Georgia Enacts Commercial Finance Disclosure Act, Mandatory Compliance Date January 1, 2024 | Buchalter

Georgia has enacted its own Commercial Finance Disclosure Law (“CFDL”) that is similar to the disclosure laws of California, Florida, and New York. The Georgia CFDL applies to “Trade finance transactions“Completed on or after January 1, 2024 and of $500,000 or less that arose from “Covered”ProviderThe disclosure document itself is an early disclosure, provided once for each trade finance transaction before it is completed.

Where to find the Georgia Trade Finance Disclosure Act

SB90 (2023), Georgia’s CFDL added to Georgia’s Fair Trade Practices Act at Title 10, Official Code of Georgia Annotated, Sections 10-1-393.18, and what comes next. click here to read.

Covered Trade Finance Transactions are defined; Excluded transactions

Defines the Georgia CFDL Trade finance process As a “business purpose transaction made for a business or intended to be used to continue business, with a primary purpose that is not intended for personal, family, or household (traditional consumer) purposes.” Types of trade finance transactions covered by SB 90 include business loans, open business credit plans, and accounts receivable purchase transactions (GA Ann. §§ 10-1-393.19(a)(5), (6).)

Trade finance transactions outside the scope of SB90 coverage are:

• Commercial financing operations secured by real estate.
• Business “rent” transactions as defined in GA Code Section 11-2A-103.
• A commercial “purchase money obligation” as defined in GA Code Section 11-9-103.
• Business loans and open lines of credit of $50,000 or more made to an automobile dealer or an affiliate of the dealer, an automobile leasing company as defined in Section 40-2-167 of the GA Code or an affiliate of the leasing company.
• A trade financing transaction made by a person in connection with the sale or lease of a product or service that that person (or its parent and subsidiaries) manufactures, licenses, or distributes.
• Trade finance transactions over $500,000 in value.
• A trade financing product is a factoring, purchase, sale, advance, or similar transaction of accounts receivable owed to a health care provider due to a personal injury to a patient treated by the health care provider.
• No disclosure is required as a result of an amendment, tolerance or change in a completed covered trade finance transaction.

(GA Ann. §§ 10-1-393.19(b), (e)(2).)

Provider is defined; Exemptions

Covered Trade Finance transaction must be covered by CoveredProviderAs defined in the CFDL. Provider It has double meanings in the CFDL, as follows:

• Anyone who completes No more than five trade finance transactions in this state during any calendar year. in any calendar year It is not a phrase consistently used in Georgia law to define covered versus excluded trade finance transactions. This phrase is used interchangeably with Section 10-1-393.19(b)(5) which excludes transactions made by a “provider who completes five or fewer trade finance transactions in the state during any 12-month period.” (see below.)
• Any person who, under a written agreement with a depository institution, offers one or more trade finance products offered by the depository institution via an online lending platform operated by that person. This category of service providers that makes a specific offer for a commercial financing transaction on behalf of a depository institution is expressly declared by SB90 to not engage in lending or financing or the origination of such loan or financing, activities that could open the service provider to further Georgia Lending Laws. licensing and usury.

(GA Ann. § 10-1-393.19(a)(10).)

Elsewhere in SB 90, the Georgia CFDL excludes from its coverage any provider that is a federally insured depository institution, subsidiary, service company, affiliate, or holding company of that institution. (GA Code Ann. § 10-1-393.19(b)(1).(2).) SB 90 also exempts the following providers from the Georgia CFDL disclosure requirements:

• A Service Provider that conducts five (5) or fewer Trade Finance Transactions in the State during any 12-month period.
• A provider that is regulated under the Federal Farm Credit Act.
• Any money transfer device licensed under Title 7, Georgia Explanatory Code, Chapter 1, Section 4.

(GA Ann. § 10-1-393.19(b).)

required disclosure elements similar to the Federal Truth in Lending Act; Mandatory compliance begins in 2023.

While the required early disclosure requirement in SB 90 applies to “any trade finance transaction completed on or after January 1, 2024,” Section 10-1-393.19(e)(1) requires disclosure to be delivered to a prospective borrower “before a transaction is completed.” commercial financing.” As a result, mandatory compliance with SB 90 could occur in 2023.

Mandatory disclosure items are similar to the Federal Truth in Lending Act regarding consumer credit transactions. they:

• The total amount of money advanced to a commercial borrower (Advance Financing).
• The total amount of funds spent on the company, if it is less than the amount of financing provided (the amount of financing).
• The total amount to be paid to the provider (finance fee).
• The total dollar cost of the trade financing process (annual percentage rate).
• The method, frequency and amount of each payment (payment schedule).
• If the amount of each payment varies, the method, frequency and estimated amount of the initial payment may vary. Also include the methodology for calculating any variable payment amount and the circumstances that may cause the payment amount to vary.
• A statement whether there are any costs or deductions associated with the prepayment, including a reference to the paragraph in the Trade Finance Transaction Agreement that establishes each (prepayment) cost or deduction.

(GA Ann. § 10-1-393.19(e)(3).)

Mandatory; Penalties for violating the Georgia CFDL

The Georgia Attorney General is granted exclusive power to enforce the CFDL subject to statutory sanctions provisions (GA Ann. § 10-1-393.19(g)); The CFDL does not create a private right of action against alleged violations (GA Ann. § 10-1-393.19(j)) and violation of the CFDL Georgia law will not affect the enforceability of any underlying commercial finance transaction agreement (GA Ann. § 10-1-393.19 (K)). For each first-time violation, the statutory penalty is $500 (maximum total penalty $20,000); For each repeat violation, the statutory penalty is $1,000 (maximum total penalty $50,000) (GA Ann. §§ 10-1-393.19(h), (i)). No other rules for implementing the Georgia CFDL are imposed on the Attorney General by law.