BILL NUMBER: S3177
SPONSOR: SANDERS
 
TITLE OF BILL:
An act to amend the banking law and the administrative code of the city
of New York, in relation to regulating commercial finance licensing
 
PURPOSE:
This bill would require persons or entities engaging in the business of
making or soliciting commercial financing products in the New York state
to obtain a license from the superintendent
 
SUMMARY OF PROVISIONS: AND STATEMENT IN SUPPORT:
Section 363. Requires persons or entities engaging in the business of
making soliciting commercial financing products in the New York state to
obtain a license from the superintendent.
Commercial financing product means any advance of funds to a commercial
or business enterprise made for the purpose of assisting the business
with its needs.
Making or soliciting means providing commercial financing products to
small businesses; marketing commercial financing products for providers
of commercial financing products; receiving any compensation from a
provider of commercial financing products based on the value of the
commercial financing product provided in exchange for a referral of
small business or its owner; any entity that partners with federal or
state banking organization In which the federal or state banking organ-
ization originates the commercial financing product.
363-b. writes already licensed by DFS or entities making five or fewer
commercial financing products in a year are exempt.
363-c. Sets forth the application process for a license including fees,
capitalization requirements, approval for opening a second location.
363-d. License applicants must have financial responsibility, experi-
ence, character, and general fitness to command the confidence of the
community and to warrant belief that the business will operate honestly,
fairly, and efficiently. License is valid until, it is surrendered by
licensee or revoked/suspended by superintendent.
363-e. License must have address of business, name of licensee, date and
place of incorporation. Every location used to conduct business must be
identified in the application and approved by superintendent.
363-f. Superintendent must approve a change of control of the licensed
business.
363-g. Grounds for suspension or revocation of a license include: fail-
ure to pay any sum of money lawfully demanded by the superintendent,
failure to company with. any demand, ruling or requirement of the super-
intendent, violation of this article, or upon finding that a fact or
condition exists that would warrant to superintendent to refuse to issue
a license if the fact or condition had exited at the time of the
original application.
363-h. Superintendent may investigate the business and examine the books
for the purpose of discovering violations or securing information
lawfully required.
363-i. Licensee must keep and use books in compliance with the applica-
ble laws. Licensee must preserve records for at least 2 years after last
payment. Licensee must give annual report to superintendent.
363-j. Licensee cannot advertise information that is false, misleading
or deceptive.
363-k. No licensee can take a confession of judgement. No instrument can
be left blank to fill in after execution.
363-1. Commercial financing product made by entity not licensed under
this article is void and there is no right to collect from the borrower.
Violation this article is a misdemeanor.
363-m. Regulations 363-n. Severability
 
JUSTIFICATION:
Currently, non-traditional commercial lenders are allowed to operate
without being licensed. Unlicensed lenders are not regulated. This bill
would require lenders operating in New York state to obtain a license
and be subject to the oversight by the DFS.
 
LEGISLATIVE HISTORY:
2022 REPORTED AND COMMITTED TO SENATE FINANCE
2022 referred to assembly banks
2021 REFERRED TO SENATE BANKS
2021 referred to assembly banks
2020 REFERRED TO SENATE BANKS
2020 referred to assembly banks
2019 REFERRED TO SENATE RULES
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
No net cost to the State. The Department of Financial Services would
collect licensing fees.
 
EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become a law. Effective immediately, the addition, amendment
and/or repeal of any rule or regulation necessary for the implementation
of this act on its effective date are authorized to be made and
completed on or before such effective date.

Statutes affected:
S3177: 22 banking law, 635 banking law, 635(2) banking law, 652-b banking law, 652-b(1) banking law