Kansas Governor Laura Kelly signed The Commercial Financing Disclosure Act (SB 245/SB 345) into law on Friday, April 12th, as we learned from the Revenue Based Finance Coalition. The RBFC introduced this bill as one of their proactive pieces of Total Cost of Capital disclosure legislation nationwide. According to the law, "This act shall take effect and be in force from and after its publication in the statute book."
As we wrote about the bill passing through the Kansas state legislature, the following are the Key Points of the Kansas Commercial Financing Disclosure Act
Requires lenders to disclose certain information about commercial financing products, including the total cost of capital
Mandates registration with the state bank commissioner for entities offering commercial financing
Grants regulatory authority to the commissioner to oversee compliance
Empower the Attorney General to enforce the provisions of the Act
"Violations would be punishable by a civil penalty of $500 per violation, but not to exceed $20,000 for all aggregated violations. If a person violates the Act after receiving written notice of a prior violation from the Attorney General, the new violation would be punishable by a civil penalty of $1,000 per violation, but not to exceed $50,000 for all aggregated violations."
Additionally, Section 4 of the law is as follows:
No broker shall:
(a) Assess, collect or solicit an advance fee from a business to
provide services as a broker. Nothing in this subsection shall be construed
to preclude a broker from soliciting a potential business to pay for, or
preclude a potential business from paying for, actual services necessary to
apply for a commercial financing transaction. Such actual services may
include, but not be limited to, a credit check or an appraisal of security,
where such payment is made by check or money order payable to a party
independent of the broker;
(b) make or use any false or misleading representations or omit any
material fact in the offer or sale of the services of a broker or engage,
directly or indirectly, in any act that operates or would operate as fraud or
deception upon any person in connection with the offer or sale of the
services of a broker, notwithstanding the absence of reliance by the buyer;
or
(c) make or use any false or deceptive representation in its business
dealings.