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Banking Interpretations

September 21, 2004

Steven Barras-Email Response 9/21/04 NYSBL Section 340

Section 340 of Article IX of the New York Banking Law states that no person or other entity shall make loans to an individual for personal, family, household or investment purposes in a principal amount of $25,000 or less, and in a principal amount of $50,000 or less for business and commercial loans, if that person or entity charges an interest rate greater than permitted by law for a person or entity not licensed under Article IX, without first obtaining a licensed lender license from the Superintendent of Banks. It is the position of the Banking Department that a lender which only makes loans to business or commercial entities, as your client proposes to do, need not first obtain a license under Article IX. However, for your information, if you determine that New York usury laws are applicable to your client's transactions, I note that it would appear that your client would be limited to a rate of 16% per annum on loans to non-corporate entities and 25% per annum to corporate borrowers for the stated maximum amount of the loans.