What's happening
This bill extends financial consumer protections and usury laws to small businesses in New York with 100 or fewer employees.
Why it matters
Applies consumer financial protections—like limits on high interest rates and usury laws—to small businesses. , meaning those protections that previously only covered individuals would now shield small companies (up to 100 employees) from predatory lending.
Broadens the definition of “person” in key sections of the General Obligations and Banking Laws to include small businesses. , which could make it easier for these businesses to challenge unfair loan terms in court or recover damages from lenders who violate interest rate caps.
Levels the playing field for independently owned and operated small businesses that are not dominant in their field. , helping them compete against larger businesses that may have more favorable financing options and greater leverage in financial markets.
May increase compliance burdens on lenders and financial institutions doing business with small businesses. , as they would need to ensure that their lending practices meet the stricter consumer standards, potentially affecting availability or terms of credit for small firms.
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Who cares
Headline styles
Protect Small Business Finances
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 7
3 Co-sponsors
History
- Referred to judiciary
- Returned to senate
- Died in assembly
- Referred to banks
- Delivered to assembly
- Passed senateVote 62–0
- Ordered to third reading cal.1426
- Committee discharged and committed to rules
- Referred to judiciary
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Protect Small Business Borrowers
In Assembly Committee · Banks · Sponsor Yuh-Line Niou
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4525
2019-2020 Regular Sessions
IN SENATE
March 14, 2019
Introduced by Sen. KAPLAN -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary
AN ACT to amend the general obligations law and the banking law, in relation to providing financial consumer protections for small businesses
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The general obligations law is amended by adding a new section 5-522 to read as follows:
§ 5-522. Application to small businesses. All rights and privileges granted under this title to persons shall also apply to small businesses. For purposes of this section, a small business shall be deemed to be one which is resident in this state, independently owned and operated, not dominant in its field and employs one hundred or less persons.
§ 2. Section 173 of the banking law is amended by adding a new subdivision 4 to read as follows:
4. All rights and privileges granted under this section to persons shall also apply to small businesses. For purposes of this subdivision, a small business shall be deemed to be one which is resident in this state, independently owned and operated, not dominant in its field and employs one hundred or less persons.
§ 3. Section 380-e of the banking law, as separately amended by chapters 349 and 1072 of the laws of 1968, is amended to read as follows:
§ 380-e. Effect of usury. The knowingly taking, receiving, reserving, or charging by a savings and loan association of interest, as computed pursuant to this article, at a rate greater than such rate of interest as may be authorized by law shall be held and adjudged a forfeiture of the entire interest which the note or other evidence of debt carries with it, or which has been agreed to be paid thereon. If such greater rate of interest has been paid, the person paying the same or his legal representatives may recover from the savings and loan association twice
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03232-01-9
S. 4525 2
the entire amount of the interest thus paid. Nothing in this section shall be deemed to affect the powers of any savings and loan association with respect to loans or investments it is authorized to make. The rights and privileges granted under this section shall also apply to small businesses. For purposes of this section, a small business shall be deemed to be one which is resident in this state, independently owned and operated, not dominant in its field and employs one hundred or less persons.
§ 4. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general obligations law and the banking law, in relation to providing financial consumer protections for small businesses
Purpose or general idea of bill
The purpose of this bill is to provide financial consumer protections to small businesses.
Summary of provisions
Section 1 amends the general obligations law by adding section 5-522 which applies all rights and privileges granted under the title to small businesses It also defines a small business for the purpose of this section.
Section 2 amends Section 173 of the banking law by adding subdivision 4 which applies all rights and privileges granted under the title to small businesses and defines a small business for the purposes of the sub division.
Section 3 amends Section 380-e of the banking law and applies the rights and privileges under this section to small businesses and defines a small business for the purpose of the section.
Section 4 sets the effective date.
Justification
Currently, small businesses in New York State are not covered under most financial consumer protection laws, leaving them vulnerable to lending abuse and usury. This legislation provides small businesses more protection from unfair lending practices which is already offered to consumers and helps small businesses remain solvent.
Prior legislative history
None
Fiscal implications for state and local governments
None.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.