"On January 5, 2023, a bill was introduced in the Missouri legislature that would require non-depository financial institutions to provide disclosures at or before consummation of certain commercial financing products. Missouri House Bill No. 584 would also require commercial financing brokers to register with the Missouri Division of Finance. If passed, the law would be known as the Commercial Financing Disclosure Law."
"The disclosure requirements proposed in the Missouri bill are less onerous relative to commercial financing disclosure statutes in other states. At a high level, the bill requires a provider to disclose (i) the total amount of funds provided to a business, (ii) the total amount of funds disbursed to a business, (iii) the total amount to be repaid to a provider pursuant to the commercial financing contract, and (iv) the total dollar cost of the commercial financing product. Certain repayment information must also be disclosed. At this juncture, the bill does not require an APR to be disclosed. The bill requires the same set of disclosures for all financing products that qualify as “commercial financing products.”
In addition to disclosures, the bill requires a person engaged in business as a commercial financing broker in Missouri to register prior to conducting business. “Broker” means a person who for compensation or the expectation of compensation obtains a commercial financing product or an offer for a commercial financing product from a third party that would, if executed, be binding upon the third party and communicates the offer to a business located in Missouri. The bill clarifies that a “provider” is not a “broker.” Further, receiving compensation in a certain manner could exclude a person from falling within the definition of “broker.”
The bill contains product and person exclusions. The disclosure and registration requirements do not apply to federally and state chartered banks and credit unions. These requirements also do not apply to certain secured commercial financing products, leases, or certain floor plan financing for motor vehicle dealers. While other exclusions are proposed, the bill does not currently include an exception for large-dollar business loans or lines of credit.
The bill’s scope and requirements could evolve as the bill makes its way through the Missouri legislature. The Missouri Division of Finance may also promulgate rules under the statute that provide more details on disclosures, registration, and exemptions."