION OF  COOPERATING  BANKING  ORGANIZA-
  TIONS  AND  FOR  THE AMOUNTS AND TERMS UNDER WHICH THE INVESTMENT OF THE
  FUND MAY BE MADE IN SUCH BANKING ORGANIZATIONS.
    4. A PROVISION STATING THAT IF THE AUTHORITY  IN  ITS  JUDGMENT  FINDS
  THAT  SUCH BANKING ORGANIZATION HAS NOT MET THE CONDITIONS OF THE AGREE-
  MENT ENTERED INTO BETWEEN THE AUTHORITY AND SAID  BANKING  ORGANIZATION,
  THE  AUTHORITY SHALL NOTIFY THE BANKING ORGANIZATION OF THOSE ASPECTS OF
  THE AGREEMENT THAT THE AUTHORITY DETERMINES ARE NOT BEING  MET;  AND  IF
  AFTER  THIRTY  DAYS SUBSEQUENT TO SUCH NOTIFICATION THE AUTHORITY DETER-
  MINES THAT THE BANKING ORGANIZATION HAS NOT MET THE  CONDITIONS  OF  THE
  AGREEMENT, THE AUTHORITY MAY REMOVE ANY MONIES DEPOSITED WITH SUCH BANK-
  ING ORGANIZATION AND MAY TERMINATE THE AGREEMENT.
    5.  THE  AUTHORITY  SHALL  ALLOCATE  THE  MONIES  APPROPRIATED FOR THE
  PURPOSES OF THIS PROGRAM FOR DEPOSIT IN ONE OR MORE COOPERATING  BANKING
  ORGANIZATIONS LOCATED WITHIN THE STATE OF NEW YORK.
    6. AT THE END OF EACH FISCAL YEAR FOLLOWING THE EFFECTIVE DATE OF THIS
  SECTION,  THE  AUTHORITY  SHALL  REPORT  TO  THE GOVERNOR AND THE FISCAL
  COMMITTEES OF THE LEGISLATURE AS TO: (A) THE NUMBER  OF  LOANS  MADE  TO
  ELIGIBLE  PROJECTS;  (B) THE AMOUNT OF EACH LOAN AND ITS REPAYMENT TERMS
  TO INCLUDE INTEREST CHARGED AND DURATION OF THE LOAN; (C) THE  PRINCIPAL
  PRODUCT  OR SERVICES INVOLVED IN THE ELIGIBLE PROJECT; (D) THE NATION IN
  WHICH THE PRODUCT OR SERVICE WAS SOLD; AND (E)  THE  NUMBER  OF  BANKING
  ORGANIZATIONS PARTICIPATING IN THE PROGRAM.
    S 5. This act shall take effect on the one hundred twentieth day after
  it  shall have become a law. Effective immediately, the addition, amend-
  ment and/or repeal of any rule or regulation necessary for the implemen-
  tation of the foregoing sections of this act on their effective date  is
  authorized  and  directed  to  be  made  and completed on or before such
  effective date.