The world of commercial finance law – usually as dry as a piece of toast left in the sun too long – has lately been more exciting than a late-night bingo session at the senior citizens' center. It's like a TILA-like disclosure convention has come to town, and states across the U.S. are lining up for autographs.
Georgia recently got its backstage pass, passing a law effective from January 1, 2024. California, New York, Utah, and Virginia have already been doing the groupie thing for a while now.
But wait, there's more!
Florida and Connecticut are teetering on the brink of fandom, waiting for their governors to finish up at the merchandise booth (or in official terms, to sign the legislation).
In the "Rockstars and Roadies" section, Georgia and Florida's laws are all about those commercial financing transactions, specifically the ones for $500,000 or less.
Hold on, is that a VIP section I see?
Federally insured depository institutions and their affiliates are lounging in the corner with backstage passes, clearly immune to the TILA-like frenzy.
These laws have decided to go unplugged, demanding specific acoustic (aka transparent) versions of key information such as the total funds provided and the cost of credit. Interestingly, they've decided to omit the usual drum solo of an APR disclosure – a move that's been as welcomed as skipping the 10-minute guitar riff mid-concert.
Brokers are being treated like the roadies of this gig, tasked with ensuring everything runs smoothly and above board.
Both Georgia and Florida laws have them double-checking wires and adjusting mic stands, prohibiting the collection of advance fees or putting on a false show.
Florida has even asked for their contact details, just in case there's an encore.
But who's going to keep this wild crowd in check?
Enter our head bouncers, the state attorneys general, who've been granted the power to enforce the rules and slap any miscreants with monetary penalties. But fans hoping for a stage dive (private right of action), might have to wait – these laws are strictly no crowd-surfing zones.
Connecticut, meanwhile, is organizing its own music festival. Its proposed law is a bit more niche, targeting the indie bands, or rather, extensions of sales-based financing of up to $250,000. They're doing a mic check with the state Banking Commissioner, requiring registration by October 1, 2024, and even trying to hit the same high notes as New York's “double dipping” disclosure.
Connecticut's law assigns the role of tour manager to the Banking Commissioner, who has the authority to impose civil penalties for any off-key violations. Any wilful lip-syncing or deceitful playbacks can even get you kicked off the tour!
To summarize, the commercial finance law concert is in full swing, with TILA-like disclosure laws being the headlining act.
As more states reach for their lighters (or cell phone lights) in support, commercial lenders and brokers are crowd-surfing through the wave of new regulation.
For those feeling out of tune, don't worry—there's always a legal professional ready to play maestro and keep everyone in harmony.