Louisiana Clarifies that Amounts Charged in Revenue-Based Financing Transactions Are Not "Interest"
From the CounselorLibrary
On June 8, 2025, Louisiana Governor Jeff Landry signed House Bill 470, which specifies that amounts charged in revenue-based financing transactions are not interest. The new law also establishes disclosure requirements for revenue-based financing transactions.
The law defines "revenue-based financing transaction" as "an agreement under which a person engaged in a commercial enterprise sells or agrees to forward a percentage of sales, revenue, or income, and the person's payment obligation increases and decreases according to the volume of sales made or revenue or income received." The law states that a revenue-based financing transaction "is not a transaction for the use, forbearance, or detention of money" and "[a]mounts charged in a revenue-based financing transaction, whether in the nature of a fee, discount, or otherwise, are not interest."
Effective August 1, 2025, a provider of revenue-based financing must give the following disclosures with each transaction:
The total amount of funds provided to the commercial enterprise under the terms of the agreement.
The total amount of funds disbursed to the commercial enterprise if less than the amount specified in the bullet point above as a result of any fees deducted or withheld at disbursement, any amount paid to the provider to satisfy a prior balance, and any amount paid to a third party on behalf of the commercial enterprise.
The total amount to be paid to the provider under the terms of the agreement.
There are more disclosures, read the full bill here