LBD11387-02-0
S. 5470--A 2
PAYMENT HELD BY A RECIPIENT FOR GOODS THE RECIPIENT HAS SUPPLIED OR
SERVICES THE RECIPIENT HAS RENDERED THAT HAVE BEEN ORDERED BUT FOR WHICH
PAYMENT HAS NOT YET BEEN MADE.
(B) "COMMERCIAL FINANCING" MEANS A COMMERCIAL LINE OF CREDIT, CLOSED-
END CREDIT, SALES-BASED FINANCING, ACCOUNTS RECEIVABLE TRANSACTION, OR
OTHER FORM OF FINANCING, THE PROCEEDS OF WHICH THE RECIPIENT DOES NOT
INTEND TO USE PRIMARILY FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. FOR
PURPOSES OF DETERMINING WHETHER A FINANCING IS A COMMERCIAL FINANCING,
THE PROVIDER MAY RELY ON ANY STATEMENT OF INTENDED PURPOSES BY THE
RECIPIENT. THE STATEMENT MAY BE A SEPARATE STATEMENT SIGNED BY THE
RECIPIENT; MAY BE CONTAINED IN THE FINANCING APPLICATION, FINANCING
AGREEMENT, OR OTHER DOCUMENT SIGNED OR CONSENTED TO BY THE RECIPIENT; OR
MAY BE PROVIDED ORALLY BY THE RECIPIENT SO LONG AS IT IS DOCUMENTED IN
THE RECIPIENT'S APPLICATION FILE BY THE PROVIDER. ELECTRONIC SIGNATURES
AND CONSENTS ARE VALID FOR PURPOSES OF THE FOREGOING SENTENCE. THE
PROVIDER SHALL NOT BE REQUIRED TO ASCERTAIN THAT THE PROCEEDS OF A
COMMERCIAL FINANCING ARE USED IN ACCORDANCE WITH THE RECIPIENT'S STATE-
MENT OF INTENDED PURPOSES.
(C) "COMMERCIAL LINE OF CREDIT" MEANS AN AGREEMENT FOR ONE OR MORE
EXTENSIONS OF OPEN-END CREDIT, SECURED OR UNSECURED, THE PROCEEDS OF
WHICH THE RECIPIENT DOES NOT INTEND TO USE PRIMARILY FOR PERSONAL, FAMI-
LY OR HOUSEHOLD PURPOSES. A "COMMERCIAL LINE OF CREDIT" INCLUDES CREDIT
EXTENDED BY A CREDITOR UNDER A PLAN IN WHICH: (I) THE CREDITOR REASON-
ABLY CONTEMPLATES REPEATED TRANSACTIONS; (II) THE CREDITOR MAY IMPOSE A
FINANCE CHARGE FROM TIME TO TIME ON AN OUTSTANDING UNPAID BALANCE; AND
(III) THE AMOUNT OF CREDIT THAT MAY BE EXTENDED TO THE RECIPIENT DURING
THE TERM OF THE PLAN (UP TO ANY LIMIT SET BY THE CREDITOR) IS GENERALLY
MADE AVAILABLE TO THE EXTENT THAT ANY OUTSTANDING BALANCE IS REPAID.
(D) "CLOSED-END CREDIT" MEANS A CLOSED-END EXTENSION OF CREDIT,
SECURED OR UNSECURED, INCLUDING EQUIPMENT FINANCING THAT DOES NOT MEET
THE DEFINITION OF A LEASE UNDER SECTION 2-A-103 OF THE UNIFORM COMMER-
CIAL CODE, THE PROCEEDS OF WHICH THE RECIPIENT DOES NOT INTEND TO USE
PRIMARILY FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. "CLOSED-END CRED-
IT" INCLUDES FINANCING WITH AN ESTABLISHED PRINCIPAL AMOUNT AND DURA-
TION.
(E) "CREDITOR" MEANS THE PERSON TO WHICH THE FINANCING OBLIGATION
UNDER A COMMERCIAL LINE OF CREDIT OR CLOSED-END CREDIT IS INITIALLY
OWED. FOR PURPOSES OF THIS ARTICLE, A CREDITOR MAY ALSO BE A PROVIDER.
(F) "FINANCIAL INSTITUTION" MEANS ANY OF THE FOLLOWING: (I) A BANK,
TRUST COMPANY, OR INDUSTRIAL LOAN COMPANY DOING BUSINESS UNDER THE
AUTHORITY OF, OR IN ACCORDANCE WITH, A LICENSE, CERTIFICATE OR CHARTER
ISSUED BY THE UNITED STATES, THIS STATE OR ANY OTHER STATE, DISTRICT,
TERRITORY, OR COMMONWEALTH OF THE UNITED STATES THAT IS AUTHORIZED TO
TRANSACT BUSINESS IN THIS STATE; (II) A FEDERALLY CHARTERED SAVINGS AND
LOAN ASSOCIATION, FEDERAL SAVINGS BANK OR FEDERAL CREDIT UNION THAT IS
AUTHORIZED TO TRANSACT BUSINESS IN THIS STATE; OR (III) A SAVINGS AND
LOAN ASSOCIATION, SAVINGS BANK OR CREDIT UNION ORGANIZED UNDER THE LAWS
OF THIS OR ANY OTHER STATE THAT IS AUTHORIZED TO TRANSACT BUSINESS IN
THIS STATE.
(G) "PERSON" MEANS AN INDIVIDUAL, CORPORATION, PARTNERSHIP, LIMITED
LIABILITY COMPANY, JOINT VENTURE, ASSOCIATION, JOINT STOCK COMPANY,
TRUST OR UNINCORPORATED ORGANIZATION INCLUDING, BUT NOT LIMITED TO, A
SOLE PROPRIETORSHIP.
(H) "PROVIDER" MEANS A PERSON WHO EXTENDS A SPECIFIC OFFER OF COMMER-
CIAL FINANCING TO A RECIPIENT. A PROVIDER MAY INCLUDE A CREDITOR OR
PURCHASER. UNLESS OTHERWISE EXEMPT, "PROVIDER" ALSO INCLUDES A PERSON
S. 5470--A 3
THAT IS NOT A CREDITOR OR PURCHASER BUT WHO SOLICITS AND PRESENTS
SPECIFIC OFFERS OF COMMERCIAL FINANCING ON BEHALF OF A THIRD PARTY. FOR
THE AVOIDANCE OF DOUBT, THE EXTENSION OF A SPECIFIC OFFER OR PROVISION
OF DISCLOSURES FOR A COMMERCIAL FINANCING, IN AND OF ITSELF, SHALL NOT
BE CONSTRUED TO MEAN THAT A PROVIDER IS ORIGINATING, MAKING, FUNDING OR
PROVIDING COMMERCIAL FINANCING.
(I) "PURCHASER" MEANS THE PERSON THAT INITIALLY ACQUIRES THE RIGHT TO
RECEIVE PAYMENTS ON RECEIVABLES FROM THE SELLER IN AN ACCOUNTS RECEIV-
ABLE PURCHASE. FOR PURPOSES OF THIS ARTICLE, A PURCHASER MAY ALSO BE A
PROVIDER.
(J) "RECIPIENT" MEANS A PERSON WHO IS PRESENTED AN OFFER OF COMMERCIAL
FINANCING BY A PROVIDER. A RECIPIENT MAY BE A BORROWER OR SELLER OR THE
AUTHORIZED REPRESENTATIVE OF A BUYER OR SELLER.
(K) "SALES-BASED FINANCING" MEANS A TRANSACTION WHERE THERE IS AN
EXTENSION OF FINANCING TO A RECIPIENT THAT IS REPAID BY THE RECIPIENT TO
THE PROVIDER, OVER TIME, AS A PERCENTAGE OF SALES OR REVENUE, IN WHICH
THE PAYMENT AMOUNT MAY INCREASE OR DECREASE ACCORDING TO THE VOLUME OF
SALES MADE OR REVENUE RECEIVED BY THE RECIPIENT.
(L) "SPECIFIC OFFER" MEANS THE SPECIFIC TERMS OF COMMERCIAL FINANCING,
INCLUDING PRICE OR AMOUNT, THAT IS QUOTED TO A RECIPIENT, BASED ON
INFORMATION OBTAINED FROM, OR ABOUT THE RECIPIENT, WHICH, IF ACCEPTED BY
A RECIPIENT, SHALL BE BINDING ON THE PROVIDER, AS APPLICABLE, SUBJECT TO
ANY SPECIFIC REQUIREMENTS STATED IN SUCH TERMS.
§ 702. EXEMPTIONS. THIS ARTICLE SHALL NOT APPLY TO, AND SHALL NOT
PLACE ANY ADDITIONAL REQUIREMENTS OR OBLIGATIONS UPON, ANY OF THE
FOLLOWING:
(A) A FINANCIAL INSTITUTION;
(B) A PERSON ACTING IN ITS CAPACITY AS A TECHNOLOGY SERVICES PROVIDER,
SUCH AS LICENSING SOFTWARE AND PROVIDING SUPPORT SERVICES, TO AN ENTITY
EXEMPT UNDER THIS SECTION FOR USE AS PART OF THE EXEMPT ENTITY'S COMMER-
CIAL FINANCING PROGRAM, PROVIDED SUCH PERSON HAS NO INTEREST, OR
ARRANGEMENT OR AGREEMENT TO PURCHASE ANY INTEREST IN THE COMMERCIAL
FINANCING EXTENDED BY THE EXEMPT ENTITY IN CONNECTION WITH SUCH PROGRAM;
(C) A LENDER REGULATED UNDER THE FEDERAL FARM CREDIT ACT (12 U.S.C.
SEC. 2001 ET SEQ.);
(D) A COMMERCIAL FINANCING TRANSACTION SECURED BY REAL PROPERTY;
(E) A LEASE AS DEFINED IN SECTION 2-A-103 OF THE UNIFORM COMMERCIAL
CODE; OR
(F) ANY PERSON OR PROVIDER WHO:
(I) MAKES NO MORE THAN FIVE COMMERCIAL FINANCING TRANSACTIONS IN THIS
STATE IN A TWELVE-MONTH PERIOD;
(II) MAKES COMMERCIAL FINANCING TRANSACTIONS IN THIS STATE THAT ARE
INCIDENTAL TO THE BUSINESS OF THE PERSON RELYING UPON THE EXEMPTION; OR
(III) MAKES SPECIFIC OFFERS EXCLUSIVELY ON BEHALF OF PERSONS DESCRIBED
IN PARAGRAPHS (I) AND (II) OF THIS SUBSECTION.
§ 703. SALES-BASED FINANCING DISCLOSURE REQUIREMENTS. A PROVIDER
SUBJECT TO THIS ARTICLE SHALL PROVIDE THE FOLLOWING DISCLOSURES TO A
RECIPIENT AT THE TIME OF EXTENDING A SPECIFIC OFFER OF SALES-BASED
FINANCING ACCORDING TO FORMATTING PRESCRIBED BY THE SUPERINTENDENT:
(A) THE TOTAL AMOUNT OF THE COMMERCIAL FINANCING, AND THE DISBURSEMENT
AMOUNT, IF DIFFERENT FROM THE FINANCING AMOUNT, AFTER ANY FEES DEDUCTED
OR WITHHELD AT DISBURSEMENT.
(B) THE TOTAL COST OF THE FINANCING, EXPRESSED AS A DOLLAR COST,
INCLUDING ANY AND ALL FEES, EXPENSES AND CHARGES THAT ARE TO BE PAID BY
THE RECIPIENT AND THAT CANNOT BE AVOIDED BY THE RECIPIENT.
S. 5470--A 4
(C) THE ESTIMATED ANNUAL PERCENTAGE RATE, USING THE WORDS ANNUAL
PERCENTAGE RATE OR THE ABBREVIATION "APR", EXPRESSED AS A YEARLY RATE,
INCLUSIVE OF ANY FEES AND FINANCE CHARGES, AND CALCULATED IN ACCORDANCE
WITH THE FEDERAL TRUTH IN LENDING ACT, REGULATION Z, 12 C.F.R. §
1026.22, BASED ON THE ESTIMATED TERM OF REPAYMENT AND THE PROJECTED
PERIODIC PAYMENT AMOUNTS. THE ESTIMATED TERM OF REPAYMENT AND THE
PROJECTED PERIODIC PAYMENT AMOUNTS SHALL BE CALCULATED BASED ON THE
PROJECTION OF THE RECIPIENT'S SALES, CALLED THE PROJECTED SALES VOLUME.
THE PROJECTED SALES VOLUME MAY BE CALCULATED USING THE HISTORICAL METHOD
OR THE OPT-IN METHOD. THE PROVIDER SHALL PROVIDE NOTICE TO THE SUPER-
INTENDENT ON WHICH METHOD THEY INTEND TO USE IN CALCULATING ESTIMATED
ANNUAL PERCENTAGE RATE PURSUANT TO THIS SECTION.
(I) THE PROVIDER USING THE HISTORICAL METHOD SHALL USE AN AVERAGE
HISTORICAL VOLUME OF SALES OR REVENUE BY WHICH THE FINANCING'S PAYMENT
AMOUNTS ARE BASED AND THE ESTIMATED ANNUAL PERCENTAGE RATE IS CALCU-
LATED. THE PROVIDER SHALL FIX THE HISTORICAL TIME PERIOD USED TO CALCU-
LATE THE AVERAGE HISTORICAL VOLUME AND USE SUCH PERIOD FOR ALL DISCLO-
SURE PURPOSES FOR ALL SALES-BASED FINANCING PRODUCTS OFFERED. THE
AVERAGE HISTORICAL VOLUME SHALL BE NO LESS THAN ONE MONTH AND NOT EXCEED
TWELVE MONTHS.
(II) THE PROVIDER USING THE OPT-IN METHOD SHALL DETERMINE THE ESTI-
MATED ANNUAL PERCENTAGE RATE, THE ESTIMATED TERM, AND THE PROJECTED
PAYMENTS, USING A PROJECTED SALES VOLUME THAT THE PROVIDER ELECTS FOR
EACH DISCLOSURE, PROVIDED, THAT THEY PARTICIPATE IN A REVIEW PROCESS
PRESCRIBED BY THE SUPERINTENDENT. A PROVIDER SHALL, ON AN ANNUAL BASIS,
DISCLOSE DATA TO THE SUPERINTENDENT OF ESTIMATED ANNUAL PERCENTAGE RATES
DISCLOSED TO THE RECIPIENT AND ACTUAL RETROSPECTIVE ANNUAL PERCENTAGE
RATES OF COMPLETED TRANSACTIONS. THE REPORT SHALL CONTAIN SUCH INFORMA-
TION AS THE SUPERINTENDENT, BY RULE OR REGULATION, MAY PRESCRIBE AS
NECESSARY OR APPROPRIATE FOR THE PURPOSE OF MAKING A DETERMINATION OF
WHETHER THE DEVIATION BETWEEN THE ESTIMATED ANNUAL PERCENTAGE RATE AND
ACTUAL RETROSPECTIVE ANNUAL PERCENTAGE RATES OF COMPLETED TRANSACTIONS
WAS REASONABLE. THE SUPERINTENDENT SHALL ESTABLISH THE METHOD OF DISCLO-
SURE AND MAY, UPON A FINDING THAT THE USE OF PROJECTED SALES VOLUME BY
THE PROVIDER HAS RESULTED IN AN UNACCEPTABLE DEVIATION BETWEEN ESTIMATED
AND ACTUAL ANNUAL PERCENTAGE RATE, REQUIRE THE PROVIDER TO USE THE
HISTORICAL METHOD.
(D) THE TOTAL REPAYMENT AMOUNT, WHICH IS THE DISBURSEMENT AMOUNT PLUS
THE TOTAL COST OF THE FINANCING.
(E) THE ESTIMATED TERM IS THE PERIOD OF TIME REQUIRED FOR THE PERIODIC
PAYMENTS, BASED ON THE PROJECTED SALES VOLUME, TO EQUAL THE TOTAL AMOUNT
REQUIRED TO BE REPAID.
(F) THE PAYMENT AMOUNTS, BASED ON THE PROJECTED SALES VOLUME:
(I) FOR PAYMENT AMOUNTS THAT ARE FIXED, THE PAYMENT AMOUNTS AND
FREQUENCY (E.G., DAILY, WEEKLY, MONTHLY), AND, IF THE PAYMENT FREQUENCY
IS OTHER THAN MONTHLY, THE AMOUNT OF THE AVERAGE PROJECTED PAYMENTS PER
MONTH; OR
(II) FOR PAYMENT AMOUNTS THAT ARE VARIABLE, A PAYMENT SCHEDULE OR A
DESCRIPTION OF THE METHOD USED TO CALCULATE THE AMOUNTS AND FREQUENCY OF
PAYMENTS, AND THE AMOUNT OF THE AVERAGE PROJECTED PAYMENTS PER MONTH.
(G) A DESCRIPTION OF ALL OTHER POTENTIAL FEES AND CHARGES THAT CAN BE
AVOIDED BY THE RECIPIENT, INCLUDING, BUT NOT LIMITED TO, DRAW FEES, LATE
PAYMENT FEES, AND RETURNED PAYMENT FEES.
(H) IN THE EVENT THAT A RECIPIENT ELECTS TO PAY OFF OR REFINANCE THE
COMMERCIAL FINANCING PRIOR TO FULL REPAYMENT, THE PROVIDER MUST
DISCLOSE:
S. 5470--A 5
(I) WHETHER THE RECIPIENT WOULD BE REQUIRED TO PAY ANY FINANCE CHARGES
OTHER THAN INTEREST ACCRUED SINCE THEIR LAST PAYMENT. IF SO, DISCLOSURE
OF THE PERCENTAGE OF ANY UNPAID PORTION OF THE FINANCE CHARGE AND MAXI-
MUM DOLLAR AMOUNT THE RECIPIENT COULD BE REQUIRED TO PAY; AND
(II) WHETHER THE RECIPIENT WOULD BE REQUIRED TO PAY ANY ADDITIONAL
FEES NOT ALREADY INCLUDED IN THE FINANCE CHARGE.
(I) A DESCRIPTION OF COLLATERAL REQUIREMENTS OR SECURITY INTERESTS, IF
ANY.
§ 704. CLOSED-END COMMERCIAL FINANCING DISCLOSURE REQUIREMENTS. A
PROVIDER, SUBJECT TO THIS ARTICLE, SHALL PROVIDE THE FOLLOWING DISCLO-
SURES TO A RECIPIENT AT THE TIME OF EXTENDING A SPECIFIC OFFER FOR
CLOSED-END CREDIT ACCORDING TO FORMATTING PRESCRIBED BY THE SUPERINTEN-
DENT:
(A) THE TOTAL AMOUNT OF THE COMMERCIAL FINANCING, AND THE DISBURSEMENT
AMOUNT, IF DIFFERENT FROM THE FINANCING AMOUNT, AFTER ANY FEES DEDUCTED
OR WITHHELD AT DISBURSEMENT.
(B) THE TOTAL COST OF THE FINANCING, EXPRESSED AS A DOLLAR COST,
INCLUDING ANY AND ALL FEES, EXPENSES AND CHARGES THAT ARE TO BE PAID BY
THE RECIPIENT AND THAT CANNOT BE AVOIDED BY THE RECIPIENT. THE TOTAL
COST OF FINANCING SHALL ASSUME THE RECIPIENT REPAYS THE TOTAL REPAYMENT
AMOUNT, ACCORDING TO THE ORIGINAL AGREED UPON PAYMENT SCHEDULE.
(C) THE ANNUAL PERCENTAGE RATE, USING ONLY THE WORDS ANNUAL PERCENTAGE
RATE OR THE ABBREVIATION "APR", EXPRESSED AS A YEARLY RATE, INCLUSIVE OF
ANY FEES AND FINANCE CHARGES THAT CANNOT BE AVOIDED BY A RECIPIENT, AND
CALCULATED IN ACCORDANCE WITH THE FEDERAL TRUTH IN LENDING ACT, REGU-
LATION Z, 12 C.F.R. § 1026.22.
(D) THE TOTAL REPAYMENT AMOUNT, WHICH IS THE DISBURSEMENT AMOUNT PLUS
THE TOTAL COST OF THE FINANCING.
(E) THE TERM OF THE FINANCING.
(F) THE PAYMENT AMOUNTS:
(I) FOR PAYMENT AMOUNTS THAT ARE FIXED, THE PAYMENT AMOUNTS AND
FREQUENCY (E.G., DAILY, WEEKLY, MONTHLY), AND, IF THE TERM IS LONGER
THAN ONE MONTH, THE AVERAGE MONTHLY PAYMENT AMOUNT; OR
(II) FOR PAYMENT AMOUNTS THAT ARE VARIABLE, A FULL PAYMENT SCHEDULE OR
A DESCRIPTION OF THE METHOD USED TO CALCULATE THE AMOUNTS AND FREQUENCY
OF PAYMENTS, AND, IF THE TERM IS LONGER THAN ONE MONTH, THE ESTIMATED
AVERAGE MONTHLY PAYMENT AMOUNT.
(G) A DESCRIPTION OF ALL OTHER POTENTIAL FEES AND CHARGES THAT CAN BE
AVOIDED BY THE RECIPIENT, INCLUDING, BUT NOT LIMITED TO, LATE PAYMENT
FEES AND RETURNED PAYMENT FEES.
(H) IN THE EVENT THAT A RECIPIENT ELECTS TO PAY OFF OR REFINANCE THE
COMMERCIAL FINANCING PRIOR TO FULL REPAYMENT, THE PROVIDER MUST
DISCLOSE:
(I) WHETHER THE RECIPIENT WOULD BE REQUIRED TO PAY ANY FINANCE CHARGES
OTHER THAN INTEREST ACCRUED SINCE THEIR LAST PAYMENT. IF SO, DISCLOSURE
OF THE PERCENTAGE OF ANY UNPAID PORTION OF THE FINANCE CHARGE AND MAXI-
MUM DOLLAR AMOUNT THE RECIPIENT COULD BE REQUIRED TO PAY; AND
(II) WHETHER THE RECIPIENT WOULD BE REQUIRED TO PAY ANY ADDITIONAL
FEES NOT ALREADY INCLUDED IN THE FINANCE CHARGE.
(I) A DESCRIPTION OF COLLATERAL REQUIREMENTS OR SECURITY INTERESTS, IF
ANY.
§ 705. OPEN-END COMMERCIAL FINANCING DISCLOSURE REQUIREMENTS. A
PROVIDER, SUBJECT TO THIS ARTICLE, SHALL PROVIDE THE FOLLOWING DISCLO-
SURES TO A RECIPIENT AT THE TIME OF EXTENDING A SPECIFIC OFFER FOR A
COMMERCIAL LINE OF CREDIT ACCORDING TO FORMATTING PRESCRIBED BY THE
SUPERINTENDENT:
S. 5470--A 6
(A) THE MAXIMUM AMOUNT OF CREDIT AVAILABLE TO THE RECIPIENT (E.G., THE
CREDIT LINE AMOUNT), AND THE AMOUNT SCHEDULED TO BE DRAWN BY THE RECIPI-
ENT AT THE TIME THE OFFER IS EXTENDED, IF ANY, LESS ANY FEES DEDUCTED OR
WITHHELD AT DISBURSEMENT.
(B) THE TOTAL COST OF THE FINANCING, EXPRESSED AS A DOLLAR COST,
INCLUDING ALL REQUIRED PERIODIC AND NON-PERIODIC FEES AND CHARGES THAT
CANNOT BE AVOIDED BY THE RECIPIENT, INCLUDING ANY INTEREST EXPENSE. THE
TOTAL COST OF FINANCING SHALL ASSUME THE MAXIMUM AMOUNT OF CREDIT AVAIL-
ABLE TO THE RECIPIENT, IN EACH CASE, IS DRAWN AND HELD FOR THE DURATION
OF THE TERM OR DRAW PERIOD.
(C) THE ANNUAL PERCENTAGE RATE, USING ONLY THE WORDS ANNUAL PERCENTAGE
RATE OR THE ABBREVIATION "APR", EXPRESSED AS A NOMINAL YEARLY RATE,
INCLUSIVE OF ANY FEES AND FINANCE CHARGES THAT CANNOT BE AVOIDED BY A
RECIPIENT, AND CALCULATED IN ACCORDANCE WITH THE FEDERAL TRUTH IN LEND-
ING ACT, REGULATION Z, 12 C.F.R. § 1026.22 AND BASED ON THE MAXIMUM
AMOUNT OF CREDIT AVAILABLE TO THE RECIPIENT AND THE TERM RESULTING FROM
MAKING THE MINIMUM REQUIRED PAYMENTS TERM AS DISCLOSED.
(D) THE TOTAL REPAYMENT AMOUNT, WHICH IS THE DRAW AMOUNT, LESS ANY
FEES DEDUCTED OR WITHHELD AT DISBURSEMENT, PLUS THE TOTAL COST OF THE
FINANCING. THE TOTAL REPAYMENT AMOUNT SHALL ASSUME A DRAW AMOUNT EQUAL
TO THE MAXIMUM AMOUNT OF CREDIT AVAILABLE TO THE RECIPIENT IF DRAWN AND
HELD FOR THE DURATION OF THE TERM OR DRAW PERIOD.
(E) THE TERM OF THE PLAN, IF APPLICABLE, OR THE PERIOD OVER WHICH A
DRAW IS AMORTIZED.
(F) THE PAYMENT FREQUENCY AND AMOUNTS, BASED ON THE ASSUMPTIONS USED
IN THE CALCULATION OF THE ANNUAL PERCENTAGE RATE, INCLUDING A
DESCRIPTION OF PAYMENT AMOUNT REQUIREMENTS SUCH AS A MINIMUM PAYMENT
AMOUNT, AND IF THE PAYMENT FREQUENCY IS OTHER THAN MONTHLY, THE AMOUNT
OF THE AVERAGE PROJECTED PAYMENTS PER MONTH. FOR PAYMENT AMOUNTS THAT
ARE VARIABLE, THE PROVIDER SHOULD INCLUDE A PAYMENT SCHEDULE, OR A
DESCRIPTION OF THE METHOD USED TO CALCULATE THE AMOUNTS AND FREQUENCY OF
PAYMENTS, AND THE ESTIMATED AVERAGE MONTHLY PAYMENT AMOUNT.
(G) A DESCRIPTION OF ALL OTHER POTENTIAL FEES AND CHARGES THAT CAN BE
AVOIDED BY THE RECIPIENT, INCLUDING, BUT NOT LIMITED TO, DRAW FEES, LATE
PAYMENT FEES, AND RETURNED PAYMENT FEES.
(H) IN THE EVENT THAT A RECIPIENT ELECTS TO PAY OFF OR REFINANCE THE
COMMERCIAL FINANCING PRIOR TO FULL REPAYMENT, THE PROVIDER MUST
DISCLOSE:
(I) WHETHER THE RECIPIENT WOULD BE REQUIRED TO PAY ANY FINANCE CHARGES
OTHER THAN INTEREST ACCRUED SINCE THEIR LAST PAYMENT. IF SO, DISCLOSURE
OF THE PERCENTAGE OF ANY UNPAID PORTION OF THE FINANCE CHARGE AND MAXI-
MUM DOLLAR AMOUNT THE RECIPIENT COULD BE REQUIRED TO PAY; AND
(II) WHETHER THE RECIPIENT WOULD BE REQUIRED TO PAY ANY ADDITIONAL
FEES NOT ALREADY INCLUDED IN THE FINANCE CHARGE.
(I) A DESCRIPTION OF COLLATERAL REQUIREMENTS OR SECURITY INTERESTS, IF
ANY.
§ 706. ACCOUNTS RECEIVABLE TRANSACTION DISCLOSURE REQUIREMENTS. A
PROVIDER, SUBJECT TO THIS ARTICLE, SHALL PROVIDE THE FOLLOWING DISCLO-
SURES TO A RECIPIENT AT THE TIME OF EXTENDING A SPECIFIC OFFER FOR AN
ACCOUNTS RECEIVABLE TRANSACTION ACCORDING TO FORMATTING PRESCRIBED BY
THE SUPERINTENDENT:
(A) THE AMOUNT OF THE RECEIVABLES PURCHASE PRICE PAID TO THE RECIPIENT
AND, IF DIFFERENT FROM THE PURCHASE PRICE, THE AMOUNT DISBURSED TO THE
RECIPIENT AFTER ANY FEES DEDUCTED OR WITHHELD AT DISBURSEMENT.
S. 5470--A 7
(B) THE TOTAL COST OF FINANCING, EXPRESSED AS A DOLLAR COST, WHICH IS
THE DIFFERENCE BETWEEN THE VALUE OF THE PURCHASED RECEIVABLES AND THE
PURCHASE PRICE PAID TO THE RECIPIENT.
(C) THE ESTIMATED ANNUAL PERCENTAGE RATE, USING THAT TERM, CALCULATED
ACCORDING TO THE FEDERAL TRUTH IN LENDING ACT, REGULATION Z, 12 C.F.R. §
1026 APPENDIX J, AS A "SINGLE ADVANCE, SINGLE PAYMENT TRANSACTION". TO
CALCULATE THE ESTIMATED ANNUAL PERCENTAGE RATE, THE PURCHASE AMOUNT IS
CONSIDERED THE FINANCING AMOUNT, THE PURCHASE AMOUNT MINUS THE TOTAL
COST OF FINANCING IS CONSIDERED THE PAYMENT AMOUNT, AND THE TERM IS
ESTABLISHED BY THE PAYMENT DUE DATE OF THE RECEIVABLES. AS AN ALTERNATE
METHOD OF ESTABLISHING THE TERM, THE PROVIDER MAY ESTIMATE THE TERM FOR
AN ACCOUNT RECEIVABLE TRANSACTION AS THE AVERAGE PAYMENT PERIOD, ITS
HISTORICAL DATA OVER A PERIOD NOT TO EXCEED THE PREVIOUS TWELVE MONTHS,
CONCERNING PAYMENT INVOICES PAID BY THE PARTY OWING THE ACCOUNTS RECEIV-
ABLE IN QUESTION.
(D) THE TOTAL REPAYMENT AMOUNT, WHICH IS THE PURCHASE AMOUNT PLUS THE
TOTAL COST OF THE FINANCING.
(E) A DESCRIPTION OF ALL OTHER POTENTIAL FEES AND CHARGES THAT CAN BE
AVOIDED BY THE RECIPIENT.
(F) A DESCRIPTION OF THE RECEIVABLES PURCHASED AND ANY ADDITIONAL
COLLATERAL REQUIREMENTS OR SECURITY INTERESTS.
§ 707. OTHER FORMS OF FINANCING DISCLOSURE REQUIREMENTS. THE SUPER-
INTENDENT MAY REQUIRE DISCLOSURE BY A PROVIDER EXTENDING A SPECIFIC
OFFER OF COMMERCIAL FINANCING WHICH IS NOT A COMMERCIAL LINE OF CREDIT,
CLOSED-END CREDIT, SALES-BASED FINANCING, OR ACCOUNTS RECEIVABLE TRANS-
ACTION BUT OTHERWISE MEETS THE DEFINITION OF COMMERCIAL FINANCING AS
PROVIDED IN THIS ARTICLE. SUBJECT TO SUCH RULES AND REGULATIONS BY THE
SUPERINTENDENT, A PROVIDER SUBJECT TO THIS ARTICLE SHALL PROVIDE THE
FOLLOWING DISCLOSURES TO A RECIPIENT AT THE TIME OF EXTENDING A SPECIFIC
OFFER OF OTHER FORMS OF FINANCING ACCORDING TO FORMATTING PRESCRIBED BY
THE SUPERINTENDENT:
(A) THE TOTAL AMOUNT OF THE COMMERCIAL FINANCING, AND THE DISBURSEMENT
AMOUNT, IF DIFFERENT FROM THE FINANCING AMOUNT, AFTER ANY FEES DEDUCTED
OR WITHHELD AT DISBURSEMENT.
(B) THE TOTAL COST OF THE FINANCING, EXPRESSED AS A DOLLAR COST,
INCLUDING ANY AND ALL FEES, EXPENSES AND CHARGES THAT ARE TO BE PAID BY
THE RECIPIENT AND THAT CANNOT BE AVOIDED BY THE RECIPIENT, INCLUDING ANY
INTEREST EXPENSE. THE TOTAL COST OF FINANCING SHALL ASSUME THE RECIPIENT
REPAYS THE COMMERCIAL FINANCING IN ITS ENTIRETY ACCORDING TO THE AGREED
UPON ORIGINAL PAYMENT SCHEDULE.
(C) THE ANNUAL PERCENTAGE RATE, USING ONLY THE WORDS ANNUAL PERCENTAGE
RATE OR THE ABBREVIATION "APR", EXPRESSED AS A YEARLY RATE, INCLUSIVE OF
ANY FEES AND FINANCE CHARGES, AND CALCULATED IN ACCORDANCE WITH THE
RELEVANT SECTIONS OF THE FEDERAL TRUTH IN LENDING ACT, REGULATION Z OR
THIS ARTICLE.
(D) THE TOTAL REPAYMENT AMOUNT, WHICH IS THE DISBURSEMENT AMOUNT PLUS
THE TOTAL COST OF THE FINANCING.
(E) THE TERM OF THE FINANCING.
(F) THE PAYMENT AMOUNTS:
(I) FOR PAYMENT AMOUNTS THAT ARE FIXED, THE PAYMENT AMOUNTS AND
FREQUENCY (E.G., DAILY, WEEKLY, MONTHLY), AND THE AVERAGE MONTHLY
PAYMENT AMOUNT; OR
(II) FOR PAYMENT AMOUNTS THAT ARE VARIABLE, A PAYMENT SCHEDULE OR A
DESCRIPTION OF THE METHOD USED TO CALCULATE THE AMOUNTS AND FREQUENCY OF
PAYMENTS, AND THE ESTIMATED AVERAGE MONTHLY PAYMENT AMOUNT.
S. 5470--A 8
(G) A DESCRIPTION OF ALL OTHER POTENTIAL FEES AND CHARGES THAT CAN BE
AVOIDED BY THE RECIPIENT, INCLUDING, BUT NOT LIMITED TO, LATE PAYMENT
FEES AND RETURNED PAYMENT FEES.
(H) IN THE EVENT THAT A RECIPIENT ELECTS TO PAY OFF OR REFINANCE THE
COMMERCIAL FINANCING PRIOR TO FULL REPAYMENT, THE PROVIDER MUST
DISCLOSE:
(I) WHETHER THE RECIPIENT WOULD BE REQUIRED TO PAY ANY FINANCE CHARGES
OTHER THAN INTEREST ACCRUED SINCE THEIR LAST PAYMENT. IF SO, DISCLOSURE
OF THE PERCENTAGE OF ANY UNPAID PORTION OF THE FINANCE CHARGE AND MAXI-
MUM DOLLAR AMOUNT THE RECIPIENT COULD BE REQUIRED TO PAY; AND
(II) WHETHER THE RECIPIENT WOULD BE REQUIRED TO PAY ANY ADDITIONAL
FEES NOT ALREADY INCLUDED IN THE FINANCE CHARGE.
(I) A DESCRIPTION OF COLLATERAL REQUIREMENTS OR SECURITY INTERESTS, IF
ANY.
§ 708. DISCLOSURE REQUIREMENTS FOR RENEWAL FINANCING. IF, AS A CONDI-
TION OF OBTAINING THE COMMERCIAL FINANCING, THE PROVIDER REQUIRES THE
RECIPIENT TO PAY OFF THE BALANCE OF AN EXISTING COMMERCIAL FINANCING
FROM THE SAME PROVIDER, THE PROVIDER MUST DISCLOSE:
(A) THE AMOUNT OF THE NEW COMMERCIAL FINANCING THAT IS USED TO PAY OFF
THE PORTION OF THE EXISTING COMMERCIAL FINANCING THAT CONSISTS OF
PREPAYMENT CHARGES REQUIRED TO BE PAID AND ANY UNPAID INTEREST EXPENSE
THAT WAS NOT FORGIVEN AT THE TIME OF RENEWAL. FOR FINANCING FOR WHICH
THE TOTAL REPAYMENT AMOUNT IS CALCULATED AS A FIXED AMOUNT, THE PREPAY-
MENT CHARGE IS EQUAL TO THE ORIGINAL FINANCE CHARGE MULTIPLIED BY THE
AMOUNT OF THE RENEWAL USED TO PAY OFF EXISTING FINANCING AS A PERCENTAGE
OF THE TOTAL REPAYMENT AMOUNT, MINUS ANY PORTION OF THE TOTAL REPAYMENT
AMOUNT FORGIVEN BY THE PROVIDER AT THE TIME OF PREPAYMENT. IF THE AMOUNT
IS MORE THAN ZERO, SUCH AMOUNT SHALL BE THE ANSWER TO THE FOLLOWING
QUESTION:
"DOES THE RENEWAL FINANCING INCLUDE ANY AMOUNT THAT IS USED TO PAY
UNPAID FINANCE CHARGE OR FEES, ALSO KNOWN AS DOUBLE DIPPING? YES, {ENTER
AMOUNT}. IF THE AMOUNT IS ZERO, THE ANSWER WOULD BE NO."
(B) IF THE DISBURSEMENT AMOUNT WILL BE REDUCED TO PAY DOWN ANY UNPAID
PORTION OF THE OUTSTANDING BALANCE, THE ACTUAL DOLLAR AMOUNT BY WHICH
SUCH DISBURSEMENT AMOUNT WILL BE REDUCED.
§ 709. REQUIRED SIGNATURE. THE PROVIDER SHALL OBTAIN THE RECIPIENT'S
SIGNATURE, WHICH MAY BE FULFILLED BY AN ELECTRONIC SIGNATURE, ON ALL
DISCLOSURES REQUIRED TO BE PRESENTED TO THE RECIPIENT BY THIS ARTICLE
BEFORE AUTHORIZING THE RECIPIENT TO PROCEED FURTHER WITH THE COMMERCIAL
FINANCING TRANSACTION APPLICATION.
§ 710. ADDITIONAL INFORMATION. NOTHING IN THIS ARTICLE SHALL PREVENT A
PROVIDER FROM PROVIDING OR DISCLOSING ADDITIONAL INFORMATION ON A
COMMERCIAL FINANCING BEING OFFERED TO A RECIPIENT, PROVIDED HOWEVER,
THAT SUCH ADDITIONAL INFORMATION SHALL NOT BE DISCLOSED AS PART OF THE
DISCLOSURE REQUIRED BY THIS ARTICLE. IF OTHER METRICS OF FINANCING COST
ARE DISCLOSED OR USED IN THE APPLICATION PROCESS OF A COMMERCIAL FINANC-
ING, THESE METRICS SHALL NOT BE PRESENTED AS A "RATE" IF THEY ARE NOT
THE ANNUAL INTEREST RATE OR THE ANNUAL PERCENTAGE RATE. THE TERM "INTER-
EST", WHEN USED TO DESCRIBE A PERCENTAGE RATE, SHALL ONLY BE USED TO
DESCRIBE ANNUALIZED PERCENTAGE RATES, SUCH AS THE ANNUAL INTEREST RATE.
WHEN A PROVIDER STATES A RATE OF FINANCE CHARGE OR A FINANCING AMOUNT TO
A RECIPIENT DURING AN APPLICATION PROCESS FOR COMMERCIAL FINANCING, THE
PROVIDER SHALL ALSO STATE THE RATE AS AN "ANNUAL PERCENTAGE RATE", USING
THAT TERM OR THE ABBREVIATION "APR".
§ 711. RULES AND REGULATIONS. THE SUPERINTENDENT IS HEREBY AUTHORIZED
AND EMPOWERED TO PROMULGATE SUCH RULES AND REGULATIONS AS MAY IN THE
S. 5470--A 9
JUDGMENT OF THE SUPERINTENDENT BE CONSISTENT WITH THE PURPOSES OF THIS
ARTICLE, OR APPROPRIATE FOR THE EFFECTIVE ADMINISTRATION OF THIS ARTI-
CLE, INCLUDING, BUT NOT LIMITED TO:
(A) SUCH RULES AND REGULATIONS IN CONNECTION WITH THE CALCULATION OR
DETERMINATION OF ANY METRIC REQUIRED TO BE DISCLOSED TO A RECIPIENT.
(B) SUCH RULES AND REGULATIONS AS NECESSARY TO DEVELOP AND PRESCRIBE
DISCLOSURE FORMATTING TO BE USED BY PROVIDERS THAT ALLOWS FOR RECIPIENTS
TO EASILY COMPARE FINANCING OPTIONS IN A CLEAR AND CONSPICUOUS MANNER.
SUCH RULES AND REGULATIONS SHALL INCLUDE THE DESIGNATION AND METHOD FOR
DISCLOSING THE INFORMATION REQUIRED IN THIS ARTICLE, OR APPROVING
ADEQUATE FORMS AND METHODS ALREADY USED BY PROVIDERS.
(C) SUCH RULES AND REGULATIONS AS MAY DEFINE THE TERMS USED IN THIS
ARTICLE AND AS MAY BE NECESSARY AND APPROPRIATE TO INTERPRET AND IMPLE-
MENT THE PROVISIONS OF THIS ARTICLE.
(D) SUCH RULES AND REGULATIONS AS MAY BE NECESSARY FOR THE ENFORCEMENT
OF THIS ARTICLE.
§ 712. PENALTIES. (A) UPON A FINDING BY THE SUPERINTENDENT THAT A
PROVIDER HAS VIOLATED THE PROVISIONS OF THIS ARTICLE OR THE RULES OR
REGULATIONS PROMULGATED HEREUNDER, THE PROVIDER SHALL BE ORDERED TO PAY
TO THE PEOPLE OF THIS STATE A CIVIL PENALTY FOR EACH VIOLATION OF THIS
ARTICLE OR ANY REGULATION OR POLICY PROMULGATED HEREUNDER A SUM NOT TO
EXCEED TWO THOUSAND DOLLARS FOR EACH VIOLATION OR WHERE SUCH VIOLATION
IS WILLFUL TEN THOUSAND DOLLARS FOR EACH VIOLATION.
(B) IN ADDITION TO ANY PENALTY IMPOSED PURSUANT TO SUBSECTION (A) OF
THIS SECTION, UPON A FINDING BY THE SUPERINTENDENT THAT A PROVIDER HAS
KNOWINGLY VIOLATED THIS ARTICLE, THE SUPERINTENDENT MAY ORDER ADDITIONAL
RELIEF, INCLUDING, BUT NOT LIMITED TO, A PERMANENT OR PRELIMINARY
INJUNCTION ON BEHALF OF ANY RECIPIENT AFFECTED BY THE VIOLATION.
§ 2. This act shall take effect on the one hundred eightieth day after
it shall have become a law.
