Public Comments Sought Until 12/19

NYS Small Business Truth In Lending Act

NYS CDFI Slider A1.jpg
The Public Comment Period on this Rule Closes Sunday 12/19/21
Please Submit Your Comments in Support ASAP! 

 

Background 

 

Sample Text for Comment Letter

Please choose from among the bullets below, and feel free to insert any experience your institution has had with consumers falling victim to predatory lenders where indicated. Some examples from CDFI Coalition members can be found by scrolling to the bottom of this presentation

Department of Financial Services
George Bogdan
1 State St
New York, New York 10004

george.bogdan@dfs.ny.gov

VIA ELECTRONIC TRANSMISSION

RE: Proposed 23 NYCRR 600, Disclosure Requirements for Certain Providers of Commercial Financing Transactions
 

Dear Mr. Bogdan:

  • Since long before the pandemic, small business owners have had to struggle with unfamiliar rates and terms to secure financing.

  • Hard-working entrepreneurs, particularly people of color, are misled into taking on financial products that drain the life out of their business.

  • The COVID-19 pandemic has made small business owners desperate for funds to stay afloat, leaving them vulnerable to predatory lenders.
     

  • Fortunately, in 2020 the New York State legislature passed the Small Business Truth in Lending Act (SB5470B, now Article 8 of the Financial Services Law), bringing sunshine to the commercial financing marketplace.

  • On October 20, 2021, the New York State Department of Financial Services (“Department” or “DFS”) published a thoughtful and comprehensive draft rule that enables New York to set a strong national standard for small business truth-in-lending disclosures.

  • DFS’ regulations will empower entrepreneurs with the standardized, transparent disclosures they need to compare financing options and select the best product for their business.

 

  • Thank you for publishing a strong proposed rule that included thoughtful revisions to the pre-proposed outreach draft.

INSERT YOUR EXPERIENCE HERE IF APPLICABLE 

  • We recommend two additional changes intended to further strengthen small business borrower protections and enable interstate harmonization.

Recommendation 1: Incorporate October 12, 2021 California regulatory updates to enable interstate harmonization and innovation.
 

  • We commend the Department for incorporating provisions of the California Department of Financial Protection and Innovation’s (“DFPI”) draft commercial financing regulations published on August 9, 2021. We also thank the Department for including our recommended change to ensure that borrowers receive disclosures for any offer they consider when presented with multiple offers, rather than only for the single offer the small business selects to move forward with. These changes strengthened the Department’s draft rule and will enable interstate harmonization.

  • We encourage the Department to adopt this language and other changes made in DFPI’s third modification published October 12, 2021, to ensure continued interstate harmonization and support innovations in small business financing delivery systems.
     

Recommendation 2: Include S5470B’s requirement to disclose APR any time price or amount are stated, even outside of the required disclosure.
 

  • We urge the Department to implement an important financial protection for small businesses that is included in Article 8, Section 810 of the Financial Services Law. Section 810 requires APR to be disclosed throughout the application process at any time the price or financing amount are stated, including outside of the required disclosure:

  • “§ 810… WHEN A PROVIDER STATES A RATE OF FINANCE CHARGE OR A FINANCING AMOUNT TO A RECIPIENT DURING AN APPLICATION PROCESS FOR COMMERCIAL FINANCING, THE PROVIDER SHALL ALSO STATE THE RATE AS AN "ANNUAL PERCENTAGE RATE", USING THAT TERM OR THE ABBREVIATION "APR".”

  • By addressing Section 810 in the rules, the Department will help ensure that small business borrowers are able to make apples-to-apples price comparisons using APR throughout the application process, including outside of when the full form disclosure is presented to them

Small businesses represent the dreams and labor of millions of New Yorkers. Overall, we are very pleased with the Department’s draft rule to protect business owners from deceptive lending practices. We hope the above comments are helpful as DFS proceeds with this rulemaking. We thank DFS for leading the nation with strong commercial financing regulations that will protect small business borrowers and enable interstate harmonization.

Sincerely,