Substitute House Bill No. 5211 seeks to amend existing laws on commercial financing by repealing and replacing Sections 36a-861 and 36a-863 of the general statutes, effective October 1, 2026. The bill notably removes the previous cap on sales-based financing, which was limited to $250,000, and introduces new definitions such as "commercial financing broker," "finance charge," and "sales-based financing." It clarifies the roles of "providers" and "recipients" in the financing process and exempts certain entities, including banks and credit unions, from these regulations. The bill mandates that providers disclose essential information to recipients, including the total financing amount, disbursement amount, finance charge, and a newly required estimated annual percentage rate (APR), calculated based on projected sales or revenue.

Additionally, the bill establishes that providers will not be liable for discrepancies between estimated and actual APRs and prohibits the use of misleading terms like "interest" or "rate" unless clearly defined. It also ensures that financing contracts cannot include nondisclosure provisions requiring confidentiality, making such provisions unenforceable. The bill anticipates the creation of a new position within the banking department to manage the increased regulatory requirements, with associated costs estimated at $90,000 in salary and $77,400 in fringe benefits annually. While the bill is expected to generate minimal revenue through new registrations and fees, its overall fiscal impact will depend on the volume of consumer complaints and the number of newly registered commercial financing providers.

Statutes affected:
Raised Bill:
BA Joint Favorable Substitute:
File No. 134: