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NEW YORK • MCA LAW

New York S5470-B

New York S5470-B is a landmark commercial finance disclosure law requiring MCA providers, factoring companies, and online lenders to give small business borrowers APR-style, consumer-grade disclosures before a contract is signed.

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State-specific guidanceDisclosure requirementsActionable review
EFFECTIVE
Disclosure requirements effective August 1, 2023 (per DFS regulations)
COVERS
Merchant cash advance companies, factoring companies, online lenders, and certain non-bank financing providers offering covered commercial financing in New York. Banks and certain other regulated lenders are generally exempt.
ENFORCED BY
New York State Department of Financial Services (DFS).
KEY PROVISIONS

What S5470-B requires

APR or cost-of-capital disclosure

Providers must disclose an estimated annual percentage rate or equivalent cost-of-capital metric so borrowers can compare offers the way consumers compare credit products.

Total repayment amount

The total dollars a business will repay over the life of the financing must be clearly disclosed upfront.

Itemized fees and costs

All fees and costs associated with the financing must be broken out so there are no surprise charges after signing.

Payment schedule and collection method

The payment schedule and method of collection — daily debits, weekly ACH, or percentage-of-sales — must be disclosed in advance.

Prepayment penalties

Any prepayment penalties or non-discounted early-payoff terms must be clearly stated.

PENALTIES

What happens if a provider doesn't comply?

Providers that fail to comply face DFS regulatory action, civil penalties, and potential legal challenges to the underlying contracts. Borrowers may also cite non-compliance as leverage in settlement discussions.

IF YOU'VE BEEN AFFECTED

What borrowers can do now

  1. Pull the S5470-B disclosure form you received for any New York MCA, factoring, or online lender contract.
  2. Verify the disclosed APR/cost-of-capital, total repayment, fees, and payment schedule match reality.
  3. Document any missing disclosures or prepayment terms that differ from the contract.
  4. Contact Debt Consultants Group for a complimentary New York MCA contract review.

Citations & sources

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