According to the Equipment Leasing and Finance Association, changes in commercial disclosure requirements in California and New York are expected to take effect in 2022 that will have a significant impact on the commercial equipment leasing and finance sector. The new regulations apply to all equipment financing transactions (except true leases) below $500,000 in California and below $2.5 million in New York. New disclosure requirements have also been introduced in Connecticut, Missouri, New Jersey and North Carolina.

The ELFA has been fighting to exclude the equipment leasing and finance industry from these disclosure laws since they were first introduced. To help educate its members about what they need to know about this topic, the ELFA has compiled multiple informational resources.

The ELFA’s state advocacy team, led by Scott Riehl, vice president of state government relations, has been lobbying on behalf of members and the industry, with the true lease exemption among the results of the group’s advocacy efforts.

To provide details on the new regulations, the ELFA hosted a webinar on Dec. 15, 2021, with Riehl and ELFA members Moorari Shah, chair of the ELFA’s state legislative and regulatory subcommittee and a partner at Sheppard Mullin; Jeffrey P. Taft, a partner at Mayer Brown; and Bonnie Michael, a shareholder at Baker Donelson. More than 550 people registered for the session. The webinar recording and slide deck are available on ELFA’s state advocacy webpage on lender license and enhanced financial disclosure.

Given that regulations are not yet finalized in California and New York, the ELFA will conduct a follow-up webinar after the regulations are finalized to provide updates and information on the requirements that will become effective.

“These types of disclosure requirements were originally intended for consumer finance transactions but are now being applied to commercial finance transactions, a move that will likely result in more confusion than clarity,” Riehl said. “Banks are generally exempt from the new requirements, but for equipment finance companies, it will mean upgrading systems to accommodate providing disclosures for potentially thousands or hundreds of thousands of transactions.”

In addition to the Dec. 15, 2021, webinar resources, the ELFA’s lender license and enhanced financial disclosure webpage also contains an overview of finance licensing, the state advocacy team’s legislative testimony and regulatory comments, requests for guidance and regulatory response. The ELFA has filed more than six separate comment letters with regulatory bodies in California and four sets of comments with the New York Department of Financial Services.

“These challenges are increasingly showing up in the states,” Riehl said. “ELFA has and will continue to lead the way to protect the interests of its members and the equipment leasing and finance industry.”

The Dec. 15, 2021, webinar was part of the ELFA’s “Wednesday Webinar” series, which was created to provide information to equipment finance professionals on essential topics. The free webinars include live Q&A sessions. The ELFA will host additional Wednesday webinars throughout 2022.