H.B. No. 700 introduces new regulations for commercial sales-based financing transactions in Texas by adding Chapter 398 to the Finance Code. This chapter defines key terms such as "commercial sales-based financing," "provider," "recipient," and "finance charge," and outlines its applicability to providers and brokers offering financing services online. The bill specifies exemptions for certain entities, including banks and credit unions, and clarifies that sales-based financing transactions are not classified as account purchase transactions under existing law. The Office of Consumer Credit Commissioner is designated to administer and enforce these regulations, with the authority to impose civil penalties for non-compliance.

The bill establishes comprehensive disclosure requirements for financing offers under $1 million, mandating that providers detail the total amount, disbursement amount, finance charges, repayment amounts, and any additional fees. Providers must obtain the recipient's signature on these disclosures before finalizing transactions. Registration with the Office of Consumer Credit Commissioner is required for providers and brokers, including the payment of initial and renewal fees, and the submission of specific information on the registration form. The bill also prohibits certain practices, such as including confession of judgment provisions in contracts and automatic debits from recipients' accounts without a valid security interest. Violations can incur civil penalties of $10,000 per instance, and the act is set to take effect on September 1, 2025, with a registration deadline for existing providers and brokers by December 31, 2026.

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