Where We Are Now
In effect as of July 1 2024, Senate Bill 345 enacts the Commercial Financing Disclosure Act, first proposed as SB 245. It introduces requirements for disclosures during commercial financing transactions.
How We Got here
Senate Bill 245, known as the Commercial Financing Disclosure Act, was introduced February 13, 2023. It was then referred to the Committee on Financial Institutions and Insurance on February 14, 2023.
The bill was then reintroduced as SB 345 in January 2024, with a hearing held on January 24, 2024. Finally, SB 345 was approved by Governor Laura Kelly. The Bill is sponsored by the Committee on Federal and State Affairs and was first introduced by Senator Chase Blasi.
What Funders Need to Know
Exemptions
The law exempts a variety of entities and transactions. For entities, this includes depository institutions (like banks and credit unions) and their subsidiaries; lenders who are regulated under the Federal Farm Credit Act; and providers that consummate five or fewer transactions in Kansas in a 12-month period.
Exempted transactions include—but are not limited to—leases, certain purchase money obligations, and commercial financing transactions of more than $500,000.
Compliance Requirement
SB 345 does not include any provisions that require providers (or brokers) to register with the state of Kansas.
Disclosure Requirements
Kansas disclosures regard timing, commercial financing facilities, frequency, and format. The specific transaction information that providers must share include the likes of the total amount funds provided and disbursed, total payments, total cost of frequency, among other details.
Penalties
SB 345 stipulates civil penalties (not criminal). It will cost $500 per violation, up to $20,000 for all aggregated violations. For repeat violations there is an increased penalty: $1,000 per violation, but [the total] can’t exceed $50,000.
