CFGMS Admin November 2, 2023 Categories: Compliance Regulation, Merchant Cash Advance

In a continued push for greater transparency in small business financing, Georgia has become the fifth U.S. state to implement commercial financing disclosure requirements. Signed by Governor Brian Kemp on May 1, 2023, Senate Bill 90 (SB90) amends the Georgia Fair Business Practices Act and takes effect on January 1, 2024.

This legislation applies to certain closed-end and open-end commercial financing products, as well as accounts receivable purchase transactions of $500,000 or less, and introduces clear disclosure obligations that must be provided to applicants before a transaction is consummated.

What Makes Georgia’s Law Unique

Georgia’s SB90 takes a noteworthy position on the classification of accounts receivable or payment intangibles: they are not considered loans under state financial institution laws. This language helps clarify the legal status of factoring arrangements, distinguishing Georgia from other states.

Unlike Utah and Virginia, Georgia does not require providers to obtain a license or register to operate under this law, making the compliance process more straightforward for many commercial finance providers.

Required Disclosures Under SB90

Starting January 1, 2024, providers must disclose the following for all qualifying transactions:

1. Total funding amount

2. Total funds disbursed (net of fees and costs)

3. Total amount to be repaid

4. Total dollar cost of the financing

5. Payment schedule

6. Description of any prepayment penalties

⚠️ Note: Georgia’s law does not require disclosure of an APR, unlike similar laws in California and New York.

Who Is Covered: Scope and Definitions

Under Georgia’s law, a “provider” is defined as any person or entity that completes more than five commercial financing transactions in Georgia within a calendar year. This includes fintechs and marketplace platforms operating in bank partnerships, where a depository institution extends the credit.

Exemptions Under Georgia SB90

The law provides several exemptions, including:

* Federally insured depository institutions and affiliates

* Entities regulated under the Farm Credit Act

* Licensed money transmitters in Georgia

* Providers with five or fewer transactions in a 12-month period

* Real property-secured transactions

* “True” leases

* Purchase-money obligations

* Captive finance companies

* Most auto floorplan loans

* Healthcare receivable purchases tied to personal injury claims

What are the Enforcement and Penalties for Georgia SB90?

Georgia SB90 is enforced through civil penalties:

$500 per violation, capped at $20,000 total

Additional penalties may apply for continued violations

Importantly, a violation does not affect the enforceability of the financing agreement, and no private right of action is granted under this law.

Trend Toward Nationwide Regulation

With California, New York, Utah, Virginia, and now Georgia implementing commercial financing disclosure laws, it’s clear that the push for transparency is gaining momentum. Connecticut, Illinois, Maryland, and Missouri are actively considering similar bills, signaling that providers must remain alert and adaptable.

CFGMS™ ISO Partners Enjoy a Direct Line to Compliance Department

For any inquiries regarding pre-existing or upcoming disclosure laws pertaining to CFGMS ISOs, we strongly recommend reaching out for assistance and guidance via email at compliance@cfgms.com. Dan Taylor, our Vice President of Compliance & Data Assurance, is dedicated to providing support and ensuring that ISOs are well-prepared.