Florida Senate - 2023 SB 1624 By Senator Brodeur 10-01051C-23 20231624__ Page 1 of 8 CODING: Words stricken are deletions; words underlined are additions. A bill to be entitled 1

An act relating to commercial financing product 2 brokers and providers; creating

part XIII of ch. 559, 3 F.S., entitled “Florida Commercial Financing 4 Disclosure Law”; creating s. 559.961, F.S.; providing 5 a

short title; creating s. 559.9611, F.S.; providing 6

definitions; creating s. 559.9612, F.S.; providing 7 scope; creating s. 559.9613, F.S.; providing 8 requirements for disclosure of certain information by 9 commercial financing product providers under certain 10 circumstances; creating s. 559.9614, F.S.; providing 11 prohibited acts by commercial financing product 12 providers; creating s. 559.9615, F.S.; providing 13 exclusive authority of the Attorney General to enforce 14 specified provisions; providing fines; providing 15 construction; providing an effective date. 16 17 Be It Enacted by the Legislature of the State of Florida: 18 19

Section 1.

Part XIII of

chapter 559, Florida Statutes, 20 consisting of sections 559.961, 559.9611, 559.9612, 559.9613, 21 559.9614, and 559.9615, is created to read: 22

PART XIII 23 FLORIDA COMMERCIAL FINANCING DISCLOSURE LAW 24 559.961

Short title.—This part may be cited as the “Florida 25 Commercial Financing Disclosure Law.” 26 559.9611

Definitions.—As used in this part, the term: 27 (1) “Accounts receivable purchase transaction” means a 28 transaction in which a business forwards or otherwise sells to a 29

Florida Senate - 2023 SB 1624 10-01051C-23 20231624__ Page 2 of 8 CODING: Words stricken are deletions; words underlined are additions. person all or a portion of the business’ accounts, as defined in 30 s. 679.1021, or payment intangibles, as defined in s. 679.1021, 31 at a discount to the expected value of the account or payment 32 intangibles.

For purposes of this part, the provider’s 33 characterization of an accounts receivable purchase transaction 34 as a purchase is conclusive that the accounts receivable 35 purchase transaction is not a loan or a transaction for the use, 36 forbearance, or detention of money. 37 (2) “Advance fee” means any consideration that is assessed 38 or collected by a broker before the closing of a commercial 39 financing product transaction. 40 (3) “Broker” means a person who, for compensation or the 41 expectation of compensation, arranges a commercial financing 42 product transaction or an offer between a third party and a 43 business in the state which would, if executed, be binding upon 44 that third party.

The term excludes a provider and any 45 individual or entity whose compensation is not based or 46 dependent upon on the terms of the specific commercial financing 47 product transaction obtained or offered. 48 (4) “Business” means an individual or group of individuals, 49 a sole proprietorship, a corporation, a limited liability 50 company, a trust, an estate, a cooperative, an association, or a 51 limited or general partnership engaged in a business activity. 52 (5) “Commercial financing product” means a commercial loan, 53 accounts receivable purchase transaction, commercial open-end 54 credit plan, or each to the extent the transaction is a business 55 purpose transaction.

As used in this subsection, the term 56 “business purpose transaction” means a transaction the proceeds 57 of which are provided to a business or are intended to be used 58

Florida Senate - 2023 SB 1624 10-01051C-23 20231624__ Page 3 of 8 CODING: Words stricken are deletions; words underlined are additions. to carry on a business and not for personal, family, or 59 household purposes. For purposes of determining whether a 60 transaction is a business purpose transaction, the provider may 61 rely on any written statement of intended purpose signed by the 62 business.

The statement may be a separate statement or may be 63 contained in an application, agreement, or other document signed 64 by the business or the business owner. 65 (6) “Commercial loan” means a loan to a business, whether 66 secured or unsecured. 67 (7) “Commercial open-end credit plan” means commercial 68 financing extended by any provider under a plan in which: 69 (

a) The provider reasonably contemplates repeat 70 transactions. 71 (

b) The amount of financing that may be extended to the 72 business during the term of the plan, up to any limit set by the 73 provider, is generally made available to the extent that any 74 outstanding balance is repaid. 75 (8) “Depository institution” means: 76 (

a) A bank, a trust company, or an industrial loan company 77 doing business under the authority of, or in accordance with, a 78 license, certificate, or charter issued by the United States, 79 this state, or any other state, district, territory, or 80 commonwealth of the United States which is authorized to 81 transact business in this state; 82 (

b) A federally chartered savings and loan association, 83 federal savings bank, or federal credit union that is authorized 84 to transact business in the state; or 85 (

c) A savings and loan association, savings bank, or credit 86 union organized under the laws of this or any other state which 87

Florida Senate - 2023 SB 1624 10-01051C-23 20231624__ Page 4 of 8 CODING: Words stricken are deletions; words underlined are additions. is authorized to transact business in the state. 88 (9) “Provider” means a person who consummates more than 89 five commercial financing product transactions to a business 90 located in the state in any calendar year.

The term also 91 includes a person who enters into a written agreement with a 92 depository institution to arrange for the extension of a 93 commercial financing product by the depository institution to a 94 business via an online lending platform administered by the 95 person.

The fact that a provider extends a specific offer for a 96 commercial financing product on behalf of a depository 97 institution may not be construed to mean that the provider 98 engaged in lending or financing or originated that loan or 99 financing. 100 559.9612 Scope of this part.—This part applies to any 101 commercial financing product transaction consummated on or after 102 January 1, 2024. This part does not apply to: 103

(1) A provider that is: 104 (

a) A federally insured depository institution or an 105 affiliate or holding company of such institution; or 106 (

b) A subsidiary or service corporation that is owned and 107 controlled by a federally insured depository institution. 108

(2) A provider that is a lender regulated under the Farm 109 Credit Act of 1971, 12 U.S.C. ss. 2001 et seq. 110

(3) A commercial financing product transaction that is: 111 (

a) Secured by real property; 112 (

b) A lease; or 113 (

c) A purchase money obligation that is incurred as all or 114 part of the price of the collateral or for value given to enable 115 the business to acquire rights in or the use of the collateral 116

Florida Senate - 2023 SB 1624 10-01051C-23 20231624__ Page 5 of 8 CODING: Words stricken are deletions; words underlined are additions. if the value is in fact so used. 117

(4) A commercial financing product transaction in which the 118 recipient is a motor vehicle dealer or an affiliate of such a 119 dealer, or a vehicle rental company or an affiliate of such a 120 company, pursuant to a commercial loan or commercial open-end 121 credit plan of at least $50,000 or a commercial financing 122 product offered by a person in connection with the sale or lease 123 of products or services that such person manufactures, licenses, 124 or distributes, or whose parent company or any of its directly 125 or indirectly owned and controlled subsidiaries manufactures, 126 licenses, or distributes. 127

(5) A provider that is licensed as a money transmitter in 128 accordance with a license, certificate, or charter issued by 129 this state or any other state, district, territory, or 130 commonwealth of the United States. 131

(6) A provider that consummates no more than five 132 commercial financing product transactions in the state in a 12-133 month period. 134

(7) A commercial financing product transaction of more than 135 $500,000. 136 559.9613 Disclosures.— 137

(1) A provider that consummates a commercial financing 138 product transaction shall disclose the terms of the commercial 139 financing product transaction as required by this part. The 140 disclosures must be provided at or before consummation of the 141 transaction. Only one disclosure must be provided for each 142 commercial financing product transaction, and a disclosure is 143 not required as result of a modification, forbearance, or change 144 to a consummated commercial financing product transaction. 145

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(2) A provider must disclose the following information in 146 connection with each commercial financing product transaction: 147 (

a) The total amount of funds provided to the business 148 under the terms of the agreement. 149 (

b) The total amount of funds disbursed to the business if 150 less than the amount specified in paragraph (

a) as a result of 151 any fees deducted or withheld at disbursement, any amount paid 152 to the provider to satisfy a prior balance, and any amount paid 153 to a third party on behalf of the business. 154 (

c) The total amount to be paid to the provider under the 155 terms of the agreement. 156 (

d) The total dollar cost under the terms of the agreement, 157 calculated by finding the difference between the amount 158 specified in paragraph (

a) and the amount specified in paragraph 159 (c). 160 (

e) The manner, frequency, and amount of each payment. If 161 the payments may vary, the provider shall instead disclose the 162 manner, frequency, and the estimated amount of the initial 163 payment and a description of the methodology for calculating any 164 variable payment and the circumstances when payments may vary. 165 (

f) A statement of whether there are any costs or discounts 166 associated with prepayment, including a reference to the 167 paragraph in the agreement which creates the contractual rights 168 of the parties related to prepayment. 169 559.9614 Prohibited acts.—A broker may not: 170

(1) Assess, collect, or solicit an advance fee from a 171 business to provide services as a broker. However, this 172 subsection does not preclude a broker from soliciting a business 173 to pay for, or preclude a business from paying for, actual 174

Florida Senate - 2023 SB 1624 10-01051C-23 20231624__ Page 7 of 8 CODING: Words stricken are deletions; words underlined are additions. services necessary to apply for a commercial financing product, 175 including, but not limited to, a credit check or an appraisal of 176 security, if such payment is made by check or money order 177 payable to a party independent of the broker; 178

(2) Make or use any false or misleading representation or 179 omit any material fact in the offer or sale of the services of a 180 broker or engage, directly or indirectly, in any act that 181 operates or would operate as fraud or deception upon any person 182 in connection with the offer or sale of the services of a 183 broker, notwithstanding the absence of reliance by the business; 184

(3) Make or use any false or deceptive representation in 185 its business dealings; or 186

(4) Offer the services of a broker by making, publishing, 187 disseminating, circulating, or placing before the public within 188 the state an advertisement in a newspaper or other publication 189 or an advertisement in the form of a book, notice, handbill, 190 poster, sign, billboard, bill, circular, pamphlet, letter, 191 photograph, or motion picture or an advertisement circulated by 192 radio, loudspeaker, telephone, television, telegraph, or in any 193 other way, in which the offer or advertisement does not disclose 194 the name, business address, and telephone number of the broker. 195 For purposes of this subsection, the broker shall disclose the 196 actual address and telephone number of the business of the 197 broker in addition to the address and telephone number of any 198 forwarding service that the broker may use. 199 559.9615 Enforcement.— 200

(1) The Attorney General has exclusive authority to enforce 201 this part. The Attorney General may: 202 (

a) Receive and act on complaints. 203

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b) Take action designed to obtain voluntary compliance 204 with this part. 205 (

c) Commence administrative or judicial proceedings to 206 enforce compliance with this part. 207 (2)(

a) A violation of any provision of this

part is 208 punishable by a fine of $500 per incident, not to exceed $20,000 209 for all aggregated violations arising from the use of the 210 transaction documentation or materials found to be in violation 211 of this part. 212 (

b) A violation of any provision of this part after receipt 213 of a written notice of a prior violation from the Attorney 214 General is punishable by a fine of $1,000 per incident, not to 215 exceed $50,000 for all aggregated violations arising from the 216 use of the transaction documentation or materials found to be in 217 violation of this part. 218 (

c) A violation of any provision of this part does not 219 affect the enforceability or validity of the underlying 220 commercial financing product transaction. 221

(3) Nothing in this

part creates or is intended to create a 222 private right of action against any person or entity based upon 223 compliance or noncompliance with the provisions of this part. 224

Section 2. This act shall take effect July 1, 2023. 225