Industry Letters

Streamlined Procedures for Licensed Lender Locations


Earlier this year, the Banking Department held meetings with representatives of the Consumer Finance Association to discuss the applications process. At those meetings, the Association expressed its view that the processing of applications for additional locations should be simplified and expedited given the fact that the applicants were existing licensees. The Banking Department agreed with this assessment and worked closely with the Association in drafting the new legislation and supporting its passage and enactment.

Chapter 494 of the Laws of 1998, which becomes effective on January 25,1999, implements certain new procedures designed to facilitate and expedite the issuance of licensed lender licenses by the Superintendent. The legislation makes a distinction between the issuance of an original license to an applicant, which is deemed to be a "Master License" and the issuance of a license for each additional location at which the business regulated under Article 9 of the Banking Law is conducted, which is deemed to be a "Supplemental License".

Licensed lenders seeking to open and maintain additional locations for the conduct of activities requiring a license under Article 9 must simply submit written notification of their intention to do so to the Applications Unit of the Licensed Financial Services Division. That notification must contain the address of the new location and the Master License number. An investigation fee of two hundred fifty dollars together with an annual license fee of one thousand dollars (five hundred dollars if application is filed after June 30th in any year) is required for each additional location.

Upon receipt of the notification and the required fees, the Superintendent will issue a Temporary Supplemental License which will be valid for a period not exceeding thirty days, pending final approval of the new location. In the Superintendent’s discretion, the validity of the Temporary Supplemental License may be extended for additional thirty day periods not exceeding a total of sixty days. After a licensee receives formal written approval of the location from the Superintendent, the Temporary Supplemental License shall be deemed to be a Supplemental License. That is to say, the Superintendent will continue to issue the form of license currently issued for additional locations. However, the cover letter, enclosed with the license given to a licensee subsequent to the Superintendent’s receipt of notification and the required fees, shall indicate that the license is a Temporary Supplemental License and that, upon receipt of the Superintendent’s formal written approval of the location, the license may be treated by the licensee as a Permanent Supplemental License.

The procedure for obtaining authorization for additional locations under the new legislation contrasts sharply with that under the current law. At present, a licensed lender applying for a license to conduct business at another location must complete and submit a three page application form, duly signed and notarized, together with a schedule of officers, directors and stockholders, a current financial statement, a Certificate of Compliance with Section 296-a of the Executive Law and a completed tax identification form. Additionally, if the licensee has any new officers or directors who have not been previously reported to the Banking Department, it is required to submit a completed Banking Department Questionnaire, personal financial statement and litigation affidavit for each such officer and director.

In a case in which an original license is granted to an applicant, the cover letter shall indicate that such license is deemed to be a Master License. As the Banking Law requires that a Master License must be conspicuously posted in the principal place of business of a licensee and that, for additional locations, a Supplemental License must be conspicuously posted at the location for which such license is issued, the licensee must post its license(s) accordingly.

Should you have any questions regarding the new legislation or the new procedures described above, please contact the Applications Unit of the Licensed Financial Services Division at (212) 618-6403.

Very truly yours,
Peter M. Philbin

Deputy Superintendent of Banks