Bill > HB693

This bill establishes the Commercial Financing - Small Business Truth in Lending Act, which creates comprehensive disclosure requirements for various types of commercial financing transactions in Maryland. The bill defines different types of commercial financing, including closed-end financing, open-end financing, sales-based financing, and factoring transactions, and mandates that providers disclose key financial information to recipients before extending a specific offer. These disclosures must include the total financing amount, finance charges, annual percentage rate (APR), repayment terms, payment frequencies, and potential additional fees. The bill requires providers to calculate APRs using specific methodologies, including for sales-based financing where providers can use either a historical method or an opt-in method to project sales volumes. Providers must be transparent about potential prepayment charges and additional fees, and must present financial information in clear, standardized language. The legislation applies to most commercial financing transactions under $2.5 million, with several exemptions for certain types of financial institutions and transactions. The Commissioner of Financial Regulation is empowered to enforce the law, with potential civil penalties of up to $2,000 for each violation and $10,000 for willful violations, and the ability to order restitution or injunctions. The law is set to take effect on October 1, 2025, and is modeled substantially on similar regulations in New York State.

Business and Industry

https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/HB0693?ys=2025RS