What You Need to Know About Enhanced Financial Disclosure Requirements

New requirements expected to take effect in CA and NY

Changes in commercial disclosure requirements in California and New York are expected to take effect in 2022 that will have a significant impact on the commercial equipment leasing and finance sector. The new regulations apply to all equipment financing transactions, except true leases, of less than $500,000 in California and less than $2.5 million in New York. New disclosure requirements have also been introduced in Connecticut, Missouri, New Jersey and North Carolina. ELFA has been fighting to exclude the equipment leasing and finance industry from these onerous disclosure laws since they were first introduced. To help educate members about what they need to know about this important topic, ELFA has compiled a number of critical informational resources.

In-Depth Webinar and Takeaways

ELFA’s State Advocacy team, led by VP of State Government Relations Scott Riehl, have been lobbying vigorously on behalf of members and the industry; the true lease exemptions are among the results of their extensive advocacy efforts.

Riehl and ELFA members Moorari Shah, Chair of ELFA’s State Legislative & Regulatory Subcommittee and Partner, Sheppard Mullin; Jeffrey P. Taft, Partner, Mayer Brown; and Bonnie Michael, Shareholder, Baker Donelson presented an ELFA Wednesday Webinar on Dec. 15, 2021, titled “ELFA State Advocacy New Year’s Resolutions: Prepare for Commercial Financing Disclosure Laws in New York and California.” Over 550 people registered for the session, which provided in-depth details of the scope of the new regulations. Members are encouraged to visit ELFA’s State Advocacy webpage on Lender License and Enhanced Financial Disclosure at https://www.elfaonline.org/advocacy/state-issues/lenders-license to access the webinar recording and slide deck.

Given that regulations are not yet finalized in California and New York, ELFA will conduct a follow-up webinar after they are finalized to provide updates and information on the requirements that will become effective. Look for future announcements for the webinar date. All will be welcome to attend this free event.

“These types of disclosure requirements were originally intended for consumer finance transactions, but are now being applied to commercial finance transactions.”

Scott Reihl, ELFA VP of State Government Relations

“These types of disclosure requirements were originally intended for consumer finance transactions, but are now being applied to commercial finance transactions, a move that will likely result in more confusion than clarity,” said Riehl. “Banks are generally exempt from the new requirements, but for equipment finance companies, it will mean upgrading systems to accommodate providing disclosures for potentially thousands or hundreds of thousands of transactions.”

Deep Dive into Advocacy

In addition to the Dec. 15 webinar resources, the ELFA Lender License and Enhanced Financial Disclosure webpage also contains an overview of finance licensing, the State Advocacy team’s legislative testimony and regulatory comments, requests for guidance, and regulatory response. ELFA has filed more than six separate, detailed comment letters with the regulatory body in California, and four sets of comments with the New York Department of Financial Services.

“These challenges are increasingly showing up in the states,” Riehl said. “ELFA has and will continue to lead the way to protect the interests of its members and the equipment leasing and finance industry.”