New York releases proposed rules on commercial finance disclosures | Sheppard Mullin Richter & Hampton LLP


On September 14, the New York Department of Financial Services (NYDFS) published a notice of proposed rules under the New York Commercial Finance Disclosure Act (CFDL) (we discussed this previous regulation in a blog post here). Under the CFDL, commercial finance companies are required to provide consumer loan information to potential recipients when a specific financing offer is extended to certain commercial transactions of $2.5 million or less. We note in particular some elements of the last proposed rule:

  • An additional requirement that if the finance company is operating out of New York, New York disclosure law applies to all of their transactions, nationwide, mostly without regard to location or to the management of the borrower.
  • Continued overlap with similar California regulations (we have discussed California regulations in previous blog posts here and here). The NYDFS has confirmed its intention to align with California where possible.
  • An additional notice requirement for the transfer of management by the manager of a commercial financing.

Note that while financial institutions such as banks, trust companies, industrial loan companies, federally chartered savings and loan associations, federal savings banks, or federal credit unions are exempt, it there is no exemption for bank subsidiaries in New York and California.

Public comments on the proposed rule are expected no later than October 29, 2022.

Put into practice : As New York regulations continue to take shape, companies will need to thoroughly review New York and California regulations to ensure they prepare and provide compliant disclosure forms in each state in a timely manner.


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