March 31, 2026
The New York legislature is considering a bill, Senate Bill 3177, that would require a provider of commercial financing to obtain a license from the New York Department of Financial Services. The bill would also add other restrictions on the provision of commercial financing in New York.
The bill would require anyone making or soliciting commercial financing products to New York businesses to obtain a license from the DFS. The term "making or soliciting" covers not only direct provision of funds but also marketing, brokering, and bank partnerships. The bill's definition of "commercial financing product" covers leases as well as closed- and open-end loans, sales-based financing, and factoring. The bill would apply to a transaction with an amount financed of $500,000 or less.
S.B. 3177 would add other requirements to the provision of commercial financing. Licensees would be subject to recordkeeping and reporting requirements. The bill would prohibit confessions of judgment. It would also prohibit false, misleading, and deceptive statements and representations regarding rates, terms, costs, and conditions for commercial financing products. Under the bill, any commercial financing transaction made by an unlicensed, non-exempt person would be void and unenforceable.
If passed, S.B. 3177 would take effect 180 days after enactment.