Florida Senate - 2023 SB 1624
By Senator Brodeur
10-01051C-23 20231624__
1 A bill to be entitled
2 An act relating to commercial financing product
3 brokers and providers; creating part XIII of ch. 559,
4 F.S., entitled “Florida Commercial Financing
5 Disclosure Law”; creating s. 559.961, F.S.; providing
6 a short title; creating s. 559.9611, F.S.; providing
7 definitions; creating s. 559.9612, F.S.; providing
8 scope; creating s. 559.9613, F.S.; providing
9 requirements for disclosure of certain information by
10 commercial financing product providers under certain
11 circumstances; creating s. 559.9614, F.S.; providing
12 prohibited acts by commercial financing product
13 providers; creating s. 559.9615, F.S.; providing
14 exclusive authority of the Attorney General to enforce
15 specified provisions; providing fines; providing
16 construction; providing an effective date.
17
18 Be It Enacted by the Legislature of the State of Florida:
19
20 Section 1. Part XIII of chapter 559, Florida Statutes,
21 consisting of sections 559.961, 559.9611, 559.9612, 559.9613,
22 559.9614, and 559.9615, is created to read:
23 PART XIII
24 FLORIDA COMMERCIAL FINANCING DISCLOSURE LAW
25 559.961 Short title.—This part may be cited as the “Florida
26 Commercial Financing Disclosure Law.”
27 559.9611 Definitions.—As used in this part, the term:
28 (1) “Accounts receivable purchase transaction” means a
29 transaction in which a business forwards or otherwise sells to a
30 person all or a portion of the business’ accounts, as defined in
31 s. 679.1021, or payment intangibles, as defined in s. 679.1021,
32 at a discount to the expected value of the account or payment
33 intangibles. For purposes of this part, the provider’s
34 characterization of an accounts receivable purchase transaction
35 as a purchase is conclusive that the accounts receivable
36 purchase transaction is not a loan or a transaction for the use,
37 forbearance, or detention of money.
38 (2) “Advance fee” means any consideration that is assessed
39 or collected by a broker before the closing of a commercial
40 financing product transaction.
41 (3) “Broker” means a person who, for compensation or the
42 expectation of compensation, arranges a commercial financing
43 product transaction or an offer between a third party and a
44 business in the state which would, if executed, be binding upon
45 that third party. The term excludes a provider and any
46 individual or entity whose compensation is not based or
47 dependent upon on the terms of the specific commercial financing
48 product transaction obtained or offered.
49 (4) “Business” means an individual or group of individuals,
50 a sole proprietorship, a corporation, a limited liability
51 company, a trust, an estate, a cooperative, an association, or a
52 limited or general partnership engaged in a business activity.
53 (5) “Commercial financing product” means a commercial loan,
54 accounts receivable purchase transaction, commercial open-end
55 credit plan, or each to the extent the transaction is a business
56 purpose transaction. As used in this subsection, the term
57 “business purpose transaction” means a transaction the proceeds
58 of which are provided to a business or are intended to be used
59 to carry on a business and not for personal, family, or
60 household purposes. For purposes of determining whether a
61 transaction is a business purpose transaction, the provider may
62 rely on any written statement of intended purpose signed by the
63 business. The statement may be a separate statement or may be
64 contained in an application, agreement, or other document signed
65 by the business or the business owner.
66 (6) “Commercial loan” means a loan to a business, whether
67 secured or unsecured.
68 (7) “Commercial open-end credit plan” means commercial
69 financing extended by any provider under a plan in which:
70 (a) The provider reasonably contemplates repeat
71 transactions.
72 (b) The amount of financing that may be extended to the
73 business during the term of the plan, up to any limit set by the
74 provider, is generally made available to the extent that any
75 outstanding balance is repaid.
76 (8) “Depository institution” means:
77 (a) A bank, a trust company, or an industrial loan company
78 doing business under the authority of, or in accordance with, a
79 license, certificate, or charter issued by the United States,
80 this state, or any other state, district, territory, or
81 commonwealth of the United States which is authorized to
82 transact business in this state;
83 (b) A federally chartered savings and loan association,
84 federal savings bank, or federal credit union that is authorized
85 to transact business in the state; or
86 (c) A savings and loan association, savings bank, or credit
87 union organized under the laws of this or any other state which
88 is authorized to transact business in the state.
89 (9) “Provider” means a person who consummates more than
90 five commercial financing product transactions to a business
91 located in the state in any calendar year. The term also
92 includes a person who enters into a written agreement with a
93 depository institution to arrange for the extension of a
94 commercial financing product by the depository institution to a
95 business via an online lending platform administered by the
96 person. The fact that a provider extends a specific offer for a
97 commercial financing product on behalf of a depository
98 institution may not be construed to mean that the provider
99 engaged in lending or financing or originated that loan or
100 financing.
101 559.9612 Scope of this part.—This part applies to any
102 commercial financing product transaction consummated on or after
103 January 1, 2024. This part does not apply to:
104 (1) A provider that is:
105 (a) A federally insured depository institution or an
106 affiliate or holding company of such institution; or
107 (b) A subsidiary or service corporation that is owned and
108 controlled by a federally insured depository institution.
109 (2) A provider that is a lender regulated under the Farm
110 Credit Act of 1971, 12 U.S.C. ss. 2001 et seq.
111 (3) A commercial financing product transaction that is:
112 (a) Secured by real property;
113 (b) A lease; or
114 (c) A purchase money obligation that is incurred as all or
115 part of the price of the collateral or for value given to enable
116 the business to acquire rights in or the use of the collateral
117 if the value is in fact so used.
118 (4) A commercial financing product transaction in which the
119 recipient is a motor vehicle dealer or an affiliate of such a
120 dealer, or a vehicle rental company or an affiliate of such a
121 company, pursuant to a commercial loan or commercial open-end
122 credit plan of at least $50,000 or a commercial financing
123 product offered by a person in connection with the sale or lease
124 of products or services that such person manufactures, licenses,
125 or distributes, or whose parent company or any of its directly
126 or indirectly owned and controlled subsidiaries manufactures,
127 licenses, or distributes.
128 (5) A provider that is licensed as a money transmitter in
129 accordance with a license, certificate, or charter issued by
130 this state or any other state, district, territory, or
131 commonwealth of the United States.
132 (6) A provider that consummates no more than five
133 commercial financing product transactions in the state in a 12
134 month period.
135 (7) A commercial financing product transaction of more than
136 $500,000.
137 559.9613 Disclosures.—
138 (1) A provider that consummates a commercial financing
139 product transaction shall disclose the terms of the commercial
140 financing product transaction as required by this part. The
141 disclosures must be provided at or before consummation of the
142 transaction. Only one disclosure must be provided for each
143 commercial financing product transaction, and a disclosure is
144 not required as result of a modification, forbearance, or change
145 to a consummated commercial financing product transaction.
146 (2) A provider must disclose the following information in
147 connection with each commercial financing product transaction:
148 (a) The total amount of funds provided to the business
149 under the terms of the agreement.
150 (b) The total amount of funds disbursed to the business if
151 less than the amount specified in paragraph (a) as a result of
152 any fees deducted or withheld at disbursement, any amount paid
153 to the provider to satisfy a prior balance, and any amount paid
154 to a third party on behalf of the business.
155 (c) The total amount to be paid to the provider under the
156 terms of the agreement.
157 (d) The total dollar cost under the terms of the agreement,
158 calculated by finding the difference between the amount
159 specified in paragraph (a) and the amount specified in paragraph
160 (c).
161 (e) The manner, frequency, and amount of each payment. If
162 the payments may vary, the provider shall instead disclose the
163 manner, frequency, and the estimated amount of the initial
164 payment and a description of the methodology for calculating any
165 variable payment and the circumstances when payments may vary.
166 (f) A statement of whether there are any costs or discounts
167 associated with prepayment, including a reference to the
168 paragraph in the agreement which creates the contractual rights
169 of the parties related to prepayment.
170 559.9614 Prohibited acts.—A broker may not:
171 (1) Assess, collect, or solicit an advance fee from a
172 business to provide services as a broker. However, this
173 subsection does not preclude a broker from soliciting a business
174 to pay for, or preclude a business from paying for, actual
175 services necessary to apply for a commercial financing product,
176 including, but not limited to, a credit check or an appraisal of
177 security, if such payment is made by check or money order
178 payable to a party independent of the broker;
179 (2) Make or use any false or misleading representation or
180 omit any material fact in the offer or sale of the services of a
181 broker or engage, directly or indirectly, in any act that
182 operates or would operate as fraud or deception upon any person
183 in connection with the offer or sale of the services of a
184 broker, notwithstanding the absence of reliance by the business;
185 (3) Make or use any false or deceptive representation in
186 its business dealings; or
187 (4) Offer the services of a broker by making, publishing,
188 disseminating, circulating, or placing before the public within
189 the state an advertisement in a newspaper or other publication
190 or an advertisement in the form of a book, notice, handbill,
191 poster, sign, billboard, bill, circular, pamphlet, letter,
192 photograph, or motion picture or an advertisement circulated by
193 radio, loudspeaker, telephone, television, telegraph, or in any
194 other way, in which the offer or advertisement does not disclose
195 the name, business address, and telephone number of the broker.
196 For purposes of this subsection, the broker shall disclose the
197 actual address and telephone number of the business of the
198 broker in addition to the address and telephone number of any
199 forwarding service that the broker may use.
200 559.9615 Enforcement.—
201 (1) The Attorney General has exclusive authority to enforce
202 this part. The Attorney General may:
203 (a) Receive and act on complaints.
204 (b) Take action designed to obtain voluntary compliance
205 with this part.
206 (c) Commence administrative or judicial proceedings to
207 enforce compliance with this part.
208 (2)(a) A violation of any provision of this part is
209 punishable by a fine of $500 per incident, not to exceed $20,000
210 for all aggregated violations arising from the use of the
211 transaction documentation or materials found to be in violation
212 of this part.
213 (b) A violation of any provision of this part after receipt
214 of a written notice of a prior violation from the Attorney
215 General is punishable by a fine of $1,000 per incident, not to
216 exceed $50,000 for all aggregated violations arising from the
217 use of the transaction documentation or materials found to be in
218 violation of this part.
219 (c) A violation of any provision of this part does not
220 affect the enforceability or validity of the underlying
221 commercial financing product transaction.
222 (3) Nothing in this part creates or is intended to create a
223 private right of action against any person or entity based upon
224 compliance or noncompliance with the provisions of this part.
225 Section 2. This act shall take effect July 1, 2023.