COMMERCIAL FINANCING DISCLOSURE LAW to be signed by MO Governor

As part of the bill SB 1359, which Modifies provisions relating to financial institutions, there is the Commercial Financing Disclosure Law which will have many effects on business loan brokers and alternative finance funding companies that operate by Missouri law. The bill was approved and now awaits the Governor's signature. Thanks to the Revenue Based Finance Coalition for their efforts on this bill and providing updates on the bills progress.

Here is the Commercial Finance Disclosure section of the bill:

COMMERCIAL FINANCING DISCLOSURE LAW (Section 427.300)

This act creates the "Commercial Financing Disclosure Law". Under this act, any person who consummates more than 5 commercial financing transactions, as defined in the act, to a business located in this state in a calendar year is required to make certain disclosures to the business with regard to the transaction. Specifically, the provider is required to disclose the following:

• The total amount of funds provided to the business under the terms of the commercial financing transaction;

• The total amount of funds disbursed to the business under the terms of the commercial financing transaction, if less than the total amount of funds provided, as a result of any fees deducted or withheld at disbursement and any amount paid to a third party on behalf of the business;

• The total amount to be paid to the provider pursuant to the commercial financing transaction agreement;

• The total dollar cost of the commercial financing transaction under the terms of the agreement, derived by subtracting the total amount of funds provided from the total of payments;

• The manner, frequency and amount of each payment; and

• A statement of whether there are any costs or discounts associated with prepayment of the commercial financing transaction including a reference to the paragraph in the agreement that creates the contractual rights of the parties related to prepayment.

The act requires registration with the Division of Finance prior to engaging in business as a broker for commercial financing. Specifically, the act requires filing a registration form, submitting a fee of $100, and obtaining a surety bond in the amount of $10,000. A registration renewal is required every year, not later than January 31st.

Violations of these provisions are punishable by a fine of $500 per incident, not to exceed $20,000 for all aggregated violations. Any person who violates any provision of this act after receiving written notice of a prior violation from the Attorney General shall be punishable by a fine of $1,000 per incident, not to exceed $50,000 for all aggregated violations arising from the use of the transaction documentation or materials found to be in violation of this act.

Violation of any provision of these provisions does not affect the enforceability or validity of the underlying agreement.

This act does not create a private cause of action against any person or entity based upon noncompliance with this act.

The Attorney General is given exclusive authority to enforce these provisions.

These provisions contains various exemptions.

The registration and disclosure requirements of these provisions take effect either (1) 6 months after the Division of Finance finalizes promulgating rules, if the Division intends to promulgate rules; or (2) February 28, 2025, if the Division does not intend to promulgate rules.

These provisions are substantially similar to provisions in HCS/SB 736 (2024), and SB 753 (2024), HCS/SS/SCS/SB 835 (2024), HB 2063 (2024), HCS/HB 2087 (2024), HB 2780 (2024), HCS/SCS/SB 187 (2023), SCS/HB 585 (2023), provisions in HCS/HB 809 (2023), HCS/HB 584 (2023), SCS/SB 963 (2022), provisions in SCS/HB 2571 (2022), and HB 2706 (2022).

https://www.senate.mo.gov/24info/bts_web/Bill.aspx?SessionType=R&BillID=2152710