In November, we reported on a new proposed rule by Consumer Financial Protection Bureau that will replace the existing Small Business Data Collection Rule (also known as the 1071 Rule). The proposed replacement rule is much more modest scope than the existing rule and, by design, will reduce regulatory burden on financial institutions.
Texas. In November, the Texas Office of Consumer Credit Commissioner (OCCC) held on online webinar to seek comment and input for potential rules designed to prohibit unfair and deceptive practices by providers of sales-based financing. The OCCC was tasked with writing these rules as part of Texas House Bill 700. In 2025, we issued a series of alerts about House Bill 700 that was signed into law on June 20, 2035. Reflecting the uncertainty surrounding the new Texas law, the webinar quickly turned into a question-and-answer session (with lots of questions but few answers) from participants seeking legal advice on how to comply with House Bill 700.
California. In December, California passed a new law (California S.B. 362) designed to prohibit deceptive use of the terms “rate” and “interest” and effectively requiring redisclosure of the already disclosed APR. We published an alert on S.B. 362 providing an overview of the new law and how it could affect brokers and funders.
At least two notable court decisions were published in October 2025.
True Bus. Funding LLC v. Sonata Constr. LLC, 2025 U.S. Dist. LEXIS 205164 (E.D.N.Y. Oct. 17, 2025). The federal district court in this case concisely laid out its analysis for dismissing (and dismantling) claims alleged by a merchant who had obtained revenue-based financing. The dismissed claims included “tortious interference with business”, “fraudulent inducement”, “unjust enrichment”, “RICO violations”, and “deceptive trade practices”. The opinion provides a useful roadmap for revenue-based financing providers who face similar claims.
In re IVF Orlando, Inc., 2025 WL 2831400 (M.D. Fla. Oct. 3, 2025). In this Florida bankruptcy case, the court ruled that a revenue-based financing provider no longer held an ownership interest or a security interest in the receivables of a Chapter 11 post-petition debtor. The issues in the case are highly technical, but the court made several statements about revenue-based financing that could be damaging, especially if misapplied to non-bankruptcy actions.