The New York Commercial Financing Disclosure Law (“CFDL”) imposes consumer-style disclosure requirements for a variety of commercial financing transactions, including loans, sales-based financing, including merchant cash advances, and factoring transactions. The original bill, SB 5470, was signed into law in December 2020 and then amended by SB 898 in February 2021.
State or federally chartered depository institutions, lenders regulated under the federal Farm Credit Act, and any lender who makes five or less commercial financing transactions in New York in a 12-month period are exempt from complying with the CDFL.
Additionally, certain transactions are exempt from compliance with the CDFL, including commercial financing transactions greater than US$2.5 million, true lease transactions, as described in UCC Article 2A, secured real property financings, and commercial financing transactions in which the recipient of the financing is an automobile dealer, vehicle rental company, or affiliate of either, and the transaction is in an amount of at least US$50,000.
The effective date of the CDFL is January 1, 2022. The law will be applicable to commercial transactions in which the recipient is a New York citizen.