On December 23, 2020, New York Governor Andrew Cuomo signed into law Senate Bill S5470B (Small Business Truth in Lending Law), which imposes new requirements on certain providers of commercial financing.
New York is now the second state after California to require Truth in Lending-type disclosures for small business loans by online and other non-bank lenders.
The term “provider” is broadly defined to include “any person who extends a specific offer of commercial financing” to a small business.
There are numerous exemptions, including banks, trust companies, industrial loan companies and incidental lenders making five or fewer commercial financing transactions in New York in a year.
The new law will undoubtedly increase the cost of financing for small businesses and create difficulties for factors, MCA companies and other alternative financing companies in calculating the APR and determining other disclosure requirements such as the term of the commercial financing or breaking out the financing costs.