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New York’s Commercial Finance Disclosure Law Set to Take Effect August 1, 2023

BY: Stephen Ornstein, Josh Dhyani
Loan agreement on a table and dollars.

A&B Abstract:

New York is one of the first states that enacted laws requiring consumer-style disclosures for commercial financing transactions (the “New York Law”). Previously, the New York Department of Financial Services (“NYDFS”) issued guidance stating that compliance with the requirements would be delayed until it issued final implementing regulations. Those final regulations were published on February 1, 2023, with an effective date of August 1, 2023 (the “Final Regulations”).

The Final Regulations

The Final Regulations make a few significant changes from the proposed rules, primarily in response to public comments. For example:

  • First, New York’s law will apply only where a recipient’s business is principally managed or directed from the state of New York or where the recipient (if a natural person) is a legal resident of the state of New York. This is a change from positions taken in prior proposed versions of the rule, in which New York would have required the disclosures if either the provider or recipient was located in New York.
  • Second, the Final Regulations clarify that subsidiaries of financial institutions (in addition to the financial institutions themselves) are exempt from the law.
  • Third, the Final Regulations modify notice requirements related to transfers to adhere to UCC norms.
  • Fourth, while the Final Regulations still require broker compensation disclosures, it does not impose strict requirements on the format of those disclosures as originally proposed.
  • Finally, the Final Regulations relaxed strict signature requirements, allowing for disclosures to be provided electronically and by other reasonable means.


New York is among a growing list of states, which include California, Utah, and Virginia, that have enacted laws requiring consumer-style disclosures for commercial financing transactions. As we covered in a previous post, the New York Law has many similarities to the California law that became effective on December 9, 2022. However, New York’s Final Regulations apply to commercial financing transactions of $2.5 million or less, whereas the California regulations apply only to transactions of $500,000 or less. And, as covered in another prior post, Utah also requires registration and disclosures for certain commercial financing transactions of $1 million or less as of January 1, 2023. Notable as well, Virginia has enacted somewhat similar laws applicable to sales-based financing which apply to transactions on or after July 1, 2022. In general, these disclosure laws require specifically formatted lender statements, including the order of the content and respective font sizes. New York has not provided model forms.

While the California, Utah, and Virginia laws have already gone into effect, we expect additional states will also promulgate similar requirements in the future.

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