In our last quarterly report in April, we recapped a first quarter full of bill introductions. As always, only some of those bills made it through their respective state legislatures and became law. Here are some of the bills that made the cut.
In May 2025, we reported on North Dakota House Bill 1127, which expands the scope of the Money Brokers Act. HB 1127’s definition of the term “loan” expressly includes “alternative financing products as identified by the commissioner [of financial institutions] through the issuance of an order.” It is unclear whether the Department of Financial Institutions intends to regulate forms of financing that are not typically treated as loans – such as sales-based financing or factoring. But even if it did not, a court could use the expanded definition to conclude that such transactions are loans under the Money Brokers Act. Read our full article here.
In May and June 2025, we reported on the progress and eventual enactment of Texas HB 700, which regulates sales-based financing transactions. Unlike other state sales-based financing laws, HB 700 prohibits automatic debits except where a provider has a perfected, first-priority security interest in the recipient’s account. This restriction effectively bans sales-based financing transactions in Texas beginning September 1, 2025. See our alerts here, here, and here for more details.
In June 2025, we reported that Louisiana had passed HB 470. The new law specifies that amounts charged in a sales-based financing transaction are not interest. The law also includes disclosure requirements, although it does not require disclosure of an annual percentage rate. The law omits provisions typical of other sales-based financing laws, such as exemptions and penalties. Our alert on HB 470 is available here.
Also in June 2025, we reported on New York AB 8427-A, the “Fostering Affordability and Integrity Through Reasonable (FAIR) Business Practices Act.” AB 8427-A would expand the authority of the attorney general’s office over business-to-business transactions. Under the bill, the AG’s office would have the authority to police unfair, deceptive, and abusive acts and practices in the conduct of any business. It would also have the authority to sue any entity that either did business in New York or was physically located in New York. Governor Kathy Hochul has until December 31, 2025, to sign or veto the bill. Our alert on AB 8427-A is available here.
April 30, 2025, was the first annual filing deadline for sales-based financing providers operating in New York and using the “opt-in” method to estimate merchants’ annual revenues, which is a step in estimating the APR of a sales-based financing transaction. This filing was required for a provider that used any underwriting method other than the “historical method” described in New York’s Commercial Financing Disclosure Law for sales-based financing transactions in 2024. A more complete explanation is available in our alert here.
We did not report on any significant federal developments during the second quarter of 2025.
We did not report on any significant litigation during the second quarter of 2025.