Chapter 166 of the Laws of 1991 added a Section 97-jj to the State Finance Law establishing the Not-for-Profit Short-Term Revolving Loan Fund (to be referred to here as the Fund). The Fund was established in the joint custody of the State Comptroller and the Commissioner of Taxation and Finance to provide loans to Not-for-Profit organizations ("NFP"). Loans can be made only when it is determined that the NFP "cannot provide...services without a loan from" the Fund.

Loans can only be made to NFPs that have received a written directive (see Section 4.A - Not-for-Profit Prompt Contracting of this Guide for additional information). Loans can be for no more than one-half of the first quarterly payment (or one-eighth of the total contract amount).

The NFP is required to complete a loan application, execute a repayment agreement, and submit documentation supporting the making of a loan, which demonstrates, at a minimum, that:

• the NFP cannot provide the services under a proposed new contract without the loan, and
• the State can reasonably expect repayment of the loan.

Loan application, repayment agreement document and instructions on how to process these documents can be obtained by contacting the Office of the State Comptroller (OSC) Bureau of Contracts’ Grants Team.

Process and Document Preparation:

Agencies are responsible for evaluating the loan application and recommending approval or disapproval to OSC. Generally, the evaluation process requires the agency to:

• Determine that the NFP has no other source of funds and would be unable to provide services without the loan; and
• Confirm that the NFP did not receive an advance, relating to this contract, from the state agency.

The following criteria (and others deemed appropriate by the agency and OSC) may be used to establish the NFP's inability to provide services without the loan:

• Insufficient cash to meet the next payroll, benefits, or payroll taxes;
• Insufficient cash to make the next rental, utility or insurance payment;
• Vendors require cash-on-delivery from the NFP;
• Accounts payable exceed 45 days due to inadequate cash flow.

Generally, loan repayments to the state will be made from the first monies otherwise payable to the NFP under the terms of the service contract awarded to the NFP. However, there may be special circumstances involving the NFP which lead the state agency and NFP to agree to, and OSC to approve, alternative repayment terms that would subsequently be specified in the repayment agreement. All loans under this program must be repaid within one year.

Guide to Financial Operations

REV. 03/19/2012