Florida Senate - 2023 COMMITTEE AMENDMENT Bill No. SB 1624 Ì180480ÉÎ180480 LEGISLATIVE ACTION Senate . House Comm: RCS . 03/30/2023 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Banking and Insurance (Brodeur) recommended the following: 1 Senate Amendment (with title amendment) 2 3 Delete everything after the enacting clause 4 and insert: 5 Section 1. Part XIII of chapter 559, Florida Statutes, 6 consisting of sections 559.961, 559.9611, 559.9612, 559.9613, 7 559.9614, and 559.9615, Florida Statutes, is created to read: 8 PART XIII 9 FLORIDA COMMERCIAL FINANCING DISCLOSURE LAW 10 559.961 Short title.—This part may be cited as the “Florida 11 Commercial Financing Disclosure Law.” 12 559.9611 Definitions.—As used in this part, the term: 13 (1) “Accounts receivable purchase transaction” means a 14 transaction in which a business forwards or otherwise sells to a 15 person all or a portion of the business’s accounts or payment 16 intangibles as those terms are defined in s. 679.1021 at a 17 discount to the expected value of the account or payment 18 intangibles. For purposes of this part, the provider’s 19 characterization of an accounts receivable purchase transaction 20 as a purchase is conclusive that the accounts receivable 21 purchase transaction is not a loan or a transaction for the use, 22 forbearance, or detention of money. 23 (2) “Advance fee” means any consideration that is assessed 24 or collected by a broker before the closing of a commercial 25 financing transaction. 26 (3) “Broker” means a person who, for compensation or the 27 expectation of compensation, arranges a commercial financing 28 transaction or an offer between a third party and a business in 29 this state which would, if executed, be binding upon that third 30 party. The term excludes a provider and any individual or entity 31 whose compensation is not based or dependent upon the terms of 32 the specific commercial financing transaction obtained or 33 offered. 34 (4) “Business” means an individual or a group of 35 individuals, a sole proprietorship, a corporation, a limited 36 liability company, a trust, an estate, a cooperative, an 37 association, or a limited or general partnership engaged in a 38 business activity. 39 (5) “Commercial financing transaction” means a commercial 40 loan, an accounts receivable purchase transaction, or a 41 commercial open-end credit plan to the extent the transaction is 42 also a business purpose transaction. As used in this subsection, 43 the term “business purpose transaction” means a transaction the 44 proceeds of which are provided to a business or are intended to 45 be used to carry on a business and not to be used for personal, 46 family, or household purposes. For purposes of determining 47 whether a transaction is a business purpose transaction, the 48 provider may rely on any written statement of intended purpose 49 signed by the business. The statement may be a separate 50 statement or may be contained in an application, agreement, or 51 other document signed by the business or the business owner. 52 (6) “Commercial loan” means a loan to a business, whether 53 secured or unsecured. 54 (7) “Commercial open-end credit plan” means commercial 55 financing extended by any provider under a plan in which: 56 (a) The provider reasonably contemplates repeat 57 transactions. 58 (b) The amount of financing that may be extended to the 59 business during the term of the plan, up to any limit set by the 60 provider, is generally made available to the extent that any 61 outstanding balance is repaid. 62 (8) “Depository institution” means: 63 (a) A bank, a trust company, or an industrial loan company 64 doing business under the authority of, or in accordance with, a 65 license, certificate, or charter issued by the United States, 66 this state, or any other state, district, territory, or 67 commonwealth of the United States which is authorized to 68 transact business in this state; 69 (b) A federally chartered savings and loan association, 70 federal savings bank, or federal credit union that is authorized 71 to transact business in this state; or 72 (c) A savings and loan association, savings bank, or credit 73 union organized under the laws of this or any other state which 74 is authorized to transact business in this state. 75 (9) “Provider” means a person who consummates more than 76 five commercial financing transactions with a business located 77 in this state in any calendar year. The term also includes a 78 person who enters into a written agreement with a depository 79 institution to arrange a commercial financing transaction 80 between the depository institution and a business via an online 81 lending platform administered by the person. The fact that a 82 provider extends a specific offer for a commercial financing 83 transaction on behalf of a depository institution may not be 84 construed to mean that the provider engaged in lending or 85 financing or originated that loan or financing. 86 559.9612 Scope of this part.—This part applies to any 87 commercial financing transaction consummated on or after January 88 1, 2024. This part does not apply to: 89 (1) A provider that is: 90 (a) A federally insured depository institution or an 91 affiliate or holding company of such institution; or 92 (b) A subsidiary or service corporation that is owned and 93 controlled by a federally insured depository institution. 94 (2) A provider that is a lender regulated under the Farm 95 Credit Act of 1971, 12 U.S.C. ss. 2001 et seq. 96 (3) A commercial financing transaction that is: 97 (a) Secured by real property; 98 (b) A lease; or 99 (c) A purchase money obligation that is incurred as all or 100 part of the price of the collateral or for value given to enable 101 the business to acquire rights in or the use of the collateral 102 if the value is in fact so used. 103 (4) A commercial financing transaction in which the 104 recipient is a motor vehicle dealer or an affiliate of such a 105 dealer, or a vehicle rental company or an affiliate of such a 106 company, pursuant to a commercial loan or commercial open-end 107 credit plan of at least $50,000 or a commercial financing 108 transaction offered by a person in connection with the sale or 109 lease of products or services that such person manufactures, 110 licenses, or distributes, or whose parent company or any of its 111 directly or indirectly owned and controlled subsidiaries 112 manufactures, licenses, or distributes. 113 (5) A provider that is licensed as a money transmitter in 114 accordance with a license, certificate, or charter issued by 115 this state or any other state, district, territory, or 116 commonwealth of the United States. 117 (6) A provider that consummates no more than five 118 commercial financing transactions in this state in a 12-month 119 period. 120 (7) A commercial financing transaction of more than 121 $500,000. 122 559.9613 Disclosures.— 123 (1) A provider that consummates a commercial financing 124 transaction shall provide a written disclosure of the terms of 125 the commercial financing transaction as required by this part. 126 The disclosures must be provided at or before consummation of 127 the transaction. Only one disclosure must be provided for each 128 commercial financing transaction, and a disclosure is not 129 required as result of a modification, forbearance, or change to 130 a consummated commercial financing transaction. 131 (2) A provider shall provide a written disclosure of the 132 following information in connection with each commercial 133 financing transaction: 134 (a) The total amount of funds provided to the business 135 under the terms of the agreement. 136 (b) The total amount of funds disbursed to the business if 137 less than the amount specified in paragraph (a) as a result of 138 any fees deducted or withheld at disbursement, any amount paid 139 to the provider to satisfy a prior balance, and any amount paid 140 to a third party on behalf of the business. 141 (c) The total amount to be paid to the provider under the 142 terms of the agreement. 143 (d) The total dollar cost under the terms of the agreement, 144 calculated by finding the difference between the amount 145 specified in paragraph (a) and the amount specified in paragraph 146 (c). 147 (e)1. The manner, frequency, and amount of each payment; or 148 2. If the amount of the payments may vary, the provider 149 must instead disclose the manner and frequency of the payments, 150 the estimated amount of the initial payment, a description of 151 the methodology for calculating any variable payment, and the 152 circumstances under which payments may vary. 153 (f) Whether there are any costs or discounts associated 154 with prepayment, including a reference to the provision in the 155 agreement which creates the contractual rights of the parties 156 related to prepayment. 157 559.9614 Prohibited acts.—A broker may not do any of the 158 following: 159 (1) Assess, collect, or solicit an advance fee from a 160 business to provide services as a broker. However, this 161 subsection does not preclude a broker from soliciting a business 162 to pay for, or preclude a business from paying for, actual 163 services necessary to apply for a commercial financing 164 transaction, including, but not limited to, a credit check or an 165 appraisal of security, if such payment is made by check or money 166 order payable to a party independent of the broker. 167 (2) Make or use any false or misleading representation or 168 omit any material fact in the offer or sale of the services of a 169 broker or engage, directly or indirectly, in any act that 170 operates or would operate as fraud or deception upon any person 171 in connection with the offer or sale of the services of a 172 broker, notwithstanding the absence of reliance by the business. 173 (3) Make or use any false or deceptive representation in 174 its business dealings. 175 (4) Offer the services of a broker in any advertisement 176 without disclosing the actual address and telephone number of 177 the business of the broker and the address and telephone number 178 of any forwarding service the broker may use, if any. 179 559.9615 Enforcement.— 180 (1) The Attorney General has exclusive authority to enforce 181 this part. The Attorney General may: 182 (a) Receive and act on complaints. 183 (b) Take action designed to obtain voluntary compliance 184 with this part. 185 (c) Commence administrative or judicial proceedings to 186 enforce compliance with this part. 187 (2)(a) A violation of this part is punishable by a fine of 188 $500 per incident, not to exceed $20,000 for all aggregated 189 violations arising from the use of the transaction documentation 190 or materials found to be in violation of this part. 191 (b) A violation of this part after receipt of a written 192 notice of a prior violation from the Attorney General is 193 punishable by a fine of $1,000 per incident, not to exceed 194 $50,000 for all aggregated violations arising from the use of 195 the transaction documentation or materials found to be in 196 violation of this part. 197 (c) A violation of this part does not affect the 198 enforceability or validity of the underlying commercial 199 financing transaction. 200 (3) This part does not create a private right of action 201 against any person or entity based upon compliance or 202 noncompliance with this part. 203 Section 2. This act shall take effect July 1, 2023. 204 205 ================= T I T L E A M E N D M E N T ================ 206 And the title is amended as follows: 207 Delete everything before the enacting clause 208 and insert: 209 A bill to be entitled 210 An act relating to commercial financing transaction 211 brokers and providers; creating part XIII of ch. 559, 212 F.S., entitled “Florida Commercial Financing 213 Disclosure Law”; creating s. 559.961, F.S.; providing 214 a short title; creating s. 559.9611, F.S.; defining 215 terms; creating s. 559.9612, F.S.; providing 216 applicability; creating s. 559.9613, F.S.; requiring 217 providers that consummate commercial financing 218 transactions to provide specified written disclosures; 219 creating s. 559.9614, F.S.; prohibiting brokers from 220 taking specified actions; creating s. 559.9615, F.S.; 221 providing exclusive authority of the Attorney General 222 to enforce specified provisions; providing civil 223 penalties; providing construction; providing an 224 effective date.