As we previously posted here, in March, Utah enacted its Commercial Financing Registration and Disclosure Act (CFRDA), requiring commercial financing providers to register with the Utah Department of Financial Institutions (DFI). The process requires registering with the Nationwide Multistate Licensing System and Registry (NMLS), providing certain information about the provider, and disclosing information about certain control persons relating to specified criminal convictions. Despite the January 1, 2023 deadline for CFRDA registration, the NMLS has already started accepting applications, and the DFI encourages providers to apply early to avoid backlog. To help streamline the process, the NMLS has created a requirement checklist found here.
As a reminder, the CFRDA requires a “provider” of commercial financing transactions to register annually with the DFI and pay a fee, unless an exemption applies.
- A “commercial financing transaction” includes a commercial loan, a commercial open-end credit plan, and an accounts receivable purchase transaction.
- A “provider” is a person who offers more than five commercial financing transactions in Utah in any calendar year. A provider also includes a person who, under an agreement with a depository institution, offers one or more commercial financing products provided by the depository institution via an online platform that the person administers.
However, several CFRDA exemptions exist for certain entities and types of transactions, including:
- Depository institutions and certain regulated subsidiaries and service corporations;
- Money transmitters licensed under Utah law;
- Commercial mortgages;
- Purchase money obligations;
- Commercial loans and open-end credit plans of $50,000 or more to motor vehicle dealers or rental companies;
- Commercial financing transactions offered in connection with the sale of a product that the person manufactures, licenses, or distributes; and
- Commercial financing transactions of more than $1,000,000.
Troutman Pepper routinely assists clients in complying with commercial disclosure laws and will continue to monitor the developments of state’s regulation of commercial finance.