A10118 Summary:

BILL NOA10118A
 
SAME ASSAME AS S05470-B
 
SPONSORZebrowski
 
COSPNSRMosley, Stern, Galef, D'Urso, Griffin, Jaffee, Thiele, Gottfried, Colton, Seawright, Simon, O'Donnell, McMahon, Englebright, Cahill, Bronson, Otis, Buttenschon, McDonald, Fahy, Dickens, Darling, Ortiz, Lifton, Sayegh, Frontus, Stirpe, Rodriguez, Lupardo
 
MLTSPNSR
 
Add Art 8 801 - 812, Fin Serv L
 
Requires certain providers that extend specific terms of commercial financing to a recipient to disclose certain information about the offer to the recipient, including information concerning the financing amount, finance charges, the annual percentage rate, the total repayment amount, the term, payment amounts, other potential fees, any prepayment costs and a description of any collateral requirements.
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A10118 Actions:

BILL NOA10118A
 
03/12/2020referred to banks
07/10/2020amend and recommit to banks
07/10/2020print number 10118a
07/13/2020reported referred to codes
07/17/2020reported referred to rules
07/21/2020reported
07/21/2020rules report cal.264
07/21/2020ordered to third reading rules cal.264
07/23/2020substituted by s5470b
 S05470 AMEND=B THOMAS
 05/01/2019REFERRED TO BANKS
 01/08/2020REFERRED TO BANKS
 03/13/2020AMEND (T) AND RECOMMIT TO BANKS
 03/13/2020PRINT NUMBER 5470A
 07/13/2020AMEND AND RECOMMIT TO BANKS
 07/13/2020PRINT NUMBER 5470B
 07/21/2020REPORTED AND COMMITTED TO RULES
 07/22/2020ORDERED TO THIRD READING CAL.886
 07/23/2020PASSED SENATE
 07/23/2020DELIVERED TO ASSEMBLY
 07/23/2020referred to codes
 07/23/2020substituted for a10118a
 07/23/2020ordered to third reading rules cal.264
 07/23/2020passed assembly
 07/23/2020returned to senate
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A10118 Committee Votes:

BANKS Chair:Abinanti DATE:07/13/2020AYE/NAY:29/0 Action: Favorable refer to committee Codes
AbinantiAyeLalorAye
PerryAbsentFinchAbsent
AbbateAyeMikulinAye
MillerAyeSmithAye
WeprinAyeManktelowAye
RodriguezAyeSalkaAye
BichotteAyeSchmittAye
BlakeAyeSmullenAye
Jean-PierreAye
SeawrightAye
RichardsonAye
DickensAye
De La RosaAye
VanelAye
WrightAye
NiouAye
TaylorAye
BarnwellAye
SternAye
HevesiAye
SayeghAye
BurkeAye
ButtenschonAye

CODES Chair:Lentol DATE:07/17/2020AYE/NAY:21/0 Action: Favorable refer to committee Rules
LentolAyeMorinelloAye
SchimmingerExcusedGiglioAye
PretlowAyeMontesanoAye
CookAyePalumboAye
CymbrowitzAyeGarbarinoAye
O'DonnellAyeReillyAye
LavineAye
PerryAye
AbinantiAye
WeprinAye
MosleyAye
HevesiAye
FahyAye
SeawrightAye
RosenthalAye
WalkerAye

RULES Chair:Heastie DATE:07/21/2020AYE/NAY:26/0 Action: Favorable
HeastieExcusedBarclayAye
GottfriedAyeCrouchAye
LentolAyeFinchExcused
NolanAyeHawleyAye
WeinsteinAyeGiglioAye
OrtizExcusedMalliotakisAye
PretlowAyeBlankenbushAye
CookExcusedNorrisAye
GlickAye
AubryAye
EnglebrightAye
DinowitzAye
ColtonAye
MagnarelliAye
PerryAye
PaulinAye
Peoples-StokesAye
BenedettoAye
LavineAye
LupardoAye
ZebrowskiAye
ThieleAye

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A10118 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10118a
 
SPONSOR: Zebrowski
  TITLE OF BILL: An act to amend the financial services law, in relation to requiring certain providers that extend specific terms of commercial financing to a recipient to disclose certain information about the offer to the recipient   PURPOSE OR GENERAL IDEA OF THE BILL: This bill would require certain providers of commercial financing to disclose information regarding the amount, pricing, and terms to borrow- ers prior to accepting the financing.   SUMMARY OF PROVISIONS: Section one of the bill amends the financial services by adding a new article 8 as it relates to requiring providers of commercial financing to disclose certain information to the borrower including cost of financing, annual percentage rate, repayment amount, payments, prepay- ment costs and collateral requirements upon a specific offer of financ- ing. The superintendent is empowered to promulgate rules and regulations regarding the implementation of the law including disclosure formatting and the calculation of metrics. Section two of the bill relates to the effective date.   DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE): The amendments make several technical changes to definitions, exempts indi- vidual transactions over $500,000, and renumbers the article.   JUSTIFICATION: Currently, commercial financing providers are not required to disclose key financing terms in any standard format. This bill would require providers to disclose critical information regarding the cost of financ- ing and other terms to borrowers prior to accepting the financing. It is imperative that business owners are afforded as much transparency as possible on how a commercial financing product will impact their busi- ness. This comprehensive disclosure will provide business owners with the necessary information to make an informed, financially responsible decision. It will also allow borrowers to compare the pricing and costs of a commercial financing across several providers; ensuring that they are able to choose the best product.   LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.   EFFECTIVE DATE: This act shall take effect on the one hundred eightieth day after it shall have become a law.
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A10118 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                        10118--A
 
                   IN ASSEMBLY
 
                                     March 12, 2020
                                       ___________
 
        Introduced by M. of A. ZEBROWSKI, MOSLEY, STERN, GALEF, D'URSO, GRIFFIN,
          JAFFEE,  THIELE, GOTTFRIED, COLTON, SEAWRIGHT, SIMON, O'DONNELL, McMA-
          HON, ENGLEBRIGHT, CAHILL, BRONSON, OTIS, BUTTENSCHON, McDONALD,  FAHY,
          DICKENS,  DARLING,  ORTIZ,  LIFTON  --  read  once and referred to the
          Committee on Banks --  committee  discharged,  bill  amended,  ordered
          reprinted as amended and recommitted to said committee
 
        AN  ACT  to  amend  the financial services law, in relation to requiring
          certain providers that extend specific terms of  commercial  financing
          to  a recipient to disclose certain information about the offer to the
          recipient
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section 1. The financial services law is amended by adding a new arti-
     2  cle 8 to read as follows:
     3                                   ARTICLE 8
     4                            COMMERCIAL FINANCING
     5  Section 801. Definitions.
     6          802. Exemptions.
     7          803. Sales-based financing disclosure requirements.
     8          804. Closed-end commercial financing disclosure requirements.
     9          805. Open-end commercial financing disclosure requirements.
    10          806. Factoring transaction disclosure requirements.
    11          807. Other forms of financing disclosure requirements.
    12          808. Disclosure requirements for renewal financing.
    13          809. Required signature.
    14          810. Additional information.
    15          811. Rules and regulations.
    16          812. Penalties.
    17    § 801. Definitions. For the purposes of this article:
    18    (a)  "Factoring  transaction"  means  an  accounts receivable purchase
    19  transaction that includes an agreement to purchase, transfer, or sell  a
    20  legally  enforceable claim for payment held by a recipient for goods the
    21  recipient has supplied or services the recipient has rendered that  have
    22  been ordered but for which payment has not yet been made.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15642-05-0

        A. 10118--A                         2
 
     1    (b)   "Commercial  financing"  means  open-end  financing,  closed-end
     2  financing, sales-based financing, factoring transaction, or  other  form
     3  of financing, the proceeds of which the recipient does not intend to use
     4  primarily  for  personal,  family or household purposes. For purposes of
     5  determining  whether a financing is a commercial financing, the provider
     6  may rely on any statement of intended purposes by the  recipient.    The
     7  statement  may  be  a separate statement signed by the recipient; may be
     8  contained in the financing application, financing  agreement,  or  other
     9  document  signed  or  consented  to by the recipient; or may be provided
    10  orally by the recipient so long as it is documented in  the  recipient's
    11  application file by the provider. Electronic signatures and consents are
    12  valid  for purposes of the foregoing sentence. The provider shall not be
    13  required to ascertain that the proceeds of a  commercial  financing  are
    14  used in accordance with the recipient's statement of intended purposes.
    15    (c) "Open-end financing" means an agreement for one or more extensions
    16  of  open-end  credit,  secured  or  unsecured, the proceeds of which the
    17  recipient does not intend to  use  primarily  for  personal,  family  or
    18  household  purposes.  "Open-end financing" includes credit extended by a
    19  provider under a plan in which: (i) the provider reasonably contemplates
    20  repeated transactions; (ii) the provider may  impose  a  finance  charge
    21  from time to time on an outstanding unpaid balance; and (iii) the amount
    22  of  credit  that may be extended to the recipient during the term of the
    23  plan (up to any limit set by the provider) is generally  made  available
    24  to the extent that any outstanding balance is repaid.
    25    (d)  "Closed-end  financing"  means  a closed-end extension of credit,
    26  secured or unsecured, including equipment financing that does  not  meet
    27  the  definition  of a lease under section 2-A-103 of the uniform commer-
    28  cial code, the proceeds of which the recipient does not  intend  to  use
    29  primarily  for  personal,  family  or  household  purposes.  "Closed-end
    30  financing" includes financing with an established principal  amount  and
    31  duration.
    32    (e)  "Finance  charge" means the cost of financing as a dollar amount.
    33  It includes any charge payable directly or indirectly by  the  recipient
    34  and  imposed directly or indirectly by the provider as an incident to or
    35  a condition of the extension of financing. It includes all charges  that
    36  would be included under 12 C.F.R. part 1026.4 as if the transaction were
    37  subject  to 12 C.F.R. part 1026.4. In addition, the finance charge shall
    38  include any  charges  as  determined  by  the  superintendent.  For  the
    39  purposes  of  an open-end financing, the finance charge shall assume the
    40  maximum amount of credit available to the recipient, in  each  case,  is
    41  drawn  and  held  for  the  duration of the term or draw period. For the
    42  purposes of a factoring transaction, the  finance  charge  includes  the
    43  discount taken on the face value of the accounts receivable.
    44    (f)  "Financial  institution"  means any of the following: (i) a bank,
    45  trust company, or industrial  loan  company  doing  business  under  the
    46  authority  of,  or in accordance with, a license, certificate or charter
    47  issued by the United States, this state or any  other  state,  district,
    48  territory,  or  commonwealth  of the United States that is authorized to
    49  transact business in this state; (ii) a federally chartered savings  and
    50  loan  association,  federal savings bank or federal credit union that is
    51  authorized to transact business in this state; or (iii)  a  savings  and
    52  loan  association, savings bank or credit union organized under the laws
    53  of this or any other state that is authorized to  transact  business  in
    54  this state.
    55    (g)  "Person"  means  an individual, corporation, partnership, limited
    56  liability company, joint  venture,  association,  joint  stock  company,

        A. 10118--A                         3

     1  trust  or  unincorporated  organization including, but not limited to, a
     2  sole proprietorship.
     3    (h)  "Provider" means a person who extends a specific offer of commer-
     4  cial financing to a recipient. Unless otherwise exempt, "provider"  also
     5  includes  a  person who solicits and presents specific offers of commer-
     6  cial financing on behalf of a third party. For the avoidance  of  doubt,
     7  the  extension  of  a  specific  offer or provision of disclosures for a
     8  commercial financing, in and of itself, shall not be construed  to  mean
     9  that  a provider is originating, making, funding or providing commercial
    10  financing.
    11    (i) "Recipient" means a person who applies  for  commercial  financing
    12  and  is  made a specific offer of commercial financing by a provider.  A
    13  recipient may also be an authorized representative  of  such  person.  A
    14  person acting as a broker cannot be a recipient.
    15    (j)  "Sales-based financing" means a transaction that is repaid by the
    16  recipient to the provider, over time, as a percentage of sales or reven-
    17  ue, in which the payment amount may increase or  decrease  according  to
    18  the  volume  of  sales made or revenue received by the recipient. Sales-
    19  based financing also includes a true-up mechanism where the financing is
    20  repaid as a fixed payment but provides for a reconciliation process that
    21  adjusts the payment to an amount that is a percentage of sales or reven-
    22  ue.
    23    (k) "Specific offer" means the specific terms of commercial financing,
    24  including price or amount, that is  quoted  to  a  recipient,  based  on
    25  information obtained from, or about the recipient, which, if accepted by
    26  a recipient, shall be binding on the provider, as applicable, subject to
    27  any specific requirements stated in such terms.
    28    §  802.  Exemptions.  This  article  shall not apply to, and shall not
    29  place any additional  requirements  or  obligations  upon,  any  of  the
    30  following:
    31    (a) a financial institution;
    32    (b) a person acting in its capacity as a technology services provider,
    33  such  as licensing software and providing support services, to an entity
    34  exempt under this section for use as part of the exempt entity's commer-
    35  cial financing  program,  provided  such  person  has  no  interest,  or
    36  arrangement  or  agreement  to  purchase  any interest in the commercial
    37  financing extended by the exempt entity in connection with such program;
    38    (c) a lender regulated under the federal Farm Credit  Act  (12  U.S.C.
    39  Sec. 2001 et seq.);
    40    (d) a commercial financing transaction secured by real property;
    41    (e)  a  lease  as defined in section 2-A-103 of the uniform commercial
    42  code;
    43    (f) any person or provider who makes  no  more  than  five  commercial
    44  financing transactions in this state in a twelve-month period; or
    45    (g)  an  individual commercial financing transaction in an amount over
    46  five hundred thousand dollars.
    47    § 803.  Sales-based  financing  disclosure  requirements.  A  provider
    48  subject  to  this  article  shall provide the following disclosures to a
    49  recipient at the time of  extending  a  specific  offer  of  sales-based
    50  financing according to formatting prescribed by the superintendent:
    51    (a) The total amount of the commercial financing, and the disbursement
    52  amount,  if different from the financing amount, after any fees deducted
    53  or withheld at disbursement.
    54    (b) The finance charge.
    55    (c) The estimated annual  percentage  rate,  using  the  words  annual
    56  percentage  rate  or the abbreviation "APR", expressed as a yearly rate,

        A. 10118--A                         4
 
     1  inclusive of any fees and finance charges, and calculated in  accordance
     2  with  the  federal  Truth  in  Lending  Act,  Regulation  Z, 12 C.F.R. §
     3  1026.22, based on the estimated term  of  repayment  and  the  projected
     4  periodic  payment  amounts.  The  estimated  term  of  repayment and the
     5  projected periodic payment amounts shall  be  calculated  based  on  the
     6  projection  of the recipient's sales, called the projected sales volume.
     7  The projected sales volume may be calculated using the historical method
     8  or the opt-in method. The provider shall provide notice  to  the  super-
     9  intendent  on  which  method  they intend to use across all instances of
    10  sales-based financing offered in calculating estimated annual percentage
    11  rate pursuant to this section.
    12    (i) The provider using the historical  method  shall  use  an  average
    13  historical  volume  of sales or revenue by which the financing's payment
    14  amounts are based and the estimated annual  percentage  rate  is  calcu-
    15  lated.  The provider shall fix the historical time period used to calcu-
    16  late the average historical volume and use such period for  all  disclo-
    17  sure purposes for all sales-based financing products offered.  The fixed
    18  historical  time  period  shall either be the preceding time period from
    19  the specific offer or, alternatively, the provider may use average sales
    20  for the same number of months with the highest sales volume  within  the
    21  past  twelve  months.  The fixed historical time period shall be no less
    22  than one month and not exceed twelve months.
    23    (ii) The provider using the opt-in method shall  determine  the  esti-
    24  mated  annual  percentage  rate,  the  estimated term, and the projected
    25  payments, using a projected sales volume that the  provider  elects  for
    26  each  disclosure,  provided,  that  they participate in a review process
    27  prescribed by the superintendent. A provider shall, on an annual  basis,
    28  report  data  to the superintendent of estimated annual percentage rates
    29  disclosed to the recipient and actual  retrospective  annual  percentage
    30  rates  of completed transactions. The report shall contain such informa-
    31  tion as the superintendent, by rule  or  regulation,  may  prescribe  as
    32  necessary  or  appropriate  for the purpose of making a determination of
    33  whether the deviation between the estimated annual percentage  rate  and
    34  actual  retrospective  annual percentage rates of completed transactions
    35  was reasonable. The superintendent shall establish the method of report-
    36  ing and may, upon a finding that the use of projected  sales  volume  by
    37  the provider has resulted in an unacceptable deviation between estimated
    38  and  actual  annual  percentage  rate,  require  the provider to use the
    39  historical method.  The superintendent may consider unusual and extraor-
    40  dinary circumstances impacting the provider's  deviation  between  esti-
    41  mated  and  actual  annual  percentage rate in the determination of such
    42  finding.
    43    (d) The total repayment amount, which is the disbursement amount  plus
    44  the finance charge.
    45    (e) The estimated term is the period of time required for the periodic
    46  payments, based on the projected sales volume, to equal the total amount
    47  required to be repaid.
    48    (f) The payment amounts, based on the projected sales volume:
    49    (i)  for  payment  amounts  that  are  fixed,  the payment amounts and
    50  frequency (e.g., daily, weekly, monthly), and, if the payment  frequency
    51  is  other than monthly, the amount of the average projected payments per
    52  month; or
    53    (ii) for payment amounts that are variable, a payment  schedule  or  a
    54  description of the method used to calculate the amounts and frequency of
    55  payments, and the amount of the average projected payments per month.

        A. 10118--A                         5
 
     1    (g) A description of all other potential fees and charges not included
     2  in  the  finance  charge, including, but not limited to, draw fees, late
     3  payment fees, and returned payment fees.
     4    (h) Were the recipient to elect to pay off or refinance the commercial
     5  financing prior to full repayment, the provider must disclose:
     6    (i) whether the recipient would be required to pay any finance charges
     7  other  than interest accrued since their last payment. If so, disclosure
     8  of the percentage of any unpaid portion of the finance charge and  maxi-
     9  mum dollar amount the recipient could be required to pay; and
    10    (ii)  whether  the  recipient  would be required to pay any additional
    11  fees not already included in the finance charge.
    12    (i) A description of collateral requirements or security interests, if
    13  any.
    14    § 804. Closed-end commercial financing  disclosure  requirements.    A
    15  provider,  subject  to this article, shall provide the following disclo-
    16  sures to a recipient at the time  of  extending  a  specific  offer  for
    17  closed-end  financing  according  to formatting prescribed by the super-
    18  intendent:
    19    (a) The total amount of the commercial financing, and the disbursement
    20  amount, if different from the financing amount, after any fees  deducted
    21  or withheld at disbursement.
    22    (b) The finance charge.
    23    (c) The annual percentage rate, using only the words annual percentage
    24  rate or the abbreviation "APR", expressed as a yearly rate, inclusive of
    25  any  fees and finance charges that cannot be avoided by a recipient, and
    26  calculated in accordance with the federal Truth in  Lending  Act,  Regu-
    27  lation Z, 12 C.F.R. § 1026.22.
    28    (d)  The total repayment amount, which is the disbursement amount plus
    29  the finance charge.
    30    (e) The term of the financing.
    31    (f) The payment amounts:
    32    (i) for payment amounts  that  are  fixed,  the  payment  amounts  and
    33  frequency  (e.g.,  daily,  weekly,  monthly), and, if the term is longer
    34  than one month, the average monthly payment amount; or
    35    (ii) for payment amounts that are variable, a full payment schedule or
    36  a description of the method used to calculate the amounts and  frequency
    37  of  payments,  and,  if the term is longer than one month, the estimated
    38  average monthly payment amount.
    39    (g) A description of all other potential fees and charges that can  be
    40  avoided  by  the  recipient, including, but not limited to, late payment
    41  fees and returned payment fees.
    42    (h) Were the recipient to elect to pay off or refinance the commercial
    43  financing prior to full repayment, the provider must disclose:
    44    (i) whether the recipient would be required to pay any finance charges
    45  other than interest accrued since their last payment. If so,  disclosure
    46  of  the percentage of any unpaid portion of the finance charge and maxi-
    47  mum dollar amount the recipient could be required to pay; and
    48    (ii) whether the recipient would be required  to  pay  any  additional
    49  fees not already included in the finance charge.
    50    (i) A description of collateral requirements or security interests, if
    51  any.
    52    §  805.  Open-end  commercial  financing  disclosure  requirements.  A
    53  provider, subject to this article, shall provide the  following  disclo-
    54  sures to a recipient at the time of extending a specific offer for open-
    55  end financing according to formatting prescribed by the superintendent:

        A. 10118--A                         6
 
     1    (a) The maximum amount of credit available to the recipient (e.g., the
     2  credit line amount), and the amount scheduled to be drawn by the recipi-
     3  ent at the time the offer is extended, if any, less any fees deducted or
     4  withheld at disbursement.
     5    (b) The finance charge.
     6    (c) The annual percentage rate, using only the words annual percentage
     7  rate  or  the  abbreviation  "APR",  expressed as a nominal yearly rate,
     8  inclusive of any fees and finance charges that cannot be  avoided  by  a
     9  recipient,  and calculated in accordance with the federal Truth in Lend-
    10  ing Act, Regulation Z, 12 C.F.R. § 1026.22  and  based  on  the  maximum
    11  amount  of credit available to the recipient and the term resulting from
    12  making the minimum required payments term as disclosed.
    13    (d) The total repayment amount, which is the  draw  amount,  less  any
    14  fees deducted or withheld at disbursement, plus the finance charge.  The
    15  total  repayment  amount shall assume a draw amount equal to the maximum
    16  amount of credit available to the recipient if drawn and  held  for  the
    17  duration of the term or draw period.
    18    (e)  The  term  of the plan, if applicable, or the period over which a
    19  draw is amortized.
    20    (f) The payment frequency and amounts, based on the  assumptions  used
    21  in   the   calculation  of  the  annual  percentage  rate,  including  a
    22  description of payment amount requirements such  as  a  minimum  payment
    23  amount,  and  if the payment frequency is other than monthly, the amount
    24  of the average projected payments per month.  For payment  amounts  that
    25  are  variable,  the  provider  should  include  a payment schedule, or a
    26  description of the method used to calculate the amounts and frequency of
    27  payments, and the estimated average monthly payment amount.
    28    (g) A description of all other potential fees and charges that can  be
    29  avoided by the recipient, including, but not limited to, draw fees, late
    30  payment fees, and returned payment fees.
    31    (h) Were the recipient to elect to pay off or refinance the commercial
    32  financing prior to full repayment, the provider must disclose:
    33    (i) whether the recipient would be required to pay any finance charges
    34  other  than interest accrued since their last payment. If so, disclosure
    35  of the percentage of any unpaid portion of the finance charge and  maxi-
    36  mum dollar amount the recipient could be required to pay; and
    37    (ii)  whether  the  recipient  would be required to pay any additional
    38  fees not already included in the finance charge.
    39    (i) A description of collateral requirements or security interests, if
    40  any.
    41    § 806. Factoring transaction disclosure  requirements.    A  provider,
    42  subject  to  this  article, shall provide the following disclosures to a
    43  recipient at the time of extending a  specific  offer  for  a  factoring
    44  transaction according to formatting prescribed by the superintendent:
    45    (a) The amount of the receivables purchase price paid to the recipient
    46  and,  if  different from the purchase price, the amount disbursed to the
    47  recipient after any fees deducted or withheld at disbursement.
    48    (b) The finance charge.
    49    (c) The estimated annual percentage rate, using that term,  calculated
    50  according to the federal Truth in Lending Act, Regulation Z, 12 C.F.R. §
    51  1026  Appendix  J, as a "single advance, single payment transaction". To
    52  calculate the estimated annual percentage rate, the purchase  amount  is
    53  considered  the  financing amount, the purchase amount minus the finance
    54  charge is considered the payment amount, and the term is established  by
    55  the  payment  due  date  of  the  receivables. As an alternate method of
    56  establishing the term, the provider may estimate the term for a  factor-

        A. 10118--A                         7
 
     1  ing  transaction as the average payment period, its historical data over
     2  a period not to exceed the previous twelve  months,  concerning  payment
     3  invoices paid by the party owing the accounts receivable in question.
     4    (d)  The  total  payment amount, which is the purchase amount plus the
     5  finance charge.
     6    (e) A description of all other potential fees and charges that can  be
     7  avoided by the recipient.
     8    (f)  A  description  of  the  receivables purchased and any additional
     9  collateral requirements or security interests.
    10    § 807. Other forms of financing disclosure  requirements.  The  super-
    11  intendent  may  require  disclosure  by  a provider extending a specific
    12  offer of commercial financing which is not open-end  financing,  closed-
    13  end  financing,  sales-based  financing,  or  factoring  transaction but
    14  otherwise meets the definition of commercial financing  as  provided  in
    15  this  article.  Subject to such rules and regulations by the superinten-
    16  dent, a provider subject to this article  shall  provide  the  following
    17  disclosures  to a recipient at the time of extending a specific offer of
    18  other forms of financing  according  to  formatting  prescribed  by  the
    19  superintendent:
    20    (a) The total amount of the commercial financing, and the disbursement
    21  amount,  if different from the financing amount, after any fees deducted
    22  or withheld at disbursement.
    23    (b) The finance charge.
    24    (c) The annual percentage rate, using only the words annual percentage
    25  rate or the abbreviation "APR", expressed as a yearly rate, inclusive of
    26  any fees and finance charges, and  calculated  in  accordance  with  the
    27  relevant  sections  of the federal Truth in Lending Act, Regulation Z or
    28  this article.
    29    (d) The total repayment amount which is the disbursement  amount  plus
    30  the finance charge.
    31    (e) The term of the financing.
    32    (f) The payment amounts:
    33    (i)  for  payment  amounts  that  are  fixed,  the payment amounts and
    34  frequency (e.g.,  daily,  weekly,  monthly),  and  the  average  monthly
    35  payment amount; or
    36    (ii)  for  payment  amounts that are variable, a payment schedule or a
    37  description of the method used to calculate the amounts and frequency of
    38  payments, and the estimated average monthly payment amount.
    39    (g) A description of all other potential fees and charges that can  be
    40  avoided  by  the  recipient, including, but not limited to, late payment
    41  fees and returned payment fees.
    42    (h) Were the recipient to elect to pay off or refinance the commercial
    43  financing prior to full repayment, the provider must disclose:
    44    (i) whether the recipient would be required to pay any finance charges
    45  other than interest accrued since their last payment. If so,  disclosure
    46  of  the percentage of any unpaid portion of the finance charge and maxi-
    47  mum dollar amount the recipient could be required to pay; and
    48    (ii) whether the recipient would be required  to  pay  any  additional
    49  fees not already included in the finance charge.
    50    (i) A description of collateral requirements or security interests, if
    51  any.
    52    §  808. Disclosure requirements for renewal financing. If, as a condi-
    53  tion of obtaining the commercial financing, the  provider  requires  the
    54  recipient  to  pay  off  the balance of an existing commercial financing
    55  from the same provider, the provider must disclose:

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     1    (a) The amount of the new commercial financing that is used to pay off
     2  the portion of  the  existing  commercial  financing  that  consists  of
     3  prepayment  charges  required to be paid and any unpaid interest expense
     4  that was not forgiven at the time of renewal. For  financing  for  which
     5  the  total repayment amount is calculated as a fixed amount, the prepay-
     6  ment charge is equal to the original finance charge  multiplied  by  the
     7  amount of the renewal used to pay off existing financing as a percentage
     8  of  the total repayment amount, minus any portion of the total repayment
     9  amount forgiven by the provider at the time of prepayment. If the amount
    10  is more than zero, such amount shall be  the  answer  to  the  following
    11  question:
    12    "Does  the  renewal  financing  include any amount that is used to pay
    13  unpaid finance charge or fees, also known as double dipping? Yes, {enter
    14  amount}. If the amount is zero, the answer would be No."
    15    (b) If the disbursement amount will be reduced to pay down any  unpaid
    16  portion  of  the  outstanding balance, the actual dollar amount by which
    17  such disbursement amount will be reduced.
    18    § 809. Required signature. The provider shall obtain  the  recipient's
    19  signature,  which  may  be  fulfilled by an electronic signature, on all
    20  disclosures required to be presented to the recipient  by  this  article
    21  before  authorizing the recipient to proceed further with the commercial
    22  financing transaction application.
    23    § 810. Additional information. Nothing in this article shall prevent a
    24  provider from  providing  or  disclosing  additional  information  on  a
    25  commercial  financing  being  offered  to a recipient, provided however,
    26  that such additional information shall not be disclosed as part  of  the
    27  disclosure  required by this article. If other metrics of financing cost
    28  are disclosed or used in the application process of a commercial financ-
    29  ing, these metrics shall not be presented as a "rate" if  they  are  not
    30  the annual interest rate or the annual percentage rate. The term "inter-
    31  est",  when  used  to  describe a percentage rate, shall only be used to
    32  describe annualized percentage rates, such as the annual interest  rate.
    33  When a provider states a rate of finance charge or a financing amount to
    34  a  recipient during an application process for commercial financing, the
    35  provider shall also state the rate as an "annual percentage rate", using
    36  that term or the abbreviation "APR".
    37    § 811. Rules and regulations. The superintendent is hereby  authorized
    38  and  empowered  to  promulgate  such rules and regulations as may in the
    39  judgment of the superintendent be consistent with the purposes  of  this
    40  article,  or  appropriate for the effective administration of this arti-
    41  cle, including, but not limited to:
    42    (a) Such rules and regulations in connection with the  calculation  or
    43  determination of any metric required to be disclosed to a recipient.
    44    (b)  Such  rules and regulations as necessary to develop and prescribe
    45  disclosure formatting to be used by providers that allows for recipients
    46  to easily compare financing options in a clear and  conspicuous  manner.
    47  Such  rules and regulations shall include the designation and method for
    48  disclosing the  information  required  in  this  article,  or  approving
    49  adequate forms and methods already used by providers.
    50    (c)  Such  rules  and regulations as may define the terms used in this
    51  article and as may be necessary and appropriate to interpret and  imple-
    52  ment the provisions of this article.
    53    (d) Such rules and regulations as may be necessary for the enforcement
    54  of this article.
    55    §  812.  Penalties.  (a)  Upon  a finding by the superintendent that a
    56  provider has violated the provisions of this article  or  the  rules  or

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     1  regulations  promulgated hereunder, the provider shall be ordered to pay
     2  to the people of this state a civil penalty for each violation  of  this
     3  article  or  any regulation or policy promulgated hereunder a sum not to
     4  exceed  two  thousand dollars for each violation or where such violation
     5  is willful ten thousand dollars for each violation.
     6    (b) In addition to any penalty imposed pursuant to subdivision (a)  of
     7  this  section,  upon a finding by the superintendent that a provider has
     8  knowingly violated this article, the superintendent may order additional
     9  relief, including, but  not  limited  to,  a  permanent  or  preliminary
    10  injunction on behalf of any recipient affected by the violation.
    11    § 2. This act shall take effect on the one hundred eightieth day after
    12  it shall have become a law.
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