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  1. #1

    Cuomo's New Law- Requirement to list APR in MCAs

    Has anyone else read this?


    https://www.consumerfinancemonitor.c...isclosure-law/

    Apparently Cuomo enacted a law that states that all loan / financing (Including MCAs) are going to be required to list the APR attached to each deal.

    What do you think that will mean for the MCA industry?

  2. #2
    Quote Originally Posted by Yonah E View Post
    Has anyone else read this?


    https://www.consumerfinancemonitor.c...isclosure-law/

    Apparently Cuomo enacted a law that states that all loan / financing (Including MCAs) are going to be required to list the APR attached to each deal.

    What do you think that will mean for the MCA industry?
    Cuomo misrepresented how many people he killed during Covid.... what do you think that will mean for Cuomos ability to enact laws?

  3. #3
    Unfortunately for us, Cuomo's poor governing history during Covid doesn't really affect this new law. Seems like it's a real law that has been approved.

  4. #4
    Quote Originally Posted by Yonah E View Post
    Unfortunately for us, Cuomo's poor governing history during Covid doesn't really affect this new law. Seems like it's a real law that has been approved.
    lol correct... however its just a disclosure requirement not a rate cap. The merchants will now be aware how crappy the deal is . Just makes it a tad harder to close but they will still need the money so dont see it being too big of an obstacle.

  5. #5
    Disclosing APR on a product that doesnt use an apr , but a flat cost.
    Definitely a Cuomo move.
    Good Ex. of his logic
    Last edited by Griffinferro; 02-22-2021 at 05:57 PM.
    Youngest in the Game

  6. #6
    Quote Originally Posted by Griffinferro View Post
    Disclosing APR on a product that doesnt use an apr , but a flat cost.
    Definitely a Cuomo move.
    hahah anything to help the big banks

  7. #7
    We have the members of the ILPA, https://innovativelending.org/, to thank for lobbying this into existence. They have forced us all to use the same disclosure yardstick for loans and MCA's, even though it apples and oranges and likely to create more confusion than clarity.

    But the NY law is very similar to California's upcoming disclosures regs. Starting this summer all CA & NY contracts will have a new disclosure page added. But it's a need driven product, so we can live with disclosure, as opposed to Maryland's proposed prohibition.

    The more interesting question is how these disclosures are going to impact professional services fees? Will funders be forced to disclose separate PSF charged by ISO's? What if a ISO doesn't disclose a PSF?
    Last edited by BB_Cooper; 02-22-2021 at 08:41 PM.

  8. #8
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    i have a question are these new laws for merchants in these states or for companies operating in these states.

    like if your a funder and you operate in ny is it every deal u fund or just disclosures on ny & cali merchants?

  9. #9
    Quote Originally Posted by BB_Cooper View Post
    We have the members of the ILPA, https://innovativelending.org/, for lobbying this into existence. They have forced us all to use the same disclosure yardstick for loans and MCA's, even though it apples and oranges and likely to create more confusion than clarity.

    But the NY law is very similar to California's upcoming disclosures regs. Starting this summer all CA & NY contracts will have a new disclosure page added. But it's a need driven product, so we can live with disclosure, as opposed to Maryland's proposed prohibition.

    The more interesting question is how these disclosures are going to impact professional services fees? Will funders be forced to disclose separate PSF charged by ISO's? What if a ISO doesn't disclose a PSF?
    Hopefully we get a complete ban on the broker charging their own PSF.

  10. #10
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    Quote Originally Posted by BB_Cooper View Post
    We have the members of the ILPA, https://innovativelending.org/, for lobbying this into existence. They have forced us all to use the same disclosure yardstick for loans and MCA's, even though it apples and oranges and likely to create more confusion than clarity.

    But the NY law is very similar to California's upcoming disclosures regs. Starting this summer all CA & NY contracts will have a new disclosure page added. But it's a need driven product, so we can live with disclosure, as opposed to Maryland's proposed prohibition.

    The more interesting question is how these disclosures are going to impact professional services fees? Will funders be forced to disclose separate PSF charged by ISO's? What if a ISO doesn't disclose a PSF?
    call up finwise bank, web bank, bank of the internet, Green Dot Bank, etc etc. All the funders did was partner with these banks, accept their fee agreement, and, compliance, as well as contractually, these companies are no longer "the lender" in the language of the loan agreements. The bank is. They become servicing agents for these banks. Read the PGs on those contracts as well. They will come after all your assets if you default. It steers completely opposite of what an MCA stood for.

  11. #11
    Quote Originally Posted by BB_Cooper View Post
    We have the members of the ILPA, https://innovativelending.org/, for lobbying this into existence. They have forced us all to use the same disclosure yardstick for loans and MCA's, even though it apples and oranges and likely to create more confusion than clarity.

    But the NY law is very similar to California's upcoming disclosures regs. Starting this summer all CA & NY contracts will have a new disclosure page added. But it's a need driven product, so we can live with disclosure, as opposed to Maryland's proposed prohibition.

    The more interesting question is how these disclosures are going to impact professional services fees? Will funders be forced to disclose separate PSF charged by ISO's? What if a ISO doesn't disclose a PSF?
    Agreed transparency is fine by me, but Maryland type prohibition is scary, they are cutting off lifelines for businesses that don't have great credentials especially after a year like 2020 that is a big chunk of the businesses.

  12. #12
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    Quote Originally Posted by FlexibleCapitalSolutions View Post
    hahah anything to help the big banks
    How would an APR comparison disclosure help the big banks when 99% of our merchants don't even qualify for bank loans?
    Last edited by ridextreme; 02-22-2021 at 09:19 PM.

  13. #13
    Quote Originally Posted by ridextreme View Post
    How would an APR comparison disclosure help the big banks when 99% of our merchants don't even qualify for bank loans?
    Its not one specific law, but think about it, How do you calculate APR on a type of funding where APR cant be calculated ? Yet these funders still have to do it.

    I may be mistaken but It feels like the beginning (hopefully not) of burdensome regulation as with every other industry. Like I said I am all for transparency, I have no issue with disclosures but this type of regulation creates added expenses and barriers to entry for the little guy, ultimately the only ones that can afford the lawyers and accountants needed to comply with burdensome regulation are the big guys.

  14. #14
    Both the NY and CA disclosure laws require MCAs to calculate an APR based a disclosed guesstimated term. Given the historical performance of many MCA contracts, the guesstimated term is just that and the disclosed APR % required will in actuality be wildly inconsistent with the actual.

    To ridextreme's point, these merchant are most typically relying on MCA's, because small business bank loans are not available to them. So requiring the same measuring stick for small business loans and MCAs is as likely to confuse merchants, as to educate them.

    It does seem though one impact of these disclosures is that they will provide an unfair market advantage to the B/C lenders that are exporting rates to the extent they are competing against MCA providers for clients. It will be a challenge to educate clients on the differences between products and that they go well beyond guesstimates in a mandated disclosure and that the lenders expect a sum certain back over a certain term, regardless of the merchant's go forward cash flows-

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