NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3637
TITLE OF BILL:
An act to amend the banking law, in relation to asset-based lending
PURPOSE OR GENERAL IDEA OF BILL:
To classify asset-based lending transactions as loans for all purposes.
SUMMARY OF PROVISIONS:
Section 1 - Defines "asset-based lending transactions". Subdivision (2)
- Deems all "asset-based lending transactions" as loans.
Section 2 - Provides for an effective date 90 days after this bill
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
Currently, under state law, cash advances or asset-based lending trans-
actions are not subjected to state usury laws. This allowed predatory
lenders to loan large sums of capital to small businesses and individ-
uals at uncontrollable interest rates. This, in tandem with
"confessions of judgments", allows lenders to abuse the State's lack of
usury laws to entice small businesses into an uncontrollable cycle of
This bill seeks to apply the regulatory standards to "asset-based cash
advances" in order to protect unsuspecting small businesses and individ-
PRIOR LEGISLATIVE HISTORY:
No prior legislative history.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
No fiscal implications.
This act will take place on the ninetieth day after it becomes law.
STATE OF NEW YORK
2019-2020 Regular Sessions
January 30, 2019
Introduced by M. of A. NIOU, PEOPLES-STOKES -- read once and referred to
the Committee on Banks
AN ACT to amend the banking law, in relation to asset-based lending
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The banking law is amended by adding a new section 340-a to
2 read as follows:
3 § 340-a. Asset-based lending transactions. 1. As used in this section
4 the term "asset-based lending transaction" shall mean a transaction in
5 which advances are made which are contingent on the recipient forwarding
6 payments received from one or more third parties for goods such recipi-
7 ent has supplied or services such recipient has rendered to that third
8 party or parties.
9 2. All asset-based lending transactions shall be deemed to be loans
10 for all purposes.
11 § 2. This act shall take effect on the ninetieth day after it shall
12 have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 is old law to be omitted.