Across the country, the commercial financing landscape is undergoing significant transformation. As state regulators seek to empower small and mid-sized businesses (SMBs) with greater visibility into financing agreements, commercial disclosure mandates have become an essential regulatory standard.
Following legislative moves in states like California, New York, Utah, and Georgia, Missouri officially joined the ranks by enacting its own Commercial Financing Disclosure Law (under Missouri Senate Bill 1359 / Section 427.300).
For small business owners seeking working capital and alternative funding in the Show-Me State, understanding these new statutory protections is crucial. At CFG Merchant Solutions® (CFGMS), our dedication to integrity, transparency, and ethical business funding has always been at the core of what we do.
Here is an in-depth breakdown of Missouri’s disclosure requirements, what they mean for your business, and CFGMS has implemented policies and procedures designed to comply with Missouri’s Commercial Financing Disclosure law.
Understanding Missouri’s Commercial Financing Disclosure Law
Missouri’s legislation establishes standard disclosure mandates for entities offering business-purpose financing to commercial entities located in Missouri. Designed to increase transparency in commercial financing transactions, accounts receivable financing, and sales-based financing (such as revenue-based financing and merchant cash advances), the law ensures business owners receive key financing metrics in clear, digestible terms before entering an agreement.
Who Is Covered?
The law governs any commercial financing “provider” that consummates more than five commercial financing transactions in Missouri within a calendar year, including online platforms partnering with financial institutions. It also imposes registration and surety bond mandates ($10,000 bond) on commercial financing brokers operating in the state.
Which Transactions Are Subject to the Law?
The law broadly applies to transactions where proceeds are intended for business operations, up to $500,000. Key product categories covered include:
- Revenue-based financing and merchant cash advances (accounts receivable purchase transactions).
- Commercial closed-end and open-end loans.
- Commercial lines of credit.
- (Transactions exceeding $500,000, real estate-secured mortgages, true leases, and certain credit facilities from depository institutions are exempt).
Mandatory Disclosures: The “Show-Me” Standards
True to Missouri’s moniker as the “Show-Me State,” the statute requires commercial providers to present key terms clearly at or before the consummation of any qualifying agreement. Specifically, providers must disclose:
- Total Amount of Funds Provided: The gross capital amount made available to the business.
- Total Amount of Funds Disbursed: The actual net capital transferred to the merchant’s account after deducting any applicable origination or third-party fees.
- Total of Payments: The aggregate dollar amount the business is scheduled or obligated to pay over the course of the agreement.
- Total Dollar Cost of Financing: The clear dollar-for-dollar cost calculated by subtracting the total funds provided from the total of payments.
- Payment Manner, Frequency, and Amount: The specific terms of repayment (e.g., daily or weekly ACH debits), including the initial payment amount and the calculation methodology when variable or sales-based payments are utilized.
- Prepayment Provisions: Clear terms outlining whether there are additional costs, discounts, or fee rebates associated with prepaying the financing obligation early.
Unlike certain other state commercial financing disclosure laws, Missouri’s requirements focus on disclosure of financing costs and payment obligations rather than mandating estimated APR disclosures.
How CFG Merchant Solutions® (CFGMS) Ensures Full Compliance
Navigating state-level regulations requires experience, robust underwriting technology, and a steadfast dedication to borrower transparency. For CFGMS, compliance is not an afterthought; it is central to our operational philosophy. Here is how CFGMS aligns seamlessly with Missouri’s disclosure requirements:
- Transparent Term Sheets & Upfront Costs: Every CFGMS funding agreement clearly highlights the total capital funded, net disbursements, overall cost of capital, and agreed repayment structure upfront.
- Tailored Revenue-Based Structures with Clear Terms: As an industry leader in revenue-based financing, CFGMS designs custom funding programs that align with your cash flow. We provide full visibility into estimated delivery timelines, remittance percentages, and calculation methodologies, ensuring that small business operators understand their commitments completely from day one.
- Rigorous Underwriting and Ethical Lending Standards: CFGMS combines proprietary analytics with sensible, human underwriting. By reviewing operational performance rather than relying solely on rigid credit metrics, we extend flexible capital responsibly while verifying that our funding structures do not overburden the borrower’s cash flow.
- Continuous Regulatory Alignment & Strong Industry Standing: With an A+ rating from the Better Business Bureau (BBB) and over $2.6 billion in working capital delivered to American businesses, CFGMS monitors statutory developments closely. We continuously review and update our documentation protocols to align with Missouri’s Commercial Financing Disclosure Law and applicable regulatory requirements. The Missouri Division of Finance oversees commercial financing broker registration, while the Missouri Attorney General has exclusive statutory authority to enforce compliance with the Commercial Financing Disclosure Law.
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