New York State Bill Aims to Recharacterize Factoring, Leasing, Revenue Based Financing, and More

A proposal to amend a New York State statute that governs how the rate of interest is computed “upon a loan or forbearance of any money, goods, or thing in action” seeks to broaden its application to an all encompassing umbrella of loan and non-loan products defined as a “financing arrangement” and then subject them all to usury caps.

And yes, it applies to commercial financing.

According to Assembly Bill 9585, a financing arrangement will be defined as “to include loans, forbearance of any money, goods or things in action, and all other transactions that involve the lending or advancing of money, goods or things in action for an amount charged, taken or received, and all transactions that operate as substitutes for such products, including but not limited to retail installment contracts, merchant cash advances, invoice financing, revenue-based financing, earned wage access or similar wage advance transactions, lease- or rent-to-own arrangements, rental-purchase agreements as defined in subdivision six of section five hundred of the personal property law, buy-now pay-later transactions, financing for litigation or legal settlements, income-sharing agreements and financing for education.”

And once that rate of interest is computed, “any rate exceeding twenty-five per centum per annum” in accordance with how the rate is allowed to be calculated, will be considered a Class E Felony of Criminal Usury.

This is just a bill. It hasn’t passed anything yet. It can be read here. It was introduced by Assemblywoman Helene E. Weinstein.