On May 22, 2020, New York Governor Andrew Cuomo announced the launching of the New York Forward Loan Fund (NYFLF), a loan program providing relief for small businesses or non-profits located in New York State or small landlords with properties located in New York State which did not receive loans under the SBA’s Paycheck Protection Program or Economic Injury Disaster Loan program related to COVID-19. The NYFLF is an effort to help these businesses get back on their feet as they start to reopen.
The loans are available to certain businesses and non-profits with 20 or fewer full-time equivalent employees and landlords. Borrowers are required to have been in existence at least one year prior to the loan application and demonstrate direct economic hardship resulting from social distancing and stay at home orders related to COVID-19 that materially impacted their operations. The loan will bear interest (3% per annum for small businesses and landlords; 2% per annum for non-profits), and will be payable over a 5-year term (interest only for the first year, principal and interest over the balance of the term). They can be prepaid at any time without penalty, and will be non-recourse (i.e. no collateral required). These loans are not forgivable (unlike the Paycheck Protection Program loans). Proceeds may be used for working capital, inventory, marketing, refitting for social distancing guidelines, rent, supplies and other uses, but not refinancing of existing loans.
Small businesses can borrow up to the lesser of $100,000 or 100% of their average monthly revenues in any three-month period from 2019 or the first quarter of 2020, so long as they have gross revenues of less than $3 million per year.
Non-profits (must be 501(c)(3) or faith-based organization (but not to supporting religious worship or activities) can borrow up to the lesser of $100,000 or 100% of their average monthly expenses in any three-month period from 2019 or the first quarter of 2020, so long as they provide direct services to New Yorkers (e.g. daycare, legal aid, food banks, senior services, and the like), and have an annual operating budget of less than $3 million per year.
Small landlords can borrow up to the lesser of $100,000 or their projected reduction in three months’ net operating income based on actual reductions in NOI for April or May 2020, so long as they own no more than 200 units (and no single property greater than 50 units), properties are located in a low or moderate income census tract or meet a specified rent test and in good repair with no major violations, and the landlord has positive cash flow for a 12-month period prior to their loan request. They must demonstrate that any mortgage is either subject to an active forbearance agreement, that they have not missed a debt service payment in the past 12 months and/or no active mortgage, and that they are current on their property taxes through March 2020.
Complete information is available on the NY Empire State Development website here.
Pre-applications will open on May 26, 2020, at noon Eastern time, will begin to be processed on June 1, 2020 based on industries and regions that have been opened, and are available here.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.