Regulation

New Jersey Reintroduces Commercial Financing APR Disclosure Bill

January 20, 2022
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new jerseyMembers of New Jersey’s state legislature are trying for a fifth year in a row to advance a commercial financing APR disclosure bill. Senate Bill 819 was introduced on January 18th. Senate Majority Whip Troy Singleton (D) is the primary sponsor.

Similar to what was just introduced in the Virginia legislature, the bill is mainly aimed at “sales-based financing.”

“Sales-based financing means a transaction that is repaid by the recipient to the provider, over time and as a percentage of sales or revenue, in which the payment amount may increase or decrease according to the volume of sales made or revenue received by the recipient. ‘Sales-based financing’ includes a true-up mechanism where the financing is repaid as a fixed payment but provides for a reconciliation process that adjusts the payment to an amount that is a percentage of sales or revenue.”

Virginia Hops on the Commercial Finance APR Disclosure Bandwagon

January 14, 2022
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Virginia Capitol Building in RichmondAdd Virginia to the list of states introducing initiatives to codify disclosures in commercial finance. Virginia House Bill 1027 is aimed squarely at “sales-based financing providers.”

The Virginia bill calls for an estimated APR to be disclosed on sales-based financing contracts using methods conceived in New York’s recent legislation.

As has been witnessed, however, New York’s regulators recently discovered weaknesses in their own law.

The Virginia bill is in its very early stages. It was introduced on Wednesday, January 12th by Delegate Kathy K.L. Tran (D).

Transition to NMLS Extension Postponed to March 15, 2022

December 21, 2021
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With permission for reprint from Leasing News and credit to Ken Greene


California LendingThe California DFPI has extended the deadline for transitioning to the NMLS to March 15, 2022 for all those with a California license.

I had a long talk with the DFPI NMLS specialist and the agency is well aware that the transition process is not simple, and that many companies are having difficulty with it. I was also advised that if an application is pending but not approved when the deadline passes, your license will not be revoked. That is also good news.

This three-month extension should give everyone sufficient time to get the transition done. The process is confusing, but the folks at the DFPI are quite helpful. I urge anyone having difficulty to call them. Still, don’t wait until the last minute!

Here is the announcement:
Extension – NMLS Transition for California Financing Law Licensees: Deadline Extended to March 15, 2022

Notice of Extension

The deadline for licensees under the California Financing Law not currently on NMLS to transition onto NMLS is extended to March 15, 2022.

All licensees not yet on NMLS must establish an account in NMLS and submit their information through NMLS on or before the March 15, 2022 deadline.

Begin by Establishing an Account in NMLS

Licensees seeking to transition onto NMLS may access NMLS’s website here. From this homepage, select the button for “Getting Started – Company.”

To facilitate creating an account in NMLS, all transitioning CFL licensees should be familiar with the documentation required when setting up the account. This NMLS Account Creation Help Document describes step-by-step how to create an NMLS account and the documents needed.

Input Licensee Information

After establishing an account, a licensee must input its information on two electronic forms (three electronic forms if the licensee has branch locations). Information about the licensee is entered on the “Company Form,” MU1. Information about each key personnel (owners, officers, directors, managing members, partners, etc.) is entered on the “Individual Form,” MU2. Information about branch locations/licenses is entered on the “Branch Form,” MU3. After completing the applicable information, submit the information through NMLS.

NMLS has state-specific checklists to assist licensees transitioning onto NMLS, and FAQs for guidance on transitioning a license onto NMLS.

Questions

For questions regarding the creation of an account in NMLS, contact the NMLS Call Center at (855) 665-7123. For questions regarding transitioning a CFL license onto NMLS, contact DFPI at CFL.Inquiries@dfpi.ca.gov or (866) 275-2677.

Finally, for those of you who missed it, here is a link to my Leasing News article from 12/8/21 outlining the CFL to NMLS transition process:
https://leasingnews.org/archives/Nov2021/11_15.htm#cfl

Ken Greene Leasing & Finance Observations
https://leasingnews.org/Pages/greene_observations.html

Ken Greene
Tel: 818.575.9095
Fax: 805.435.7464
ken@kengreenelaw.com
Alternate: kengreenelaw@outlook.com

Congress Introduces New Restrictive Small Business Financing Bill

November 19, 2021
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US CapitolA new bill introduced by Rep. Nydia M. Velázquez, the Chairwoman of the House Small Business Committee, and Senator Robert Menendez (D-NJ), hopes to “stop predatory small business loans” by applying broad consumer protections to small business borrowers nationwide.

This would be done by including small businesses as a covered party under the already existing Truth in Lending Act (TILA).

The proposal, if successful, would arguably become more restrictive than New York’s recently passed commercial financing disclosure law.

Among the supporters of the bill are LendingClub and Funding Circle. No republican members of congress are listed among the sponsors in the official announcement.

The bill is similar to one introduced last year that failed to advance, the Small Business Lending Disclosure and Broker Regulation Act of 2020. That bill never made it out of the House Financial Services Committee. The makeup of Congress now, however, is different than it was last year.

New York DFS Provides New Guidance on Disclosure Law, 6 Month Delay

October 20, 2021
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One Commerce Plaza, Albany, NYNew York’s Department of Financial Services has provided updated guidance on the impending commercial finance disclosure law scheduled to go into effect on January 1st.

The main news? A six month delay.

“Financiers and brokers shall comply with disclosure requirements six months after the effective date,” the proposals state.

The comment period has also been corrected/extended to December 19, 2021. Comments are to be directed to George Bogdan at DFS.

The regulation’s draft has been amended as well and can be VIEWED HERE.

How to Comment on New York’s Commercial Finance Disclosure Law

October 4, 2021
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With New York’s commercial financing disclosure law on the horizon for Jan 1, the state’s Department of Financial Services is seeking input on how the law should officially be rolled out. Their draft was published on September 21st. Directions for how to submit a comment were said to be forthcoming, but the when and how to do that, were not easily discernible.

The DFS website says that comments should be submitted via email to George Bogdan, but that the time to do that has already expired, the deadline having been October 1st.

A spokesperson for DFS on social media, however, said that comments on the law can be sent to: Comments@dfs.ny.gov.

This process of emailing comments contrasts with processes at the federal level which typically employ formal portals. While it may apparently be too late, anyone that had hoped to contribute their feedback but didn’t get to, could try the above contacts.

MCA Skeptic Rohit Chopra Confirmed by Senate to Head CFPB

October 1, 2021
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ftc COMMISSIONER rohit chopraMore than eight months after deBanked announced that FTC Commissioner Rohit Chopra would be the next head of the Consumer Financial Protection Bureau, his appointment has finally been confirmed by the Senate.

The confirmation of Chopra is notable given the agency’s objectives to collect data from small business finance companies and the fact that Chopra himself has been very vocal about merchant cash advances in particular.

One year ago, in his capacity as an FTC commissioner, he referred to the industry as “opaque” with “pay-day style” products whose structure “may be a sham.”

In an interview with NBC around the same time, he used stronger language, saying that he was “looking for a systemic solution that makes sure they can all be wiped out before they do more damage.”

Chopra knows his way around the CFPB. He worked for the agency when it first started in 2010 and was there for five years as the Assistant Director & Student Loan Ombudsman. He later moved to the FTC as a commissioner and now returns back at the CFPB in the director’s seat.

New York DFS: The Commercial Financing Disclosure Requirement is Happening

September 21, 2021
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One Commerce Plaza, Albany, NYNew York State’s financial regulator announced that the commercial financing disclosure law is moving forward as planned for the Jan 1, 2022 deadline.

To prepare those that will be subject to it, Acting Superintendent Adrienne A. Harris released a copy of proposed regulations that will be open to comment for 60 days.

Its length, 45 pages, demonstrates the complexity that compliance will require. Anyone involved in commercial or small business financing should take the careful time to read it.

“The Department of Financial Services will then review all received comments and issue a final regulation,” the announcement says.