Financing providers would disclose rates and contracts would allow cancellation

Providers would give recipients cost and payment disclosures, including an estimated annual percentage rate (APR), with a specific offer of sales-based financing. The disclosures apply to specific offers made to people or businesses applying for sales-based financing. Providers would use the format set by the Banking Commissioner. Providers would estimate the APR using projected sales or revenue, the estimated repayment period, and projected payments, and notify the commissioner which calculation method they use. These provisions are scheduled to take effect October 1, 2026.

Providers choosing the opt-in method would report estimated and actual APRs to the Banking Commissioner, who could require them to use the historical method. This applies to providers that choose the opt-in method to estimate APRs for sales-based financing. The opt-in method uses sales or revenue projections chosen for each disclosure and requires participation in a commissioner review process. The commissioner could require the historical method if projected sales or revenue leads to an unacceptable difference between estimated and actual APRs, and may consider unusual circumstances. The first report would be due by October 1, 2027, with reports due annually after that.

Commercial financing contracts would have to include a seven-business-day cancellation option and could not waive certain court protections or require confidentiality. These requirements apply to commercial financing contracts entered into on or after October 1, 2026. A contract could not waive a recipient's right to notice, a court hearing, or a prior court order when a provider seeks a prejudgment remedy, a temporary legal measure before a case is decided. A prohibited term would be unenforceable. The seven-business-day cancellation period begins when the contract is fully signed.