As first published in Leasing News on 5/23/2023: On May 4, 2023, the Florida State Legislature enacted the Florida Commercial Financing Disclosure Law (“Law”). The Law will go into effect on July 1, 2023 if signed by the Governor of Florida. As stated in my prior article concerning this Law, it bears some similarities to both California’s and New York’s commercial disclosure laws. The Law exempts banks and leases, and certain transactions with vehicle dealers and rental car companies.
Commercial financing transactions under the proposed law cover: commercial loans; accounts receivable purchase transactions; and commercial open-end credit plans; provided they are for business purposes and not for personal, family or household purposes.
Transactions and entities exempt from the disclosure requirements are: FDIC insured depository institutions and their affiliates and subsidiaries; lenders regulated under the federal Farm Credit Act; transactions secured by real property; a lease; or a purchase money obligation; where the recipient is a vehicle dealer or vehicle rental company or affiliate and the loan or credit plan is for at least $50,000 or a similar transaction offered by a manufacturer or its related entity (captive finance company); a licensed money transmitter; a provider of no more than five commercial financing transaction in the State of Florida during a 12-month period; and transactions over $500,000.
Providers of transactions are required to give written disclosures at or before consummation of the transaction. Providers include persons that enter into agreements with Florida depository institutions to arrange commercial financing transaction between the depository institution and a Florida business through an online lending platform.
Information to be disclosed includes: the total amount of funds to be provided; the disbursement amount after any deductions or withholding which must be itemized; the total amount owed to the lender; the total cost of the financing; the manner, frequency and amount of the payments and if there are variable payments the method used to calculate the payments. Brokers may not obtain advance fees from a business to provide brokering services.
The Law also regulates brokers that arrange commercial finance transactions. It prohibits brokers from taking broker fees in advance of providing the services, making false or misleading representations in connection with the service provided and in its business dealings, and failure to disclose the broker’s name, business address and telephone number in broker advertisements.
The Florida Attorney General has exclusive authority to enforce the Law. The Law does not contain a private right of action for failure to comply. Violations will incur fines of $500 per incident with a maximum of $20,000 in the aggregate for all violations however, after receipt of notice from the Attorney General concerning violations, the fine may be up to $1000 for each incident with an aggregate penalty bumped up to $50,000.