Florida, long known for its beautiful beaches and sunshine, is contemplating throwing some shade, or, depending upon your perspective, some light, on the commercial transaction industry. On March 2, 2023, Republican State Representative Doug Bankson introduced HB1353. If enacted, the law will take effect on January 1, 2024. The bill, as it stands, is ten pages long.
The bill is called the Florida Commercial Financing Disclosure Law. Hope you don’t mind, but I’ll just call it the FCFD. Here are some highlights:
- The bill encompasses commercial loans, accounts receivable purchase transactions and commercial open-end credit. There is no specific mention of factoring (to the extent this differs from AR purchase transactions), nor any mention whatsoever of merchant cash advances. Curious indeed.
- A “provider” is a person who consummates more than five commercial financing transactions in the State of Florida in any calendar year. One who consummates five or fewer is exempt.
- Depository institutions i.e. banks, trust companies, savings and loans, and credit unions are exempt. Also, subsidiaries that are owned by federally insured depository institutions are exempt [Compare California, the lone wolf which still insists subsidiaries are not exempt].
- Leases are exempt but not defined, begetting the question whether this exempts finance leases as well as operating leases. My guess is, probably not.
- Purchase money obligations are exempt.
- Certain motor vehicle dealers are exempt.
- Commercial transactions of more than $500,000 are exempt.
- The disclosures that will be required are (1) total cost of funds; (2) total amount of funds provided to business; (3) total amount disbursed to business; (4) total amount to be paid to the provider; (5) the manner, frequency and amount of each payment; and (6) a statement re: any prepayment costs. NOTE: There is no requirement that APR or interest rate be disclosed. Curiouser and curiouser!
This is a fairly permissive bill compared to most other states. It’s very interesting that MCA’s are not covered, bank subs are exempt, and neither interest nor APR disclosure is not required. I have to wonder whether this is based on the governor’s laissez-faire attitude toward businesses in his attempt to bring business revenues back to Florida. Politics! Gotta Love ‘em.
Next up: Georgia jumps in. Why Georgia Why?
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