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On May 1, Georgia signed SB 90 to become the latest state to require disclosures for small-business financing (see our prior posts on this here, here, and here). Providers of commercial financing in the amount of $500,000 or less who conduct more than five transactions in Georgia annually will be required to comply with the new law. Among other exclusions from the legislation, it does not cover real-estate secured loans, purchase-money loans, motor-vehicle floor plan financing, credit extended in connection with the sale of the creditor’s goods or services, or if the lender makes 5 or fewer such loans in any 12-month period. The legislation will go into effect on January 1, 2024.

Before consummating a commercial financing transaction, providers must disclose:

  • Total funds provided to the business
  • Total funds disbursed (if different from the provided amount)
  • Total amount to be paid to the provider
  • Total dollar cost of the transaction
  • Manner, frequency, and amount of each payment or, if payments will vary, the initial payment
  • Costs or discounts associated with prepayment

Putting It Into Practice: Commercial finance companies operating in Georgia, and in other states, should review newly adopted and proposed legislation in order to consider the impact on their businesses. The trend of TILA-style disclosure requirements has been enacted or is being considered in 15 states, including in California, New York, Utah, Virginia, Connecticut, Georgia, Florida, Kansas, Texas, Illinois, Maryland, Mississippi, Missouri, New Jersey, and North Carolina. In combination with the CFPB’s recent adoption of a final regulation requiring collection of small-business finance applicant data, these disclosure requirements mean that small-business lenders and brokers will have to significantly overhaul their business processes to avoid potential regulatory issues (see our blog post on the CFPB’s final rule here).