August 19th, 2025

Over the past two years, some East Coast states have advanced measures to increase transparency in business purpose lending through legislation that adds consumer-style disclosure requirements to certain commercial financing products. A business purpose loan (“BPL”) refers to financing primarily for investment, commercial, or agricultural use, determined by the main use of loan proceeds rather than collateral type, and exempt from most provisions of the Truth in Lending Act (1968) (“TILA”). New York, Connecticut, New Jersey, and Maryland advanced legislation to add consumer-style disclosure requirements to certain commercial financing products. These legislative moves reflect gradual but steady oversight expansion for BPLs and in the business lending space. Lenders and servicers should track this trend as it develops.

New York’s commercial financing disclosure regulations took effect on August 1, 2023, following the finalization of rules by the New York Department of Financial Services earlier that year. The law applies to commercial financing transactions of $2.5 million or less offered to businesses principally managed or legally residing in the state. Subject to certain exemptions, it requires lenders to present clear, written disclosures, similar to TILA standards, outlining APR, total finance charges, repayment terms, and prepayment policies before origination. Coverage extends to closed-end, open-end, sales-based, factoring, asset-based lending, and lease financing that creates a security interest. Enforcement is ongoing and lenders should maintain compliance programs that align with both state-specific requirements and broader multi-state standards.

Connecticut’s commercial financing disclosure law took effect on July 1, 2024, with enforcement beginning October 1, 2024, after a short no-action period. It applies to certain commercial non-real-estate financing and requires lenders to present clear, upfront disclosure of the total cost of credit, repayment terms, and other key loan details before origination. The law also requires that disclosures be provided in a format the borrower can retain, such as a written or electronic copy, to support transparency and recordkeeping. As of today, no amendments or active hearings appear scheduled but annual registration and disclosure enforcement remain in effect.

In New Jersey, Senate Bill 1397 moved through the Senate Commerce Committee on October 10, 2024, and was amended on December 19, 2024. The bill, which remains pending, would require APR and cost disclosures for a broad range of commercial financing arrangements. It also proposes to align its definitions of “sales-based financing” and “closed-end commercial financing” with those used in other state laws to reduce confusion for multi-state lenders. Although no hearing dates have been announced, the bill could move if legislators tie it to broader small business transparency efforts.

Maryland’s Small Business Truth in Lending Act passed the Senate on March 6, 2025, and is now under review in the House. The proposal would require lenders to disclose APR, total repayment amounts, fees, and prepayment terms for covered small business loans. The bill includes a requirement for lenders to provide these disclosures before a borrower accepts the financing offer, ensuring informed consent in the decision-making process. House committee hearings will determine if the bill advances; watchers should monitor committee calendar updates and possible floor votes in the upcoming session.

These developments do not require immediate overhaul, but they do forecast a shift toward elevated disclosure expectations in the commercial lending space. Institutions should map which products fall under state-specific laws, update origination documentation and training, and track session calendars to anticipate new enforcement benchmarks. Early alignment can prevent rushed compliance updates and help maintain portfolio performance during regulatory transitions. Other East Coast states should watch this trend closely, as similar legislative efforts could emerge in their own jurisdictions.

DISCLAIMER

This publication may constitute attorney advertising under the laws and rules of professional conduct of one or more states. The information provided in this publication is for general informational purposes only and does not constitute legal advice. The contents are not intended to be a substitute for professional legal advice, consultation, or representation. No attorney-client relationship is formed by reading or relying on this publication. Prior results do not guarantee a similar outcome. Readers should consult a qualified attorney for advice regarding their individual circumstances or any specific legal questions they may have.

If you have questions about this publication, please contact Adam Friedman, Ralph Vartolo or Michael DeRosa,
Friedman Vartolo LLP, 1325 Franklin Avenue, Suite 160, Garden City, NY 11530, Phone: (212) 471-5100 | Fax: (212) 471-5150.