Banking Interpretations

NYBL 340

November 28, 2011 


Dear [---],

I write in response to your November 7, 2011, request of the Department of Financial Services to render an interpretation of the licensing requirements of New York State Banking Law Section 340 regarding licensed lenders. You described two separate loan financing programs. [---] ("O&R") plans to enhance its existing Small Business Direct Installment Program ("SBDlP"), which pays for 70% of the cost of eligible energy efficiency measures, by providing participating customers an optional loan component to cover the 30% customer contribution. The loan amounts would be for a 12 month term at 0% interest.

Con Edison likewise, is considering offering zero percent interest loans to small business customers participating in its SBDI. You have asked whether a license is required under Article IX of the Banking Law.

Your Company would not need a license to engage in the business activity you described under Article IX of the Banking Law. Under Section 340 of Article IX of the Banking Law, engaging in the business of lending to individuals in the amount of $25,000 or less for personal, family, household or investment purposes and in the amount of $50,000 or less for business and commercial purposes does not require a license in New York State unless such lending is at a rate greater than what is permitted by law. The New York Usury limit is currently 16% per annum.

Furthermore, loans to corporation and similar business entities are not covered by Article IX.

If I can be of any further assistance to you, please feel free to contact me at [---].

Very truly yours,

Orinthia E. Perkins
Assistant Counsel