NY Commercial Financing Disclosure Law
The New York Commercial Financing Disclosure Law (effective 2023) requires MCA funders and other commercial financing providers to disclose APR-equivalent costs, total dollar costs, payment amounts, and finance charges to merchants in standardized format prior to deal execution.
Why This Matters
NY CFDL was the first major US state law extending consumer-style financing disclosures to commercial finance products including MCA. The disclosure form must include: total amount financed, total cost, APR-equivalent (calculated using mandated formula), payment amount and frequency, and prepayment terms. Compliance applies to any financing offered to a NY-based merchant regardless of funder location. Similar laws have followed in California, Virginia, Utah, and Georgia, creating a patchwork of state-specific commercial disclosure requirements that MCA operations must navigate.
Frequently Asked Questions
Frequently Asked Questions
Does NY CFDL apply to MCA, or only loans?
It explicitly applies to MCA, factor advances, and any commercial financing where the recipient is a NY-located business. The law was designed specifically to bring MCA pricing transparency into regulatory scope despite MCA's non-loan legal structure.
What's the penalty for NY CFDL non-compliance?
Civil penalties up to $2,000 per violation, with separate violations possible per affected merchant. NYDFS enforcement has been measured but the statutory framework supports significant aggregate exposure for non-compliant funders.