Last year, we reported on New York’s new Commercial Financial Disclosure Act and the legislature’s swift pivot thereafter, expanding the scope of the law to all loans up to $2,500,000. – a change from the previous limit of $500,000. As we discussed in our previous article, the Commercial Finance Disclosure Act (CFDL) requires certain commercial finance providers to disclose consumer loan information, similar to some federal Truth Act disclosures. in loans that are made to consumers in the context of consumer loans.
Since our last report, the New York Department of Financial Services (DFS) has proposed rules to implement the New York CFDL. The proposed rules are available here. The comment period has passed. Upon reviewing the comments, DFS issued a statement that the CFDL’s effective date will be delayed from its original effective date of January 1, 2022 to a date after which DFS’s final rules will come into force. DFS’s guidelines on the effective date are available here.
New York and California are two states that have adopted similar CFDLs. The effective dates of these laws, however, await the development of final rules in their respective states. Similar CFDL legislation has been introduced in other states. As of the date of this article, these states include Connecticut (2021 Senate Bill 745), Mississippi (2022 Senate Bill 2629; 2022 House Bill 1178), Missouri (2022 963), New Jersey (2022 Senate Bill 819), North Carolina (2021 House Bill 969), and Pennsylvania (2021 House Bill 1793). While the theme of each of these bills remains consistent — requiring consumer-style disclosures in commercial lending — their scope is not uniform. A number of proposed laws would apply mandatory disclosures to all commercial loans regardless of loan size, unless an exemption applies.
Miles & Stockbridge is closely monitoring developments in this area and remains ready to help customers navigate these proposed changes.