New York Commercial Finance Disclosure Law

How the New York Commercial Finance Disclosure Law Works in Business Lending

The New York Commercial Finance Disclosure Law — formally part of New York Financial Services Law — requires lenders, brokers, and alternative finance providers to present a standardized disclosure form before a small business owner accepts any financing offer at or below USD 2,500,000. The disclosure must include the total amount funded, total repayment amount, total dollar cost of financing, the annualized rate of interest expressed as an Annual Percentage Rate (APR) or estimated APR, payment amounts and frequency, and any prepayment penalties. The New York Department of Financial Services (NYDFS) oversees enforcement and has published detailed compliance guidance. The law was modeled partly on the federal Truth in Lending Act (TILA), which the CFPB defines as a consumer protection standard requiring clear disclosure of credit terms — the New York law extends equivalent protections to commercial borrowers. Covered transactions include term loans, lines of credit, merchant cash advances (MCAs), sales-based financing, factoring arrangements, and lease financing, making its scope unusually broad compared to other state disclosure laws.

The disclosure requirements differ meaningfully depending on the type of lender and product involved. SBA lenders operating in New York — including community banks and credit unions participating in the 7(a) or 504 programs — must comply when the transaction falls within the USD 2,500,000 threshold, though their existing federal disclosures often align closely with the new requirements. Online lenders and alternative finance companies, particularly those offering merchant cash advances or revenue-based financing, face the most significant compliance burden because those products historically lacked standardized cost disclosures. CDFIs (Community Development Financial Institutions) operating in New York are also subject to the law, though many already provided transparent cost information as part of their mission-driven lending practices. Brokers who arrange commercial financing — not just direct lenders — are explicitly covered, meaning any intermediary presenting an offer to a New York-based business must ensure disclosures are provided prior to execution.

What Business Owners Should Do About the New York Commercial Finance Disclosure Law

If you are a small business owner in New York seeking financing, this law works directly in your favor. Before signing any funding agreement at or below USD 2,500,000, you are legally entitled to receive a written disclosure that includes the APR or estimated APR, the total repayment cost in USD, and all fees. Review these disclosures carefully and compare the APR across multiple offers — per the Federal Reserve’s 2023 Small Business Credit Survey, small businesses that shopped multiple lenders were significantly more likely to receive favorable terms. Do not proceed with any lender or broker who refuses to provide a compliant disclosure form, as this is a red flag for potentially predatory terms. Keep copies of all disclosures for your records, and if you believe a provider has violated the law, you can file a complaint directly with the New York Department of Financial Services at dfs.ny.gov. Timing matters as well — understanding your true financing cost before funds are disbursed gives you the opportunity to negotiate, walk away, or seek a competing offer.

At small-business-loans-today.com, we help business owners navigate the complexity of commercial financing by matching them with providers who operate transparently and in compliance with applicable state and federal disclosure laws. Whether your situation calls for an SBA lender, a CDFI, a community bank, or a compliant online lender, our role is clear: We connect you with lenders — we do not lend. When you understand what disclosures to expect and how to read them, you are far better positioned to choose financing that actually serves your business.