On March 2, Florida State Representative Doug Bankston introduced HB1353, the Florida Commercial Financing Disclosure Law, that would mandate covered commercial financing companies provide consumer-like disclosures for certain commercial financing transactions. The law would also define and prohibit specific acts by brokers of those transactions, including the collection of advance fees. New York, California, Utah and Virginia have each enacted legislation, discussed here, here, here, and here, imposing additional requirements on small business financing transactions. We expect that additional states will continue to push legislation forward in this area, as legislators in Connecticut, Illinois (discussed here), Maryland and Missouri (discussed here) have introduced bills this year.
The Florida law would apply to multiple types of commercial financing, including commercial loans, lines of credit, and accounts receivable purchase transactions, subject to certain exceptions. For example, like California and New York, the Florida law contains an exception for banks. For any covered transaction, the Florida law would require disclosure of:
- The total amount of commercial financing, and if different from the financing amount, the disbursement amount after any deductions or withholdings, which must be itemized;
- The total amount owed to the financing company;
- The total cost of the financing;
- The manner, frequency and amount of each payment, or if there are variable payments an estimated initial payment and the methodology used to calculate variable payments and when payments may vary; and
- Certain information related to prepayment rights and penalties.
If enacted, the law will apply to transactions beginning January 1, 2024.