Commercial Financing Disclosure Regulations and Compliance Updates
California, Utah and Virginia Have Changed Their Laws for MCAs
On June 9, California’s Office of Administrative Law approved commercial financing disclosure regulations which require consumer-like disclosures for certain commercial financing products such as small business loans and merchant cash advances. With this final step completed, the Regulations from the Department of Financial Protection and Innovation (DFPI) will become effective on December 9, 2022, completing a process that began with the passage of SB 1235 in 2018.
Until this year, only New York had also passed a similar law requiring commercial financing disclosures, which is currently at the proposed regulations stage. However, already this year, Utah and Virginia have each passed statutes requiring the registration of certain commercial finance companies in addition to imposing disclosure requirements.
The Regulations require providers of commercial financing to give the recipient of the financing-specific disclosures in the precise language and format detailed by the Regulations at the time the provider extends the commercial financing offer. The format requirements detail specific rows and columns that must be used for a disclosure table and the terms that must appear in each section of the table.
Read more from our friends and partners at Troutman Pepper Hamilton Sanders LLP.