We reported last year on New York’s newly enacted commercial finance disclosure law and the legislature’s quick pivot thereafter, expanding the law’s reach to all loans up to $2,500,000 - a change from the previous limitation of $500,000. As we discussed in our prior post, the commercial finance disclosure law (CFDL) requires certain providers of commercial financings to disclose consumer-like loan information, similar to certain federal Truth-in–Lending Act disclosures that are made to consumers in consumer loans.

Since our last report, the New York Department of Financial Services (DFS) proposed rules to implement New York’s CFDL. The proposed rules can be found here. The comment period has passed. While considering comments, DFS issued a statement that the effective date of the CFDL will be postponed from its original effective date of January 1, 2022 to a date after which DFS’s final rules go into effect. DFS’s guidance on the effective date can be found here.

New York and California are two states that have enacted similar CFDLs. The effective dates of these laws, however, await final rulemaking in their respective states. Similar CFDL legislation has been introduced in other states. As of the date of this post, those states include Connecticut (2021 Senate Bill 745), Mississippi (2022 Senate Bill 2629; 2022 House Bill 1178), Missouri (2022 Senate Bill 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 type disclosures in commercial loans – their reach is not uniform. A number of proposed laws would apply mandatory disclosures in all commercial loans without regard to loan size, unless an exemption applies.

Miles & Stockbridge is closely monitoring developments in this area and remains ready to assist clients navigate these proposed changes.

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