The Kansas Legislature has passed a new commercial financing bill, the Commercial Financing Disclosure Act (SB 245/ SB 345). This legislation aims to increase transparency in commercial financing transactions for Kansas businesses. It was supported by the Revenue Based Finance Coalition (RBFC). The bill passed the House today with a vote of 115-8. Of the 8 'Nay' votes, 6 were Republican and 2 Democrats. It now awaits Governor Laura Kelly's signature.
Key Points of the Kansas Commercial Financing Disclosure Act
Requires lenders to disclose certain information about commercial financing products, including the total cost of capital
Mandates registration with the state bank commissioner for entities offering commercial financing
Grants regulatory authority to the commissioner to oversee compliance
Empower the Attorney General to enforce the provisions of the Act
"Violations would be punishable by a civil penalty of $500 per violation, but not to exceed $20,000 for all aggregated violations. If a person violates the Act after receiving written notice of a prior violation from the Attorney General, the new violation would be punishable by a civil penalty of $1,000 per violation, but not to exceed $50,000 for all aggregated violations."
Following a National Trend
This legislation aligns with the trend of commercial finance disclosure laws across the United States. Many states are enacting laws aimed at increasing transparency and protecting businesses in commercial financing transactions.
Next Steps
With passage by both chambers, the bill now goes to Governor Kelly to be signed into law.
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