
Howard D. Bader
Partner
212-784-6926 hbader@sh-law.comFirm Insights
Author: Howard D. Bader
Date: February 12, 2021
Partner
212-784-6926 hbader@sh-law.comGov. Andrew Cuomo recently signed legislation (Senate Bill S5470) that imposes new disclosure obligations on New York commercial lenders. The new disclosures are akin to those provided to home buyers by residential mortgage lenders under the federal Truth in Lending Act.
S5470 requires providers of commercial financing to disclose certain information to the borrower upon a specific offer of financing. The term “commercial financing” refers specifically to open-end financing, closed-end financing, sales-based financing, factoring transactions, or other forms of financing the proceeds of which the recipient does not intend to use for personal, family, or household purposes.
Notably, the law contains exemptions for financial institutions, certain technology service providers, lenders regulated under the federal Farm Credit Act, commercial financing secured by real property, leases as defined in the Uniform Commercial Code (UCC), providers making five or less commercial financing transactions in a year, and individual commercial finance transactions over $500,000.
The term “financial institution” is defined as “(i) a bank, trust company, or industrial loan company doing business under the authority of, or in accordance with, a license, certificate or charter issued by the United States, this state or any other state, district, territory, or commonwealth of the United States that is authorized to transact business in this state; (ii) a federally chartered savings and loan association, federal savings bank or federal credit union that is authorized to transact business in this state; or (iii) a savings and loan association, savings bank or credit union organized under the laws of this or any other state that is authorized to transact business in this state.”
The disclosures a lender may be required to provide will vary according to the nature of the transaction. Below is a brief summary of the disclosures required for each type of covered transaction:
The law also requires that the lender obtain the recipient’s signature on all required disclosures before proceeding with a commercial financing transaction application. Lenders are authorized to disclose additional information; however, that information must be separate from the required disclosures. Under S5470, a lender who chooses to disclose additional metrics of financing cost are prohibited from using the words “rate” and “interest” unless describing APR.
Failure to comply with the new disclosure law may result in a civil penalty of up to $2,000 for each violation or $10,000 for each willful violation. S5470 also authorizes the superintendent to provide further relief for knowing violations, including injunctions, on behalf of impacted borrowers.
The new commercial lender disclosure law is slated to take effect on June 21, 2021.
If you have any questions or if you would like to discuss the matter further, please contact me, Howard Bader, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Author: Dan Brecher
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Author: Dan Brecher
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Author: Brian D. Spector
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!