New York’s Department of Financial Services or DFS proposed new rules and regulations in 2018. The aim was to significantly affect online lending. If you’re interested in all these new rules and regulations, as well as reliable and affordable lending over the internet, just read below.
DFS on Online Lending
Small business lending is developing with each year. The results of various surveys speak of this as well. Overall, online lenders are a striking source of business funding for merchants who aren’t found eligible for loans from traditional banks or other financial institutions.
In 2018, the DFS introduced a report on online loan providers. This came after the bill signed by Governor Andrew M. Cuomo on June 1, 2017. The latter required the DFS to research the online financing space in New York and create a report based on the findings.
Due to the bill, the report had to include an analysis of online lenders in New York, as well as other information. Specifically, the report had to include the methods, lending practices, interest rates and costs being charged, the risks, differences, and advantages offered by those lenders as compared to traditional ones, including banks.
By the way, if you’re looking for online financing for your business, consider turning to First American Merchant. FAM is an exceptional online lender that offers the lowest possible rates and fees in the industry. So, online lending can never be hard to get if you work with First American Merchant. FAM specializes in the high risk field and knows hard-to-approve businesses best of all.
DFS Survey Results and Benefits
Based on what the mentioned survey has revealed, the DFS recommends:
All borrowers, including small businesses, should comply with the New York state’s consumer protection laws
New York usury limits must be applied to all loans
The same licensing requirements oversight that other traditional lending providers are subject to must also refer to online lenders
According to the DFS, many lenders operating online aren’t within the frames of the lending policy confines and regulations being responsible for consumer protection. Partnership with banks in states with less strict policies can help online lenders set higher interest rates as compared to the competitor brick-and-mortar banks and credit unions.
Such regulation comes with a number of benefits. E.g., the regulation can make the process of finding and applying for a business loan online less challenging. Let’s take a major issue online financing customers come across: the lack of a standardized APR or price across the different online funding providers. Alternative fees and rates have made it challenging for online lenders to price loans and draw a parallel among different options.
In addition, the DFS is also beneficial from the aspect of the collection of alternative pieces of information that online financing providers find helpful in expediting applications and delivering more precise quotes for loans. Such pieces of information include social media information, utility and rent payments, mobile phones usage, and more.
As you see, online lenders offer a number of advantages and benefits, which can’t be said about traditional lenders, including banks. The industry is further developing and evolving, so more is yet to come.