As of January 1, 2024, both Georgia and Florida have implemented regulatory changes affecting small business financing disclosure requirements. In Georgia, Senate Bill 90 (SB 90) amends the Fair Business Practices Act. Florida enacted its own Commercial Financing Disclosure Law (CFDL), joining the ranks of California and New York. This review underscores the significance of these disclosure regulations now being actively enforced.
Georgia SB 90 Commercial Financing Law
Georgia’s SB 90 mandates providers of closed-end and open-end commercial financing. As well as accounts receivable purchase transactions of $500,000 or less, to furnish applicants with specific disclosures before finalizing a transaction.
Funders now must disclose essential terms. Which includes the total funding amount, net funds disbursed, total payment to the provider, total cost of financing, payment schedule, and any prepayment penalties. Unlike laws in California and New York, Georgia’s law does not mandate the reporting of an annual percentage rate (APR). Furthermore, unlike Utah and Virginia, Georgia’s law doesn’t require licensing or registration for funders, streamlining compliance for businesses.
Florida Commercial Financing Disclosure Law HB 1353
Florida’s Commercial Financing Disclosure Law (HB 1353) requires providers that consummate a commercial financing transaction to provide a specific written disclosure. The law applies to various types of commercial financing. This includes loans, lines of credit, and accounts receivable purchase transactions, with certain exceptions. For all covered transactions, the law necessitates the disclosure of the total financing amount. Furthermore, disbursement amount net of deductions, the total amount owed to the financing company, cost of financing, payment details, and prepayment rights.
Funders must make a single written disclosure at or before consummation. This must cover total funds provided, disbursement amount, total payment to the provider, total dollar cost, payment details, and prepayment information.
Exemptions and Legal Implications Penalties and Enforcement for Non-Compliance
Violations of the Georgia disclosure law may result in civil penalties of $500 per violation, capped at $20,000, with additional penalties for continued violations. Importantly, the law specifies that a violation does not impair the enforceability of an agreement and does not provide for a private right of action.
For Florida, exclusive enforcement authority rests with the Florida Attorney General. Penalties range from $500 to $1,000 per violation. Violations do not render a covered commercial financing transaction void and unenforceable. The law imposes fines capped at $20,000 or $50,000 in cases of repeated violations after prior notice and does not grant a private right of action.
CFGMS ISO Partners Enjoy a Direct Line to the Compliance Department
For any inquiries regarding existing or upcoming disclosure laws, CFGMS ISOs are recommended to reach out for assistance and guidance via email at compliance@cfgms.com. Dan Taylor, Vice President of Compliance & Data Assurance, provides support and ensures that ISOs are well-prepared for compliance. Additionally, CFGMS ISOs can directly contact Dan for any questions or guidance. Regarding disclosure laws in Florida, California, New York, Virginia, Utah, Connecticut, Georgia, or any upcoming states.
