Marketplace lender Opportunity Financial, LLC (“OppFi”) has gone on the offensive against the California Department of Financial Protection and Innovation (“DFPI”) to protect its bank partnership program against challenge on a “true lender” theory. On March 7, 2022, OppFi filed suit against the DFPI to ask the state court to declare that FinWise Bank, a
NYDFS Issues Pre-Proposed Rules to Implement New Commercial Financing Disclosure Law
The New York Department of Financial Services (NYDFS) has issued “pre-proposed” rules under New York’s commercial financing disclosure law that was enacted at the end of 2020. The pre-proposed rules are 45 pages in length and were posted on the NYDFS website on September 21. Comments on the pre-proposed outreach rules are due by October 1. There will be a longer comment period once a proposed rule is published in the State Register. The NYDFS is aiming to finalize the rules before the law takes effect on January 1, 2022.
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Illinois Imposes Strict 36% Usury Cap for a Range of Consumer Finance Products and Providers
On March 23, 2021, Illinois Governor JB Pritzker signed into law Senate Bill 1792, enacting the Predatory Loan Prevention Act (PLPA) and capping interest at an “all-in” 36% APR (similar to the Military Lending Act’s MAPR) for a variety of consumer financing, effective immediately. The PLPA uses an expansive definition of interest for the usury
Congress Prepares to Invalidate OCC’s True Lender Rule
On Thursday (March 26, 2021), Senator Chris Van Hollen (D-MD) introduced a Congressional Review Act (CRA) resolution of disapproval to invalidate the Office of the Comptroller of the Currency’s (OCC) true lender rule. The resolution is co-sponsored by Senate Banking Committee Chair Sherrod Brown (D-OH) and Senators Jack Reed (D-RI), Elizabeth Warren (D-MA), Catherine Cortez-Masto
NY Expands Coverage of Recently Enacted Commercial Financing Disclosure Law
As expected, New York has broadened the reach of its new commercial financing disclosure law less than two months after its enactment. S.B. 5470 imposed a range of Truth in Lending-like disclosure requirements on a variety of commercial financing transactions. On February 16, 2021, New York Governor Andrew Cuomo signed S.B. 898 into law, clarifying
Legal Update: NY Enacts TILA-Like Disclosure Law for Business Loans and Purchases of Receivables (Factors, MCA Providers, Fintechs, Commercial Lenders—Take Note)
In late December 2020, New York Governor Andrew Cuomo signed S.B. 5470 into law, which will impose a range of Truth in Lending Act-like disclosure requirements on providers of commercial financing in amounts of $500,000 or less. The law will have a significant impact on providers beyond traditional commercial lenders, as it broadly defines “commercial
The OCC Finalizes “Madden Fix” Regulation, Codifying the “Valid-when-Made” Doctrine as Applicable to Loans Made by National Banks and Federal Savings Associations
On Friday, the United States Office of the Comptroller of the Currency (“OCC”) finalized a regulation regarding the “Permissible Interest on Loans that are Sold, Assigned, or Otherwise Transferred” by national banks and federal savings associations. Initially proposed in November 2019, the regulation provides that interest on a loan that is permissible under provisions of
U.S. Federal Reserve Expands and Provides Additional Details on Main Street Lending Program for Small and Mid-Sized Businesses
On April 30, 2020, the Federal Reserve Board announced expanded loan offerings and terms for the forthcoming Main Street Lending Program. Among other changes, Main Street is now open to larger businesses with up to 15,000 employees or $5 billion in 2019 annual revenue (previously up to 10,000 employees or $2.5 billion in 2019 annual
PPPLF Now Open to Non-Banks and for Purchased PPP Loans
The Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) is now available to non-bank PPP lenders to finance Paycheck Protection Program (“PPP”) loans that they originated or purchased. While the PPPLF was previously only available to depository institutions to finance PPP loans that they originated, the Federal Reserve revised its eligibility criteria on April 30, 2020 to provide funding to all Small Business Administration (“SBA”) approved lenders.[1] Terms of the PPPLF are discussed in our earlier blog post.
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Federal Reserve Signals Progress Toward Desperately Needed Non-Bank Access to Paycheck Protection Program Liquidity Facility (PPPLF)
Non-bank lenders providing struggling small businesses a lifeline through forgivable Paycheck Protection Program (“PPP”) loans may soon have access to the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) to support their lending operations. The Federal Reserve issued a term sheet for the PPPLF on April 9, 2020, indicating its intention to provide capital to lenders participating in the flagship small business relief program established by the Coronavirus Aid, Relief, and Economic Stability (“CARES”) Act by extending credit secured by PPP loans on a short-term basis at favorable economic terms.[1] The PPPLF is only available to finance PPP loans originated by the PPP lender. While the PPPLF is currently only available to depository institutions, the Federal Reserve has now announced that it is working to provide access to other PPP lenders “as soon as possible.”[2]
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