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01-30-2017, 11:47 AM #11
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Does this language apply to direct merchant cash advance funders? I believed the proposed language everyone seems to be focusing in on is "or other forms of financing" included within Sec.2. But that term is used in the context of:
"if it solicits loans in the amounts prescribed by this section [within this state] and, in connection with such solicitation, makes loans, purchases or otherwise acquires from others loans or other forms of financing, or arranges..."
The phrase "other forms of financing" is included within a parenthetical, which specifically addresses purchasing loan or other contracts after the point in time where financing has been originated. It seems likes its meant to address transaction formats commonly found in loan syndication and pooling arrangements. When we are talking about soliciting merchants directly, the proposal address licensing for soliciting for loans. A large part of this industry has based itself upon the legal distinction between a loan and an advance contract.
If this passes, will this reverse the trend towards loan products back to advance agreements in NY? Or will we end up like CA where everyone get's licensed, in a better safe than sorry compliance approach?
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