HB5587 - Consumer Protections for Small Business Act

• Creates the Commercial Financing Licensing Act requiring persons providing commercial financing (open-end, closed-end, sales-based financing, factoring) to obtain a license from the Secretary of Financial and Professional Regulation with a $2,500 application fee and annual $2,500 renewal fee.

• Establishes licensing requirements including submission of audited financial statements, background information on owners and directors, and lists of prior judgments and bankruptcy filings; failure to obtain required license constitutes a Class 4 felony.

• Grants the Secretary broad investigative and enforcement powers including examination authority, subpoena power, ability to issue cease and desist orders, and authority to impose civil penalties up to $10,000 per violation ($50,000 aggregate) or up to $10,000 per violation with prior notice ($100,000 aggregate).

• Exempts from licensing requirements banks, credit unions, savings institutions, technology service providers for exempt entities, Farm Credit Act lenders, real estate-secured financing, leases, and persons making no more than 5 commercial financing transactions in a 12-month period.

• Establishes a commercial financing database administered by the Department where licensees must report financing transactions within 30 days of providing funds, with database information kept confidential and exempt from public disclosure under the Freedom of Information Act; licensing begins January 1, 2025 or 60 days after the application process becomes available.