2023 New York Laws › FIS - Financial Services Law › Article 8 - Commercial Financing › 803 - Sales-Based Financing Disclosure Requirements.

§  803.  Sales-based  financing  disclosure  requirements.  A provider
subject to this article shall provide the  following  disclosures  to  a
recipient  at  the  time  of  extending  a specific offer of sales-based
financing according to formatting prescribed by the superintendent:
(a) The total amount of the commercial financing, and the disbursement
amount, if different from the financing amount, after any fees  deducted
or withheld at disbursement.
(b) The finance charge.
(c)  The  estimated  annual  percentage  rate,  using the words annual
percentage rate or the abbreviation "APR", expressed as a  yearly  rate,
inclusive  of any fees and finance charges, and calculated in accordance
with the federal Truth  in  Lending  Act,  Regulation  Z,  12  C.F.R.  §
1026.22,  based  on  the  estimated  term of repayment and the projected
periodic payment  amounts,  regardless  of  whether  such  act  or  such
regulation  would  require  such  a  calculation.  The estimated term of
repayment and the projected periodic payment amounts shall be calculated
based on the projection of the recipient's sales, called  the  projected
sales  volume.  The  projected  sales volume may be calculated using the
historical method or the  opt-in  method.  The  provider  shall  provide
notice  to  the superintendent on which method they intend to use across
all instances of sales-based financing offered in calculating  estimated
annual percentage rate pursuant to this section.
(i)  The  provider  using  the  historical method shall use an average
historical volume of sales or revenue by which the  financing's  payment
amounts   are   based  and  the  estimated  annual  percentage  rate  is
calculated. The provider shall fix the historical time  period  used  to
calculate  the  average  historical  volume  and use such period for all
disclosure purposes for all sales-based financing products offered.  The
fixed  historical  time period shall either be the preceding time period
from the specific offer or, alternatively, the provider may use  average
sales for the same number of months with the highest sales volume within
the  past  twelve  months.  The fixed historical time period shall be no
less than one month and not exceed twelve months.
(ii)  The  provider  using  the  opt-in  method  shall  determine  the
estimated  annual percentage rate, the estimated term, and the projected
payments, using a projected sales volume that the  provider  elects  for
each  disclosure,  provided,  that  they participate in a review process
prescribed by the superintendent. A provider shall, on an annual  basis,
report  data  to the superintendent of estimated annual percentage rates
disclosed to the recipient and actual  retrospective  annual  percentage
rates   of   completed  transactions.  The  report  shall  contain  such
information as the superintendent, by rule or regulation, may  prescribe
as necessary or appropriate for the purpose of making a determination of
whether  the  deviation between the estimated annual percentage rate and
actual retrospective annual percentage rates of  completed  transactions
was  reasonable.  The  superintendent  shall  establish  the  method  of
reporting and may, upon a finding that the use of projected sales volume
by the provider  has  resulted  in  an  unacceptable  deviation  between
estimated and actual annual percentage rate, require the provider to use
the  historical  method.  The  superintendent  may  consider unusual and
extraordinary circumstances impacting the provider's  deviation  between
estimated and actual annual percentage rate in the determination of such
finding.
(d)  The total repayment amount, which is the disbursement amount plus
the finance charge.
(e) The estimated term is the period of time required for the periodic
payments, based on the projected sales volume, to equal the total amount
required to be repaid.
(f) The payment amounts, based on the projected sales volume:
(i)  for  payment  amounts  that  are  fixed,  the payment amounts and
frequency (e.g., daily, weekly, monthly), and, if the payment  frequency
is  other than monthly, the amount of the average projected payments per
month; or
(ii) for payment amounts that are variable, a payment  schedule  or  a
description of the method used to calculate the amounts and frequency of
payments, and the amount of the average projected payments per month.
(g) A description of all other potential fees and charges not included
in  the  finance  charge, including, but not limited to, draw fees, late
payment fees, and returned payment fees.
(h) Were the recipient to elect to pay off or refinance the commercial
financing prior to full repayment, the provider must disclose:
(i) whether the recipient would be required to pay any finance charges
other than interest accrued since their last payment. If so,  disclosure
of  the  percentage  of  any  unpaid  portion  of the finance charge and
maximum dollar amount the recipient could be required to pay; and
(ii) whether the recipient would be required  to  pay  any  additional
fees not already included in the finance charge.
(i) A description of collateral requirements or security interests, if
any.