2023 New York Laws › FIS - Financial Services Law › Article 8 - Commercial Financing › 801 - Definitions.

§ 801. Definitions. For the purposes of this article:
(a)  "Factoring  transaction"  means  an  accounts receivable purchase
transaction that includes an agreement to purchase, transfer, or sell  a
legally  enforceable claim for payment held by a recipient for goods the
recipient has supplied or services the recipient has rendered that  have
been ordered but for which payment has not yet been made.
(b)   "Commercial  financing"  means  open-end  financing,  closed-end
financing, sales-based financing, factoring transaction, or  other  form
of financing, the proceeds of which the recipient does not intend to use
primarily  for  personal,  family or household purposes. For purposes of
determining whether a financing is a commercial financing, the  provider
may  rely  on  any  statement of intended purposes by the recipient. The
statement may be a separate statement signed by the  recipient;  may  be
contained  in  the  financing application, financing agreement, or other
document signed or consented to by the recipient;  or  may  be  provided
orally  by  the recipient so long as it is documented in the recipient's
application file by the provider. Electronic signatures and consents are
valid for purposes of the foregoing sentence. The provider shall not  be
required  to  ascertain  that the proceeds of a commercial financing are
used in accordance with the recipient's statement of intended purposes.
(c) "Open-end financing" means an agreement for one or more extensions
of open-end credit, secured or unsecured,  the  proceeds  of  which  the
recipient  does  not  intend  to  use  primarily for personal, family or
household purposes. "Open-end financing" includes credit extended  by  a
provider under a plan in which: (i) the provider reasonably contemplates
repeated  transactions;  (ii)  the  provider may impose a finance charge
from time to time on an outstanding unpaid balance; and (iii) the amount
of credit that may be extended to the recipient during the term  of  the
plan  (up  to any limit set by the provider) is generally made available
to the extent that any outstanding balance is repaid.
(d) "Closed-end financing" means a  closed-end  extension  of  credit,
secured  or  unsecured, including equipment financing that does not meet
the  definition  of  a  lease  under  section  2-A-103  of  the  uniform
commercial  code, the proceeds of which the recipient does not intend to
use primarily for personal, family or  household  purposes.  "Closed-end
financing"  includes  financing with an established principal amount and
duration.
(e) "Finance charge" means the cost of financing as a  dollar  amount.
It  includes  any charge payable directly or indirectly by the recipient
and imposed directly or indirectly by the provider as an incident to  or
a  condition of the extension of financing. It includes all charges that
would be included under 12 C.F.R. part 1026.4 as if the transaction were
subject to 12 C.F.R. part 1026.4. In addition, the finance charge  shall
include  any  charges  as  determined  by  the  superintendent.  For the
purposes of an open-end financing, the finance charge shall  assume  the
maximum  amount  of  credit available to the recipient, in each case, is
drawn and held for the duration of the term  or  draw  period.  For  the
purposes  of  a  factoring  transaction, the finance charge includes the
discount taken on the face value of the accounts receivable.
(f) "Financial institution" means any of the following:  (i)  a  bank,
trust  company,  or  industrial  loan  company  doing business under the
authority of, or in accordance with, a license, certificate  or  charter
issued  by  the  United States, this state or any other state, district,
territory, or commonwealth of the United States that  is  authorized  to
transact  business in this state; (ii) a federally chartered savings and
loan association, federal savings bank or federal credit union  that  is
authorized  to  transact  business in this state; or (iii) a savings and
loan association, savings bank or credit union organized under the  laws

of  this  or  any other state that is authorized to transact business in
this state.
(g)  "Person"  means  an individual, corporation, partnership, limited
liability company, joint  venture,  association,  joint  stock  company,
trust  or  unincorporated  organization including, but not limited to, a
sole proprietorship.
(h) "Provider"  means  a  person  who  extends  a  specific  offer  of
commercial financing to a recipient. Unless otherwise exempt, "provider"
also  includes  a  person  who  solicits and presents specific offers of
commercial financing on behalf of a third party. For  the  avoidance  of
doubt, the extension of a specific offer or provision of disclosures for
a commercial financing, in and of itself, shall not be construed to mean
that  a provider is originating, making, funding or providing commercial
financing.
(i) "Recipient" means a person who applies  for  commercial  financing
and  is  made  a specific offer of commercial financing by a provider. A
recipient may also be an authorized representative  of  such  person.  A
person acting as a broker cannot be a recipient.
(j)  "Sales-based financing" means a transaction that is repaid by the
recipient to the provider, over  time,  as  a  percentage  of  sales  or
revenue,  in which the payment amount may increase or decrease according
to the volume of sales  made  or  revenue  received  by  the  recipient.
Sales-based  financing  also  includes  a  true-up  mechanism  where the
financing is repaid as a fixed payment but provides for a reconciliation
process that adjusts the payment to an amount that is  a  percentage  of
sales or revenue.
(k) "Specific offer" means the specific terms of commercial financing,
including  price  or  amount,  that  is  quoted to a recipient, based on
information obtained from, or about the recipient, which, if accepted by
a recipient, shall be binding on the provider, as applicable, subject to
any specific requirements stated in such terms.