The New York Forward Loan Fund (“NYFLF”) is an economic recovery program that administers affordable, non-forgivable working capital loans. The program makes loans of up to $100,000 available to New York small businesses, nonprofits and small landlords, as they reopen after the COVID-19 outbreak and New York State on PAUSE Executive Order.
Eligible entities must (a) be located in New York State (i.e., main office or headquarters must be located in the state), (b) have been in business for at least one year as of the date of the loan application, (c) have suffered a direct economic hardship as a result of COVID-19, and (d) be small businesses and nonprofits that did not receive loans greater than $500,000 from the Paycheck Protection Program (“PPP”) or $150,000 from the Economic Injury Disaster Loan (“EIDL”) programs administered by the U.S. Small Business Administration.
In addition to the above-listed requirements, small businesses, nonprofits and small residential landlords must also meet the following criteria, respectively:
- Must employ fifty or fewer full-time equivalent (“FTE”) employees; and
- Have gross revenues of less than $5 million per year.
- Must be a 501(c)(3) or faith-based organization (however, cannot be for support of religious worship or activities);
- Must employ fifty or fewer FTE employees; and
- Have an annual operating budget of less than $5 million per year.
Small Residential Landlords:
- Have no more than 200 units under ownership and no single property with greater than 50 units;
- Must be located in low or moderate income census tract, or serve low to moderate income tenants;
- Properties must have had positive cash flow for 12 months prior to the NY Forward Loan request and be current on property taxes through March 2020;
- Property owners must attest that they will not evict COVID-impacted non-paying tenants; and
- Properties must be in good repair, with no major life and safety violations.
Proceeds are required to be used for working capital, inventory, property taxes, rent, utilities, marketing, re-fitting for social distancing or similar expenses.
Loan Amounts and Terms
The loan amounts under the NYFLF program vary depending on the entity category:
Small Businesses and Nonprofits – May apply for a loan in the amount of the lesser of:
- $100,000; or
- Up to 100% of average monthly revenues in any three-month period from 2019 or first quarter of 2020.
Small Residential Landlords – May apply for a loan in the amount of the lesser of:
- The lesser of $100,000; or
- Projected reduction in six-months’ net operating income based on actual reductions in net operating income for the month of April or May 2020.
Unlike the PPP loan and the EIDL advance grant, the NYFLF loans are not forgivable. The loans must be repaid over a five-year (60 month) period with interest at the following applicable rates:
- Small Businesses and Small Residential Landlords – Fixed annual interest rate of three-percent (3%);
- Nonprofits – Fixed annual interest rate of two-percent (2%).
As noted above, the loans are repaid over a five-year (60 month) period, as follows:
- Months 1 through 12 – Interest-only payments; and
- Months 13 through 60 – Interest and principal payments.
Generally, there are no application fees and no specific collateral required. However, borrowers are subject to a blanket first or second lien on business assets filed by the community lenders. Moreover, owners with more than twenty-percent (20%) ownership must also sign a personal guarantee on the loan.
The funds must be used for working capital and other costs in complying with new social distancing guidelines (such as for inventory, marketing, social distancing refitting, operating and emergency maintenance, property taxes, utilities, rent, supplies, etc.). The funds, however, may not be used to repay other loans.
Lastly, borrowers may prepay the loan without penalties. However, late fees are imposed on missed payments.
The Application Process
Applications are reviewed on a rolling basis for industries and regions that have been reopened throughout the State of New York. However, eligible small businesses, nonprofits and small lenders that are not yet eligible to reopen, or are included in a region to be reopened at a later phase, are encouraged to prepare in advance of submitting a pre-application.
The New York Forward plan website has up-to-date information on when specific business segments or regions are scheduled to reopen.
Once the pre-application has been completed and submitted online, applicants deemed eligible will be matched with a participating Community Development Financial Institutions Fund lender. The lender will review the loan request and contact the applicant to start the full loan application.
New York’s Empire State Development website has more information, as well as additional resources to assist with the pre-application process and matching with a participating community lender.
Additional information and the online pre-application can be found on the New York Forward Loan Fund website.
For assistance with understanding your eligibility for the NYFLF, or for help preparing an application, contact a Friedman professional today.