June 22, 2005
Dear [ ]:
Your letter of April 14, 2005 addressed to Sara Kelsey, Deputy Superintendent an Counsel, has been forwarded to me for a response. You ask whether [ ], a cooperative association organized under the laws of the state of Iowa, must be licensed by the Banking Department in order to engage in certain lending activities.
According to your letter, the members of [ ] are limited to other entities that qualify as a cooperative under federal tax law or have their principal place of business in Wisconsin, Illinois or Texas. [ ] present business consists of making loans to the customers, both members and non- members, of its members for the agricultural operations of those customers. Specifically, [ ] plans to make loans for customers of a Wisconsin cooperative who are residents of New York and they own and run veal production operations in New York State. You state that it is expected that these loans will be in excess of $50,000. I note that you have not indicated what amount of interest will be charged.
Article IX of the Banking Law (Licensed Lenders), requires licensing by the Banking Department of persons or entities engaged in the business of making small loans ($25,000 or less to individuals for personal loans; $50,000 or less to individuals for business and commercial purposes) and charging interest at a rate greater than otherwise permitted by law (currently 16% under Section 14-a of the Banking Law and Section 5-501 of the General Obligations Law). Therefore, if [ ] makes loans in excess of $50,000 to individuals who are residents of New York, it would not be required to obtain a license from the Department.