LBD07200-01-1
S. 898 2
(c) a lender regulated under the federal Farm Credit Act (12 U.S.C.
Sec. 2001 et seq.);
(d) a commercial financing transaction secured by real property;
(e) a lease as defined in section 2-A-103 of the uniform commercial
code;
(f) any person or provider who makes no more than five commercial
financing transactions in this state in a twelve-month period; [or]
(g) an individual commercial financing transaction in an amount over
TWO MILLION five hundred thousand dollars[.]; OR
(H) A COMMERCIAL FINANCING TRANSACTION IN WHICH THE RECIPIENT IS A
DEALER AS DEFINED IN SECTION FOUR HUNDRED FIFTEEN OF THE VEHICLE AND
TRAFFIC LAW, OR AN AFFILIATE OF SUCH A DEALER, OR A RENTAL VEHICLE
COMPANY AS DEFINED IN SECTION THREE HUNDRED NINETY-SIX-Z OF THE GENERAL
BUSINESS LAW, OR AN AFFILIATE OF SUCH A COMPANY PURSUANT TO A COMMERCIAL
FINANCING AGREEMENT OR COMMERCIAL OPEN-END CREDIT PLAN OF AT LEAST FIFTY
THOUSAND DOLLARS, INCLUDING ANY COMMERCIAL LOAN MADE PURSUANT TO SUCH A
COMMERCIAL FINANCING TRANSACTION.
§ 803. Sales-based financing disclosure requirements. A provider
subject to this article shall provide the following disclosures to a
recipient at the time of extending a specific offer of sales-based
financing according to formatting prescribed by the superintendent:
(a) The total amount of the commercial financing, and the disbursement
amount, if different from the financing amount, after any fees deducted
or withheld at disbursement.
(b) The finance charge.
(c) The estimated annual percentage rate, using the words annual
percentage rate or the abbreviation "APR", expressed as a yearly rate,
inclusive of any fees and finance charges, and calculated in accordance
with the federal Truth in Lending Act, Regulation Z, 12 C.F.R. §
1026.22, based on the estimated term of repayment and the projected
periodic payment amounts, REGARDLESS OF WHETHER SUCH ACT OR SUCH REGU-
LATION WOULD REQUIRE SUCH A CALCULATION. The estimated term of repayment
and the projected periodic payment amounts shall be calculated based on
the projection of the recipient's sales, called the projected sales
volume. The projected sales volume may be calculated using the histor-
ical method or the opt-in method. The provider shall provide notice to
the superintendent on which method they intend to use across all
instances of sales-based financing offered in calculating estimated
annual percentage rate pursuant to this section.
(i) The provider using the historical method shall use an average
historical volume of sales or revenue by which the financing's payment
amounts are based and the estimated annual percentage rate is calcu-
lated. The provider shall fix the historical time period used to calcu-
late the average historical volume and use such period for all disclo-
sure purposes for all sales-based financing products offered. The fixed
historical time period shall either be the preceding time period from
the specific offer or, alternatively, the provider may use average sales
for the same number of months with the highest sales volume within the
past twelve months. The fixed historical time period shall be no less
than one month and not exceed twelve months.
(ii) The provider using the opt-in method shall determine the esti-
mated annual percentage rate, the estimated term, and the projected
payments, using a projected sales volume that the provider elects for
each disclosure, provided, that they participate in a review process
prescribed by the superintendent. A provider shall, on an annual basis,
report data to the superintendent of estimated annual percentage rates
S. 898 3
disclosed to the recipient and actual retrospective annual percentage
rates of completed transactions. The report shall contain such informa-
tion as the superintendent, by rule or regulation, may prescribe as
necessary or appropriate for the purpose of making a determination of
whether the deviation between the estimated annual percentage rate and
actual retrospective annual percentage rates of completed transactions
was reasonable. The superintendent shall establish the method of report-
ing and may, upon a finding that the use of projected sales volume by
the provider has resulted in an unacceptable deviation between estimated
and actual annual percentage rate, require the provider to use the
historical method. The superintendent may consider unusual and extraor-
dinary circumstances impacting the provider's deviation between esti-
mated and actual annual percentage rate in the determination of such
finding.
(d) The total repayment amount, which is the disbursement amount plus
the finance charge.
(e) The estimated term is the period of time required for the periodic
payments, based on the projected sales volume, to equal the total amount
required to be repaid.
(f) The payment amounts, based on the projected sales volume:
(i) for payment amounts that are fixed, the payment amounts and
frequency (e.g., daily, weekly, monthly), and, if the payment frequency
is other than monthly, the amount of the average projected payments per
month; or
(ii) for payment amounts that are variable, a payment schedule or a
description of the method used to calculate the amounts and frequency of
payments, and the amount of the average projected payments per month.
(g) A description of all other potential fees and charges not included
in the finance charge, including, but not limited to, draw fees, late
payment fees, and returned payment fees.
(h) Were the recipient to elect to pay off or refinance the commercial
financing prior to full repayment, the provider must disclose:
(i) whether the recipient would be required to pay any finance charges
other than interest accrued since their last payment. If so, disclosure
of the percentage of any unpaid portion of the finance charge and maxi-
mum dollar amount the recipient could be required to pay; and
(ii) whether the recipient would be required to pay any additional
fees not already included in the finance charge.
(i) A description of collateral requirements or security interests, if
any.
§ 804. Closed-end commercial financing disclosure requirements. A
provider, subject to this article, shall provide the following disclo-
sures to a recipient at the time of extending a specific offer for
closed-end financing according to formatting prescribed by the super-
intendent:
(a) The total amount of the commercial financing, and the disbursement
amount, if different from the financing amount, after any fees deducted
or withheld at disbursement.
(b) The finance charge.
(c) The annual percentage rate, using only the words annual percentage
rate or the abbreviation "APR", expressed as a yearly rate, inclusive of
any fees and finance charges that cannot be avoided by a recipient, and
calculated in accordance with the federal Truth in Lending Act, Regu-
lation Z, 12 C.F.R. § 1026.22, REGARDLESS OF WHETHER SUCH ACT OR SUCH
REGULATION WOULD REQUIRE SUCH A CALCULATION.
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(d) The total repayment amount, which is the disbursement amount plus
the finance charge.
(e) The term of the financing.
(f) The payment amounts:
(i) for payment amounts that are fixed, the payment amounts and
frequency (e.g., daily, weekly, monthly), and, if the term is longer
than one month, the average monthly payment amount; or
(ii) for payment amounts that are variable, a full payment schedule or
a description of the method used to calculate the amounts and frequency
of payments, and, if the term is longer than one month, the estimated
average monthly payment amount.
(g) A description of all other potential fees and charges that can be
avoided by the recipient, including, but not limited to, late payment
fees and returned payment fees.
(h) Were the recipient to elect to pay off or refinance the commercial
financing prior to full repayment, the provider must disclose:
(i) whether the recipient would be required to pay any finance charges
other than interest accrued since their last payment. If so, disclosure
of the percentage of any unpaid portion of the finance charge and maxi-
mum dollar amount the recipient could be required to pay; and
(ii) whether the recipient would be required to pay any additional
fees not already included in the finance charge.
(i) A description of collateral requirements or security interests, if
any.
§ 805. Open-end commercial financing disclosure requirements. A
provider, subject to this article, shall provide the following disclo-
sures to a recipient at the time of extending a specific offer for open-
end financing according to formatting prescribed by the superintendent:
(a) The maximum amount of credit available to the recipient (e.g., the
credit line amount), and the amount scheduled to be drawn by the recipi-
ent at the time the offer is extended, if any, less any fees deducted or
withheld at disbursement.
(b) The finance charge.
(c) The annual percentage rate, using only the words annual percentage
rate or the abbreviation "APR", expressed as a nominal yearly rate,
inclusive of any fees and finance charges that cannot be avoided by a
recipient, and calculated in accordance with the federal Truth in Lend-
ing Act, Regulation Z, 12 C.F.R. § 1026.22 and based on the maximum
amount of credit available to the recipient and the term resulting from
making the minimum required payments term as disclosed, REGARDLESS OF
WHETHER SUCH ACT OR SUCH REGULATION WOULD REQUIRE SUCH A CALCULATION.
(d) The total repayment amount, which is the draw amount, less any
fees deducted or withheld at disbursement, plus the finance charge. The
total repayment amount shall assume a draw amount equal to the maximum
amount of credit available to the recipient if drawn and held for the
duration of the term or draw period.
(e) The term of the plan, if applicable, or the period over which a
draw is amortized.
(f) The payment frequency and amounts, based on the assumptions used
in the calculation of the annual percentage rate, including a
description of payment amount requirements such as a minimum payment
amount, and if the payment frequency is other than monthly, the amount
of the average projected payments per month. For payment amounts that
are variable, the provider should include a payment schedule, or a
description of the method used to calculate the amounts and frequency of
payments, and the estimated average monthly payment amount.
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(g) A description of all other potential fees and charges that can be
avoided by the recipient, including, but not limited to, draw fees, late
payment fees, and returned payment fees.
(h) Were the recipient to elect to pay off or refinance the commercial
financing prior to full repayment, the provider must disclose:
(i) whether the recipient would be required to pay any finance charges
other than interest accrued since their last payment. If so, disclosure
of the percentage of any unpaid portion of the finance charge and maxi-
mum dollar amount the recipient could be required to pay; and
(ii) whether the recipient would be required to pay any additional
fees not already included in the finance charge.
(i) A description of collateral requirements or security interests, if
any.
§ 806. Factoring transaction disclosure requirements. A provider,
subject to this article, shall provide the following disclosures to a
recipient at the time of extending a specific offer for a factoring
transaction according to formatting prescribed by the superintendent:
(a) The amount of the receivables purchase price paid to the recipient
and, if different from the purchase price, the amount disbursed to the
recipient after any fees deducted or withheld at disbursement.
(b) The finance charge.
(c) The estimated annual percentage rate, using that term, calculated
according to the federal Truth in Lending Act, Regulation Z, 12 C.F.R. §
1026 Appendix J, as a "single advance, single payment transaction",
REGARDLESS OF WHETHER SUCH ACT OR SUCH REGULATION WOULD REQUIRE SUCH A
CALCULATION. To calculate the estimated annual percentage rate, the
purchase amount is considered the financing amount, the purchase amount
minus the finance charge is considered the payment amount, and the term
is established by the payment due date of the receivables. As an alter-
nate method of establishing the term, the provider may estimate the term
for a factoring transaction as the average payment period, its histor-
ical data over a period not to exceed the previous twelve months,
concerning payment invoices paid by the party owing the accounts receiv-
able in question.
(d) The total payment amount, which is the purchase amount plus the
finance charge.
(e) A description of all other potential fees and charges that can be
avoided by the recipient.
(f) A description of the receivables purchased and any additional
collateral requirements or security interests.
§ 807. Other forms of financing disclosure requirements. The super-
intendent may require disclosure by a provider extending a specific
offer of commercial financing which is not open-end financing, closed-
end financing, sales-based financing, or factoring transaction but
otherwise meets the definition of commercial financing as provided in
this article. Subject to such rules and regulations by the superinten-
dent, a provider subject to this article shall provide the following
disclosures to a recipient at the time of extending a specific offer of
other forms of financing according to formatting prescribed by the
superintendent:
(a) The total amount of the commercial financing, and the disbursement
amount, if different from the financing amount, after any fees deducted
or withheld at disbursement.
(b) The finance charge.
(c) The annual percentage rate, using only the words annual percentage
rate or the abbreviation "APR", expressed as a yearly rate, inclusive of
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any fees and finance charges, and calculated in accordance with the
relevant sections of the federal Truth in Lending Act, Regulation Z or
this article, REGARDLESS OF WHETHER SUCH ACT OR SUCH REGULATION WOULD
REQUIRE SUCH A CALCULATION.
(d) The total repayment amount which is the disbursement amount plus
the finance charge.
(e) The term of the financing.
(f) The payment amounts:
(i) for payment amounts that are fixed, the payment amounts and
frequency (e.g., daily, weekly, monthly), and the average monthly
payment amount; or
(ii) for payment amounts that are variable, a payment schedule or a
description of the method used to calculate the amounts and frequency of
payments, and the estimated average monthly payment amount.
(g) A description of all other potential fees and charges that can be
avoided by the recipient, including, but not limited to, late payment
fees and returned payment fees.
(h) Were the recipient to elect to pay off or refinance the commercial
financing prior to full repayment, the provider must disclose:
(i) whether the recipient would be required to pay any finance charges
other than interest accrued since their last payment. If so, disclosure
of the percentage of any unpaid portion of the finance charge and maxi-
mum dollar amount the recipient could be required to pay; and
(ii) whether the recipient would be required to pay any additional
fees not already included in the finance charge.
(i) A description of collateral requirements or security interests, if
any.
§ 812. Penalties. (a) Upon a finding by the superintendent that a
provider has violated the provisions of this article or the rules or
regulations promulgated hereunder, the provider shall be ordered to pay
to the people of this state a civil penalty for each violation of this
article or any regulation or policy promulgated hereunder a sum not to
exceed two thousand dollars for each violation or where such violation
is willful ten thousand dollars for each violation.
(b) In addition to any penalty imposed pursuant to subdivision (a) of
this section, upon a finding by the superintendent that a provider has
knowingly violated this article, the superintendent may order additional
relief, including, but not limited to, RESTITUTION OR a permanent or
preliminary injunction on behalf of any recipient affected by the
violation.
§ 2. Section 2 of a chapter of the laws of 2020, amending the finan-
cial services law relating to requiring certain providers that extend
specific terms of commercial financing to a recipient to disclose
certain information about the offer to the recipient, as proposed in
legislative bills numbers S.5470-B and A.10118-A, is amended to read as
follows:
§ 2. NOTHING IN THIS ACT SHALL AUTHORIZE TRANSACTIONS IN THIS STATE
WHICH ARE OTHERWISE ILLEGAL OR ALLOW AN ENTITY OR INDIVIDUAL TO OPERATE
IN THIS STATE WITHOUT A LICENSE WHERE A LICENSE WOULD OTHERWISE BE
REQUIRED.
§ 3. This act shall take effect [on the one hundred eightieth day
after it shall have become a law] JANUARY 1, 2022. EFFECTIVE IMMEDIATE-
LY, THE ADDITION, AMENDMENT AND/OR REPEAL OF ANY RULE OR REGULATION,
NECESSARY FOR THE IMPLEMENTATION OF THIS ACT ON ITS EFFECTIVE DATE ARE
AUTHORIZED TO BE MADE AND COMPLETED BY THE SUPERINTENDENT OF FINANCIAL
SERVICES ON OR BEFORE SUCH EFFECTIVE DATE.
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§ 3. This act shall take effect immediately; provided, however, that
the amendments to sections 802, 803, 804, 805, 806, 807 and 812 of the
financial services law made by section 1 of this act shall take effect
on the same date and in the same manner as a chapter of the laws of 2020
amending the financial services law relating to requiring certain
providers that extend specific terms of commercial financing to a recip-
ient to disclose certain information about the offer to the recipient,
as proposed in legislative bills numbers S.5470-B and A.10118-A.
