July 15, 2024
Connecticut's new commercial financing disclosure law took effect on July 1, 2024, although many of its requirements, including the disclosure requirements, will not take effect until October 1, 2024. A sales-based financing provider or broker may now register with the Connecticut Department of Banking, as the new law requires. Providers and brokers must register by October 1, 2024.
A provider or broker must register through the Nationwide Multistate Licensing System & Registry. Registration through the NMLS requires disclosure of certain information, including identification of individuals in certain company roles and explanations of events such as court orders, regulatory actions, and civil settlements involving the company.
A provider or broker must pay an initial registration fee of $1,000 and an annual registration fee of $500 by September 15 every year following initial registration. Failure to pay the annual registration fee by the deadline results in automatic expiration of a registration. Information regarding registration is available here.
On July 11, 2024, Missouri Governor Mike Parson signed SB 1359, which includes the Commercial Financing Disclosure Law. The law requires disclosures by providers of sales-based financing and commercial-purpose closed-end and open-end loans. A provider is subject to the law if the provider originates more than five commercial financing transactions to businesses located in Missouri in a calendar year. Transactions of more than $500,000 are exempt.
Under the new law, a provider must disclose the following at or before consummation of a commercial financing transaction:
The law does not require disclosure of actual or estimated APR.
Brokers must register with the Division of Finance of the Missouri Department of Commerce and Insurance and file surety bonds. The registration and bonding requirements do not apply to providers.
Violation of the new law is punishable by a fine of up to $500 per incident and up to $20,000 for all violations resulting from the use of the same set of documents or materials. If the violator has received written notice of a prior violation from the attorney general, the maximum fines increase to $1,000 per incident and $50,000 for all violations resulting from the use of the same set of documents or materials.
The new law will take effect six months after the Division of Finance finalizes rules under the law or on February 28, 2025, if it does not intend to promulgate rules.