New York Codes, Rules and Regulations
Title 23 - FINANCIAL SERVICES
Chapter I - Regulations of the Superintendent of Financial Services
Part 600
Section 600.8 - Sales-based financing-historical method
Universal Citation: 600.8 NY Comp Codes Rules and Regs ยง 600.8
Current through Register Vol. 46, No. 52, December 24, 2024
(a) This section shall apply only to sales-based financing utilizing the "historical method" as described in Financial Services Law section 803.
(b) With respect to any assumptions about a recipient's future monthly sales necessary to calculate the disclosures required by this Part, a provider shall use the "estimated monthly sales projection" described below:
(1) the estimated
monthly sales projection shall be calculated as the recipient's historical
average of:
(i) the monthly sales, income or
receipts volume received through the particular payment channel or mechanism;
and
(ii) the monthly sales received
through any other payment channel or mechanism that the financing contract
would have required recipients to redirect to the particular payment channel or
mechanism had the financing contract been operative previously;
(2) for all transactions, or by
recipient industry or financing amount (or both), a provider shall fix the
historical time period used to calculate the average historical sales, income,
or receipts and use such period for all disclosure purposes for all sales-based
financing products offered. The fixed historical time period shall either be
the preceding time period from the specific offer or, alternatively, the
provider may use average sales for the same number of months with the highest
sales volume within the past twelve months. The fixed historical time period
shall be no less than four months and no more than twelve months;
(3) when a recipient has not been in
operation for twelve months, the provider may calculate the recipient's
historical average sales volume, income, or receipts using an average from the
months the recipient has been in operation;
(4) a provider may exclude from the average
calculation required by subdivision (b)(1) of this section:
(i) the monthly sales from any month that is
less than the average monthly sales of the months required to be considered
under subdivisions (b)(2) and (b)(3) of this section if the provider determines
that the decreased monthly sales in that month arose from a cause that is
unlikely to recur (such as a natural disaster or uncommon business
interruption) during performance of the contract. A provider shall have no
liability if it declines to make this optional exclusion;
(ii) the monthly sales from any month for
which the recipient has failed to provide documentation of average monthly
sales following the provider's request; and
(iii) the monthly sales from any number of
months at the beginning of the period (starting with the oldest month) set by
the provider under paragraph (2) of this subdivision, if the provider does not
require and receive monthly sales documentation from those months from the
recipient;
(5) in
addition to the months considered pursuant to paragraph (2) of this
subdivision, a provider may include in its average calculation all or none of
the additional months for which the recipient has provided sales documentation,
excluding any months in which the recipient was not in operation; and
(6) when a provider fixes the number of
months it will consider pursuant to section
600.8(b)(2) or
section 600.8(b)(3) of
this Part, the provider shall record this decision in an internal document that
includes the effective date of the provider's decision. If the provider
modifies the months fixed pursuant to section
600.8(b)(2) or
section 600.8(b)(3) of
this Part, the provider shall create a new version of the document required by
section 600.6 of this Part. The provider
shall maintain a copy of every version of the document while it is in effect
and for a period of four years thereafter.
(c) If a provider must make additional estimates or assumptions other than a recipient's estimated monthly sales projection to provide disclosures required by this Part, the provider shall:
(1) base those estimates or assumptions on
the best information reasonably available to the provider at the time of the
disclosure;
(2) state clearly that
any disclosure based upon an estimate or assumption is an "estimate" by adding
the word "estimate" to the descriptive language of any required disclosure
under this Part; and
(3) state
clearly any assumptions or estimates used as the basis for the disclosure in
any description associated with the disclosure.
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