What Will New York Senate Bill S3177 Mean for Lenders?

As the 2025 New York legislative session unfolds, Senate Bill S3177 has been reintroduced to the New York Senate. Originally introduced in the 2019 – 2020 legislative session under S6688, S3177 aims to regulate commercial finance licensing, by requiring individuals or entities to obtain a license from the New York Superintendent of Financial Services. 

The bill was reintroduced to the Senate by Senator Leroy Comrie and was assigned to the Senate Banks Committee for review on January 24, 2025. An Assembly version of this bill, A4889, was assigned to the Assembly Banks Committee on February 10, 2025. If the bill is successful, the effective date is 180 days after becoming law – with immediate authorization for necessary regulations. 

How Will S3177 Impact My Business? 

Senate Bill S3177 will bring significant regulatory changes for commercial lenders in New York state, covering everything from licensing requirements to record-keeping. Below are the current state laws, and what S3177 aims to change:

Licensing:

• Current Law
  There are no statewide licensing requirements for lenders, and lenders can operate without a state-specific license as long as they adhere to business regulations. Lenders are not required to disclose business locations or ownership details.
• Proposed Bill
  Any individual or entity originating commercial loans must receive a license from the Department of Financial Services (DFS). Lenders must disclose business locations, and ownership details, and any change of control must be approved by the DFS.

Violations and Penalties:

• Current Law
  No specific licensing penalties currently exist for lenders operating without a license, only violations of federal regulations or consumer protection laws can result in penalties.
• Proposed Bill
  Loans originated by non-licensed lenders will be considered void, and any violations of the law will be classified as a misdemeanor.
  

Record-Keeping and Reporting

• Current Law
  Lenders are not required to submit annual reports or keep extensive records on loans to a state agency. Record-keeping obligations are minimal, and no state oversight exists for commercial lenders.
• Proposed Bill
  Licensed lenders will be required to maintain records for a minimum of two years after the final payment on each loan. They will also be required to submit annual reports to the DFS and comply with regular state investigations. 

If these changes take effect, New York lenders will have to learn and adjust to an entirely new business landscape – potentially increasing operating costs and navigating strict compliance laws. 

What’s Next?

While the Senate Bill and Assembly Bill are both under review by their respective Banks Committees, the bill has failed to pass each time it has been brought to the New York Senate and Assembly since its introduction in 2019. 

As of now, the Geraci LLP team is closely monitoring the situation and we recommend subscribing to our monthly newsletter to stay informed on any major changes or updates regarding this bill.