Bill Text: IL HB3064 | 2023-2024 | 103rd General Assembly | Introduced
Bill Title: Creates the Small Business Truth in Lending Act. Sets forth provisions concerning disclosure requirements for sales-based financing, closed-end commercial financing, open-end commercial financing, factoring transactions, renewal financing, and other forms of financing. Provides that all commercial financing shall include a clear and conspicuous notice on how to file a complaint with the Department of Financial and Professional Regulation. Provides that the Department may adopt rules. Provides that upon a finding by the Secretary of Financial and Professional Regulation that a provider has violated the provisions or rules, the provider shall be ordered to pay the Department a civil penalty for each violation of the provisions or any rule not to exceed $10,000 for each violation, or if a violation is willful, $20,000 for each violation. Sets forth provisions concerning cease and desist orders, injunctions, investigation and examination, civil actions, violations, and registration. Provides that a violation of the provisions constitutes an unlawful practice in violation of the Consumer Fraud and Deceptive Business Practices Act. Defines terms. Makes a conforming change in the Consumer Fraud and Deceptive Business Practices Act. Effective immediately.
Spectrum: Partisan Bill (Democrat 6-0)
Status: (Introduced) 2023-10-27 - Added Co-Sponsor Rep. Will Guzzardi [HB3064 Detail]
Download: Illinois-2023-HB3064-Introduced.html
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1 | AN ACT concerning regulation.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 1. Short title. This Act may be cited as the Small | |||||||||||||||||||||
5 | Business Truth in Lending Act.
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6 | Section 3. Applicability. This Act applies to transactions | |||||||||||||||||||||
7 | occurring on or after January 1, 2024.
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8 | Section 5. Purpose and construction. | |||||||||||||||||||||
9 | (a) The purpose of this Act is to protect business owners | |||||||||||||||||||||
10 | from predatory business loans. | |||||||||||||||||||||
11 | (b) This Act shall be liberally construed to effectuate | |||||||||||||||||||||
12 | its purpose.
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13 | Section 10. Definitions. As used in this Act: | |||||||||||||||||||||
14 | "Commercial financing" means open-end financing, | |||||||||||||||||||||
15 | closed-end financing, sales-based financing, factoring | |||||||||||||||||||||
16 | transaction, or another form of financing that the recipient | |||||||||||||||||||||
17 | does not intend to use the proceeds of primarily for personal, | |||||||||||||||||||||
18 | family, or household purposes. For purposes of determining | |||||||||||||||||||||
19 | whether a financing is a commercial financing, the provider | |||||||||||||||||||||
20 | may rely on any statement of intended purposes or on | |||||||||||||||||||||
21 | electronic signatures or consents by the recipient. The |
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1 | statement may be a separate statement signed by the recipient; | ||||||
2 | may be contained in the financing application, financing | ||||||
3 | agreement, or other document signed or consented to by the | ||||||
4 | recipient; or may be provided orally by the recipient so long | ||||||
5 | as it is documented in the recipient's application file by the | ||||||
6 | provider. The provider shall not be required to ascertain that | ||||||
7 | the proceeds of a commercial financing are used in accordance | ||||||
8 | with the recipient's statement of intended purposes. | ||||||
9 | "Closed-end financing" means a closed-end extension of | ||||||
10 | credit, secured or unsecured, recourse or nonrecourse, | ||||||
11 | including equipment financing that does not meet the | ||||||
12 | definition of a lease under Section 2A-103 of the Uniform | ||||||
13 | Commercial Code, that the recipient does not intend to use the | ||||||
14 | proceeds of primarily for personal, family, or household | ||||||
15 | purposes. "Closed-end financing" includes financing with an | ||||||
16 | established principal amount and duration. | ||||||
17 | "Department" means the Department of Financial and | ||||||
18 | Professional Regulation. | ||||||
19 | "Factoring transaction" means an accounts receivable | ||||||
20 | purchase transaction that includes an agreement to purchase, | ||||||
21 | transfer, or sell a legally enforceable claim for payment held | ||||||
22 | by a recipient for goods the recipient has supplied or | ||||||
23 | services the recipient has rendered that have been ordered but | ||||||
24 | for which payment has not yet been made. | ||||||
25 | "Finance charge" means the cost of financing as a dollar | ||||||
26 | amount. "Finance charge" includes any charge payable directly |
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1 | or indirectly by the recipient and imposed directly or | ||||||
2 | indirectly by the provider as an incident to or a condition of | ||||||
3 | the extension of financing. "Finance charge" includes all | ||||||
4 | charges that would be included under 12 CFR 1026.4 as if the | ||||||
5 | transaction were subject to 12 CFR 1026.4. "Finance charge" | ||||||
6 | includes any charges as determined by the Secretary. For the | ||||||
7 | purposes of an open-end financing, "finance charge" means the | ||||||
8 | maximum amount of credit available to the recipient, in each | ||||||
9 | case, that is drawn and held for the duration of the term or | ||||||
10 | draw period. For the purposes of a factoring transaction, | ||||||
11 | "finance charge" includes the discount taken on the face value | ||||||
12 | of the accounts receivable. | ||||||
13 | "Open-end financing" means an agreement for one or more | ||||||
14 | extensions of open-end credit, secured or unsecured, that the | ||||||
15 | recipient does not intend to use the proceeds of primarily for | ||||||
16 | personal, family, or household purposes. "Open-end financing" | ||||||
17 | includes credit extended by a provider under a plan in which: | ||||||
18 | (i) the provider reasonably contemplates repeated | ||||||
19 | transactions; (ii) the provider may impose a finance charge | ||||||
20 | from time to time on an outstanding unpaid balance; and (iii) | ||||||
21 | the amount of credit that may be extended to the recipient | ||||||
22 | during the term of the plan is generally made available to the | ||||||
23 | extent that any outstanding balance is repaid. | ||||||
24 | "Person" means an individual, entity, corporation, | ||||||
25 | partnership, limited liability company, joint venture, | ||||||
26 | association, joint stock company, trust, or unincorporated |
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1 | organization including, but not limited to, a sole | ||||||
2 | proprietorship. | ||||||
3 | "Provider" means a person who extends a specific offer of | ||||||
4 | commercial financing to a recipient. Unless otherwise exempt, | ||||||
5 | "provider" includes a person who solicits and presents | ||||||
6 | specific offers of commercial financing on behalf of a third | ||||||
7 | party. For purposes of determining whether a financing is a | ||||||
8 | commercial financing, the mere extension of a specific offer | ||||||
9 | or provision of disclosures for a commercial financing is not | ||||||
10 | sufficient to conclude that a provider is originating, making, | ||||||
11 | funding, or providing commercial financing. | ||||||
12 | "Recipient" means a person who applies for commercial | ||||||
13 | financing and is made a specific offer of commercial financing | ||||||
14 | by a provider or an authorized representative of such person. | ||||||
15 | "Recipient" does not include a person acting as a broker in a | ||||||
16 | transaction they broker. | ||||||
17 | "Sales-based financing" means a transaction that is repaid | ||||||
18 | by the recipient to the provider, over time, as a percentage of | ||||||
19 | sales or revenue, in which the payment amount may increase or | ||||||
20 | decrease according to the volume of sales made or revenue | ||||||
21 | received by the recipient or a transaction that includes a | ||||||
22 | true-up mechanism where the financing is repaid as a fixed | ||||||
23 | payment but provides for a reconciliation process that adjusts | ||||||
24 | the payment to an amount that is a percentage of sales or | ||||||
25 | revenue. | ||||||
26 | "Secretary" means the Secretary of Financial and |
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1 | Professional Regulation or a person authorized by the | ||||||
2 | Secretary. | ||||||
3 | "Specific offer" means the specific terms of commercial | ||||||
4 | financing, including price or amount, that is quoted to a | ||||||
5 | recipient based on information obtained from or about the | ||||||
6 | recipient, that, if accepted by a recipient, shall be binding | ||||||
7 | on the provider, as applicable, subject to any specific | ||||||
8 | requirements stated in such terms.
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9 | Section 15. Exemptions. This Act does not apply to, and | ||||||
10 | shall not place any additional requirements or obligations | ||||||
11 | upon, any of the following: | ||||||
12 | (1) A bank, trust company, or industrial loan company | ||||||
13 | doing business under the authority of, or in accordance | ||||||
14 | with, a license, certificate, or charter issued by the | ||||||
15 | United States, this State, or any other state, district, | ||||||
16 | territory, or commonwealth of the United States that is | ||||||
17 | authorized to transact business in this State. | ||||||
18 | (2) A federally chartered savings and loan | ||||||
19 | association, federal savings bank, or federal credit union | ||||||
20 | that is authorized to transact business in this State. | ||||||
21 | (3) A savings and loan association, savings bank, or | ||||||
22 | credit union organized under the laws of this State or any | ||||||
23 | other state that is authorized to transact business in | ||||||
24 | this State. | ||||||
25 | (4) A person acting in its capacity as a technology |
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1 | services provider, such as licensing software and | ||||||
2 | providing support services, to an entity exempt under this | ||||||
3 | Section for use as part of the exempt entity's commercial | ||||||
4 | financing program, if such person has no interest, | ||||||
5 | arrangement, or agreement to purchase any interest in the | ||||||
6 | commercial financing extended by the exempt entity in | ||||||
7 | connection with such program. | ||||||
8 | (5) A lender regulated under the federal Farm Credit | ||||||
9 | Act, 12 U.S.C. 2001 et seq. | ||||||
10 | (6) A commercial financing transaction secured by real | ||||||
11 | property. | ||||||
12 | (7) A lease as defined in Section 2A-103 of the | ||||||
13 | Uniform Commercial Code. | ||||||
14 | (8) Any person or provider who makes no more than 5 | ||||||
15 | commercial financing transactions in this State in a | ||||||
16 | 12-month period. | ||||||
17 | (9) An individual commercial financing transaction in | ||||||
18 | an amount over $2,500,000. | ||||||
19 | (10) A commercial financing transaction in which the | ||||||
20 | recipient is a vehicle dealer subject to Section 5-101 or | ||||||
21 | 5-102 of the Illinois Vehicle Code, an affiliate of such a | ||||||
22 | dealer, a rental vehicle company as defined in Section 10 | ||||||
23 | of the Renter's Financial Responsibility and Protection | ||||||
24 | Act, or an affiliate of such a company pursuant to a | ||||||
25 | commercial financing agreement or commercial open-end | ||||||
26 | credit plan of at least $50,000, including any commercial |
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1 | loan made pursuant to such a commercial financing | ||||||
2 | transaction.
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3 | Section 20. Sales-based financing disclosure requirements. | ||||||
4 | A provider subject to this Act shall provide the following | ||||||
5 | disclosures to a recipient, according to formatting prescribed | ||||||
6 | by the Secretary, if any, at the time of extending a specific | ||||||
7 | offer of sales-based financing: | ||||||
8 | (1) The total amount of the commercial financing, and, | ||||||
9 | if different from the financing amount, the disbursement | ||||||
10 | amount after any amount deducted or withheld at | ||||||
11 | disbursement. | ||||||
12 | (2) The finance charge. | ||||||
13 | (3) The estimated annual percentage rate, using the | ||||||
14 | words annual percentage rate or the abbreviation "APR", | ||||||
15 | expressed as a yearly rate, inclusive of any fees and | ||||||
16 | finance charges, and calculated in accordance with the | ||||||
17 | federal Truth in Lending Act, Regulation Z, 12 CFR | ||||||
18 | 1026.22, based on the estimated term of repayment and the | ||||||
19 | projected periodic payment amounts, regardless of whether | ||||||
20 | such act or such rule would require such a calculation. | ||||||
21 | The estimated term of repayment and the projected periodic | ||||||
22 | payment amounts shall be calculated based on the | ||||||
23 | projection of the recipient's sales, which may be referred | ||||||
24 | to as the projected sales volume. The projected sales | ||||||
25 | volume may be calculated using the historical method or |
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1 | the opt-in method. The provider shall provide notice to | ||||||
2 | the Secretary on which method the provider intends to use | ||||||
3 | across all instances of sales-based financing offered in | ||||||
4 | calculating the estimated annual percentage rate pursuant | ||||||
5 | to this Section, according to the following: | ||||||
6 | (i) A provider using the historical method shall | ||||||
7 | use an average historical volume of sales or revenue | ||||||
8 | by which the financing's payment amounts are based and | ||||||
9 | the estimated annual percentage rate is calculated. | ||||||
10 | The provider shall fix the historical time period used | ||||||
11 | to calculate the average historical volume and use | ||||||
12 | such period for all disclosure purposes for all | ||||||
13 | sales-based financing products offered. The fixed | ||||||
14 | historical time period shall either be the preceding | ||||||
15 | time period from the specific offer or, alternatively, | ||||||
16 | the provider may use average sales for the same number | ||||||
17 | of months with the highest sales volume within the | ||||||
18 | past 12 months. The fixed historical time period shall | ||||||
19 | be no less than one month and shall not exceed 12 | ||||||
20 | months. | ||||||
21 | (ii) A provider using the opt-in method shall | ||||||
22 | determine the estimated annual percentage rate, the | ||||||
23 | estimated term, and the projected payments, using a | ||||||
24 | projected sales volume that the provider elects for | ||||||
25 | each disclosure, if they participate in a review | ||||||
26 | process prescribed by the Secretary. A provider shall, |
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1 | on an annual basis, report data to the Secretary of | ||||||
2 | estimated annual percentage rates disclosed to the | ||||||
3 | recipient and actual retrospective annual percentage | ||||||
4 | rates of completed transactions. The report shall | ||||||
5 | contain such information as the Department may adopt | ||||||
6 | by rule as necessary or appropriate for the purpose of | ||||||
7 | making a determination of whether the deviation | ||||||
8 | between the estimated annual percentage rate and | ||||||
9 | actual retrospective annual percentage rates of | ||||||
10 | completed transactions was reasonable. The Secretary | ||||||
11 | shall establish the method of reporting and may, upon | ||||||
12 | a finding that the use of projected sales volume by the | ||||||
13 | provider has resulted in an unacceptable deviation | ||||||
14 | between estimated and actual annual percentage rate, | ||||||
15 | require the provider to use the historical method. The | ||||||
16 | Secretary may consider unusual and extraordinary | ||||||
17 | circumstances impacting the provider's deviation | ||||||
18 | between estimated and actual annual percentage rate in | ||||||
19 | the determination of such finding. | ||||||
20 | (4) The total repayment amount, which is the | ||||||
21 | disbursement amount plus the finance charge. | ||||||
22 | (5) The estimated term is the period of time required | ||||||
23 | for the periodic payments, based on the projected sales | ||||||
24 | volume, to equal the total amount required to be repaid. | ||||||
25 | (6) The payment amounts, based on the projected sales | ||||||
26 | volume: |
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1 | (i) for payment amounts that are fixed, the | ||||||
2 | payment amounts and frequency (e.g., daily, weekly, | ||||||
3 | monthly), and, if the payment frequency is other than | ||||||
4 | monthly, the amount of the average projected payments | ||||||
5 | per month; or | ||||||
6 | (ii) for payment amounts that are variable, a | ||||||
7 | payment schedule or a description of the method used | ||||||
8 | to calculate the amounts and frequency of payments and | ||||||
9 | the amount of the average projected payments per | ||||||
10 | month. | ||||||
11 | (7) A description of all other potential fees and | ||||||
12 | charges not included in the finance charge, including, but | ||||||
13 | not limited to, draw fees, late payment fees, and returned | ||||||
14 | payment fees. | ||||||
15 | (8) If the recipient elects to pay off or refinance | ||||||
16 | the commercial financing before full repayment, the | ||||||
17 | provider must disclose: | ||||||
18 | (i) whether the recipient would be required to pay | ||||||
19 | any finance charges other than interest accrued since | ||||||
20 | their last payment; if so, disclosure of the | ||||||
21 | percentage of any unpaid portion of the finance charge | ||||||
22 | and maximum dollar amount the recipient could be | ||||||
23 | required to pay; and | ||||||
24 | (ii) whether the recipient would be required to | ||||||
25 | pay any additional fees not already included in the | ||||||
26 | finance charge. |
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1 | (9) A description of collateral requirements or | ||||||
2 | security interests, if any.
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3 | Section 25. Closed-end commercial financing disclosure | ||||||
4 | requirements. A provider subject to this Act shall provide the | ||||||
5 | following disclosures to a recipient, according to formatting | ||||||
6 | prescribed by the Secretary, if any, at the time of extending a | ||||||
7 | specific offer for closed-end financing: | ||||||
8 | (1) The total amount of the commercial financing, and, | ||||||
9 | if different from the financing amount, the disbursement | ||||||
10 | amount after any amount deducted or withheld at | ||||||
11 | disbursement. | ||||||
12 | (2) The finance charge. | ||||||
13 | (3) The annual percentage rate, using only the words | ||||||
14 | annual percentage rate or the abbreviation "APR", | ||||||
15 | expressed as a yearly rate, inclusive of any fees and | ||||||
16 | finance charges that cannot be avoided by a recipient, and | ||||||
17 | calculated in accordance with the federal Truth in Lending | ||||||
18 | Act, Regulation Z, 12 CFR 1026.22, regardless of whether | ||||||
19 | such act or such rule would require such a calculation. | ||||||
20 | (4) The total repayment amount, which is the | ||||||
21 | disbursement amount plus the finance charge. | ||||||
22 | (5) The term of the financing. | ||||||
23 | (6) The payment amounts: | ||||||
24 | (i) for payment amounts that are fixed, the | ||||||
25 | payment amounts and frequency (e.g., daily, weekly, |
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1 | monthly), and, if the term is longer than one month, | ||||||
2 | the average monthly payment amount; or | ||||||
3 | (ii) for payment amounts that are variable, a full | ||||||
4 | payment schedule or a description of the method used | ||||||
5 | to calculate the amounts and frequency of payments, | ||||||
6 | and, if the term is longer than one month, the | ||||||
7 | estimated average monthly payment amount. | ||||||
8 | (7) A description of all other potential fees and | ||||||
9 | charges that can be avoided by the recipient, including, | ||||||
10 | but not limited to, late payment fees and returned payment | ||||||
11 | fees. | ||||||
12 | (8) If the recipient elects to pay off or refinance | ||||||
13 | the commercial financing before full repayment, the | ||||||
14 | provider must disclose: | ||||||
15 | (i) whether the recipient would be required to pay | ||||||
16 | any finance charges other than interest accrued since | ||||||
17 | their last payment; if so, disclosure of the | ||||||
18 | percentage of any unpaid portion of the finance charge | ||||||
19 | and maximum dollar amount the recipient could be | ||||||
20 | required to pay; and | ||||||
21 | (ii) whether the recipient would be required to | ||||||
22 | pay any additional fees not already included in the | ||||||
23 | finance charge. | ||||||
24 | (9) A description of collateral requirements or | ||||||
25 | security interests, if any.
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1 | Section 30. Open-end commercial financing disclosure | ||||||
2 | requirements. A provider subject to this Act shall provide the | ||||||
3 | following disclosures to a recipient, according to formatting | ||||||
4 | prescribed by the Secretary, if any, at the time of extending a | ||||||
5 | specific offer for open-end financing: | ||||||
6 | (1) The maximum amount of credit available to the | ||||||
7 | recipient (e.g., the credit line amount), and the amount | ||||||
8 | scheduled to be drawn by the recipient at the time the | ||||||
9 | offer is extended, if any, less any amount deducted or | ||||||
10 | withheld at disbursement. | ||||||
11 | (2) The finance charge. | ||||||
12 | (3) The annual percentage rate, using only the words | ||||||
13 | annual percentage rate or the abbreviation "APR", | ||||||
14 | expressed as a nominal yearly rate, inclusive of any fees | ||||||
15 | and finance charges that cannot be avoided by a recipient, | ||||||
16 | and calculated in accordance with the federal Truth in | ||||||
17 | Lending Act, Regulation Z, 12 CFR 1026.22, and based on | ||||||
18 | the maximum amount of credit available to the recipient | ||||||
19 | and the term resulting from making the minimum required | ||||||
20 | payments term as disclosed, regardless of whether such act | ||||||
21 | or such rule would require such a calculation. | ||||||
22 | (4) The total repayment amount, which is the draw | ||||||
23 | amount, less any fees deducted or withheld at | ||||||
24 | disbursement, plus the finance charge. The total repayment | ||||||
25 | amount shall assume a draw amount equal to the maximum | ||||||
26 | amount of credit available to the recipient if drawn and |
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1 | held for the duration of the term or draw period. | ||||||
2 | (5) The term of the plan, if applicable, or the period | ||||||
3 | over which a draw is amortized. | ||||||
4 | (6) The payment frequency and amounts, based on the | ||||||
5 | assumptions used in the calculation of the annual | ||||||
6 | percentage rate, including a description of payment amount | ||||||
7 | requirements such as a minimum payment amount, and if the | ||||||
8 | payment frequency is other than monthly, the amount of the | ||||||
9 | average projected payments per month. For payment amounts | ||||||
10 | that are variable, the provider should include a payment | ||||||
11 | schedule or a description of the method used to calculate | ||||||
12 | the amounts and frequency of payments and the estimated | ||||||
13 | average monthly payment amount. | ||||||
14 | (7) A description of all other potential fees and | ||||||
15 | charges that can be avoided by the recipient, including, | ||||||
16 | but not limited to, draw fees, late payment fees, and | ||||||
17 | returned payment fees. | ||||||
18 | (8) Were the recipient to elect to pay off or | ||||||
19 | refinance the commercial financing before full repayment, | ||||||
20 | the provider must disclose: | ||||||
21 | (i) whether the recipient would be required to pay | ||||||
22 | any finance charges other than interest accrued since | ||||||
23 | their last payment; if so, disclosure of the | ||||||
24 | percentage of any unpaid portion of the finance charge | ||||||
25 | and maximum dollar amount the recipient could be | ||||||
26 | required to pay; and |
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1 | (ii) whether the recipient would be required to | ||||||
2 | pay any additional fees not already included in the | ||||||
3 | finance charge. | ||||||
4 | (9) A description of collateral requirements or | ||||||
5 | security interests, if any.
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6 | Section 35. Factoring transaction disclosure requirements. | ||||||
7 | A provider subject to this Act shall provide the following | ||||||
8 | disclosures to a recipient, according to formatting prescribed | ||||||
9 | by the Secretary, if any, at the time of extending a specific | ||||||
10 | offer for a factoring transaction: | ||||||
11 | (1) The amount of the receivables purchase price paid | ||||||
12 | to the recipient, and, if different from the purchase | ||||||
13 | price, the disbursement amount after any amount deducted | ||||||
14 | or withheld at disbursement. | ||||||
15 | (2) The finance charge. | ||||||
16 | (3) The estimated annual percentage rate, using that | ||||||
17 | term, calculated according to the federal Truth in Lending | ||||||
18 | Act, Regulation Z, 12 CFR 1026 Appendix J, as a "single | ||||||
19 | advance, single payment transaction", regardless of | ||||||
20 | whether such act or such rule would require such a | ||||||
21 | calculation. To calculate the estimated annual percentage | ||||||
22 | rate, the purchase amount is considered the financing | ||||||
23 | amount, the purchase amount minus the finance charge is | ||||||
24 | considered the payment amount, and the term is established | ||||||
25 | by the payment due date of the receivables. As an |
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1 | alternate method of establishing the term, the provider | ||||||
2 | may estimate the term for a factoring transaction as the | ||||||
3 | average payment period based on its historical data over a | ||||||
4 | period not to exceed the previous 12 months, concerning | ||||||
5 | payment invoices paid by the party or parties owing the | ||||||
6 | accounts receivable in question. | ||||||
7 | (4) The total payment amount, which is the purchase | ||||||
8 | amount plus the finance charge. | ||||||
9 | (5) A description of all other potential fees and | ||||||
10 | charges that can be avoided by the recipient. | ||||||
11 | (6) A description of the receivables purchased and any | ||||||
12 | additional collateral requirements or security interests.
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13 | Section 40. Other forms of financing disclosure | ||||||
14 | requirements. The Secretary may require disclosure by a | ||||||
15 | provider extending a specific offer of commercial financing | ||||||
16 | which is not an open-end financing, closed-end financing, | ||||||
17 | sales-based financing, or factoring transaction but otherwise | ||||||
18 | meets the definition of commercial financing. Subject to such | ||||||
19 | rules by the Secretary, a provider subject to this Act shall | ||||||
20 | provide the following disclosures to a recipient, according to | ||||||
21 | formatting prescribed by the Secretary, if any, at the time of | ||||||
22 | extending a specific offer of other forms of financing: | ||||||
23 | (1) The total amount of the commercial financing, and, | ||||||
24 | if different from the financing amount, the disbursement | ||||||
25 | amount after any fees deducted or withheld at |
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1 | disbursement. | ||||||
2 | (2) The finance charge. | ||||||
3 | (3) The annual percentage rate, using only the words | ||||||
4 | annual percentage rate or the abbreviation "APR", | ||||||
5 | expressed as a yearly rate, inclusive of any fees and | ||||||
6 | finance charges, and calculated in accordance with the | ||||||
7 | relevant sections of the federal Truth in Lending Act, | ||||||
8 | Regulation Z, 12 CFR 1026.22, or this Act, regardless of | ||||||
9 | whether such act or such rule would require such a | ||||||
10 | calculation. | ||||||
11 | (4) The total repayment amount which is the | ||||||
12 | disbursement amount plus the finance charge. | ||||||
13 | (5) The term of the financing. | ||||||
14 | (6) The payment amounts: | ||||||
15 | (i) for payment amounts that are fixed, the | ||||||
16 | payment amounts and frequency (e.g., daily, weekly, | ||||||
17 | monthly), and the average monthly payment amount; or | ||||||
18 | (ii) for payment amounts that are variable, a | ||||||
19 | payment schedule or a description of the method used | ||||||
20 | to calculate the amounts and frequency of payments, | ||||||
21 | and the estimated average monthly payment amount. | ||||||
22 | (7) A description of all other potential fees and | ||||||
23 | charges that can be avoided by the recipient, including, | ||||||
24 | but not limited to, late payment fees and returned payment | ||||||
25 | fees. | ||||||
26 | (8) If the recipient elects to pay off or refinance |
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1 | the commercial financing before full repayment, the | ||||||
2 | provider must disclose: | ||||||
3 | (i) whether the recipient would be required to pay | ||||||
4 | any finance charges other than interest accrued since | ||||||
5 | their last payment; if so, disclosure of the | ||||||
6 | percentage of any unpaid portion of the finance charge | ||||||
7 | and maximum dollar amount the recipient could be | ||||||
8 | required to pay; and | ||||||
9 | (ii) whether the recipient would be required to | ||||||
10 | pay any additional fees not already included in the | ||||||
11 | finance charge. | ||||||
12 | (9) A description of collateral requirements or | ||||||
13 | security interests, if any.
| ||||||
14 | Section 45. Complaint disclosure. All commercial financing | ||||||
15 | shall include a clear and conspicuous notice on how to file a | ||||||
16 | complaint with the Department.
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17 | Section 50. Disclosure requirements for renewal financing. | ||||||
18 | If, as a condition of obtaining the commercial financing, the | ||||||
19 | provider requires the recipient to pay off the balance of an | ||||||
20 | existing commercial financing from the same provider, then the | ||||||
21 | provider must disclose the following: | ||||||
22 | (1) The amount of the new commercial financing that is | ||||||
23 | used to pay off the portion of the existing commercial | ||||||
24 | financing that consists of prepayment charges required to |
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| |||||||
1 | be paid and any unpaid interest expense that was not | ||||||
2 | forgiven at the time of renewal. For financing for which | ||||||
3 | the total repayment amount is calculated as a fixed | ||||||
4 | amount, the prepayment charge is equal to the original | ||||||
5 | finance charge multiplied by the amount of the renewal | ||||||
6 | used to pay off existing financing as a percentage of the | ||||||
7 | total repayment amount, minus any portion of the total | ||||||
8 | repayment amount forgiven by the provider at the time of | ||||||
9 | prepayment. If the amount is more than zero, such amount | ||||||
10 | shall be the answer to the following question: "Does the | ||||||
11 | renewal financing include any amount that is used to pay | ||||||
12 | unpaid finance charge or fees, also known as double | ||||||
13 | dipping? Yes, [enter amount]. If the amount is zero, the | ||||||
14 | answer would be No." | ||||||
15 | (2) If the disbursement amount will be reduced to pay | ||||||
16 | down any unpaid portion of the outstanding balance, then | ||||||
17 | the actual dollar amount by which the disbursement amount | ||||||
18 | will be reduced.
| ||||||
19 | Section 55. Required signature. The provider shall obtain | ||||||
20 | the recipient's signature, which may be fulfilled by an | ||||||
21 | electronic signature, on all disclosures required to be | ||||||
22 | presented to the recipient by this Act before authorizing the | ||||||
23 | recipient to proceed further with the commercial financing | ||||||
24 | transaction application.
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1 | Section 60. Additional information. Nothing in this Act | ||||||
2 | shall prevent a provider from providing or disclosing | ||||||
3 | additional information on a commercial financing being offered | ||||||
4 | to a recipient, however, such additional information shall not | ||||||
5 | be disclosed as part of the disclosure required by this Act. If | ||||||
6 | other metrics of financing cost are disclosed or used in the | ||||||
7 | application process of a commercial financing, then these | ||||||
8 | metrics shall not be presented as a "rate" if they are not the | ||||||
9 | annual interest rate or the annual percentage rate. The term | ||||||
10 | "interest", when used to describe a percentage rate, shall | ||||||
11 | only be used to describe annualized percentage rates, such as | ||||||
12 | the annual interest rate. When a provider states a rate of | ||||||
13 | finance charge or a financing amount to a recipient during an | ||||||
14 | application process for commercial financing, the provider | ||||||
15 | shall also state the rate as an "annual percentage rate", | ||||||
16 | using that term or the abbreviation "APR".
| ||||||
17 | Section 65. Rules. The Department is hereby authorized and | ||||||
18 | empowered to adopt such rules as may in the judgment of the | ||||||
19 | Secretary be consistent with the purposes of this Act, or | ||||||
20 | appropriate for the effective administration of this Act, | ||||||
21 | including, but not limited to: | ||||||
22 | (1) Rules in connection with the calculation or | ||||||
23 | determination of any metric required to be disclosed to a | ||||||
24 | recipient. | ||||||
25 | (2) Rules as necessary to develop and prescribe |
| |||||||
| |||||||
1 | disclosure formatting to be used by providers that allows | ||||||
2 | for recipients to easily compare financing options in a | ||||||
3 | clear and conspicuous manner; such rules may include the | ||||||
4 | designation and method for disclosing the information | ||||||
5 | required in this Act or approving adequate forms and | ||||||
6 | methods already used by providers. | ||||||
7 | (3) Rules as may define the terms used in this Act and | ||||||
8 | as may be necessary and appropriate to interpret and | ||||||
9 | implement the provisions of this Act. | ||||||
10 | (4) Rules as may be necessary for the enforcement and | ||||||
11 | administration of this Act. | ||||||
12 | (5) Rules appropriate for the protection of consumers | ||||||
13 | in this State. | ||||||
14 | (6) Rules as may be necessary and appropriate to | ||||||
15 | define improper or fraudulent business practices in | ||||||
16 | connection with commercial financing. | ||||||
17 | (7) Rules as may be necessary to charge and collect | ||||||
18 | fees necessary to cover the costs of administering this | ||||||
19 | Act, including, but not limited to, registration, | ||||||
20 | investigation, and examination fees. | ||||||
21 | The Department may adopt rules pursuant to this Act upon | ||||||
22 | this Act becoming law with such rules not to take effect | ||||||
23 | earlier than January 1, 2024.
| ||||||
24 | Section 70. Penalties. | ||||||
25 | (a) Upon a finding by the Secretary that a provider has |
| |||||||
| |||||||
1 | violated the provisions of this Act or the rules adopted | ||||||
2 | pursuant to this Act, the provider shall be ordered to pay the | ||||||
3 | Department a civil penalty for each violation of this Act or | ||||||
4 | any rule a sum not to exceed $10,000 for each violation or, if | ||||||
5 | such violation is willful, $20,000 for each violation. | ||||||
6 | (b) In addition to any penalty imposed pursuant to | ||||||
7 | subsection (a), the Secretary may order additional relief, | ||||||
8 | including, but not limited to: | ||||||
9 | (i) restitution; | ||||||
10 | (ii) refund of moneys or return of real property; | ||||||
11 | (iii) disgorgement or compensation for unjust | ||||||
12 | enrichment, with any disgorged amounts returned to the | ||||||
13 | affected businesses, to the extent practicable; and | ||||||
14 | (iv) limits on the activities or functions of the | ||||||
15 | person, including, but not limited to, prohibiting a | ||||||
16 | person from being a provider. | ||||||
17 | (c) The Secretary shall serve notice of the action, | ||||||
18 | including, but not limited to, a statement of the reasons for | ||||||
19 | the action, either personally or by certified mail. Service by | ||||||
20 | certified mail shall be deemed completed when the notice is | ||||||
21 | deposited in the U.S. mail. | ||||||
22 | (d) Within 10 days after service of the action, the person | ||||||
23 | may request a hearing in writing. The Secretary shall schedule | ||||||
24 | a hearing within 90 days after the request for a hearing unless | ||||||
25 | otherwise agreed to by the parties.
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| |||||||
1 | Section 75. Cease and desist order. | ||||||
2 | (a) The Secretary may issue a cease and desist order if, in | ||||||
3 | the opinion of the Secretary, a licensee or other person is | ||||||
4 | violating or is about to violate any provision of this Act or | ||||||
5 | any rule or requirement imposed in writing by the Department. | ||||||
6 | The cease and desist order permitted by this Section may be | ||||||
7 | issued before a hearing. | ||||||
8 | (b) The Secretary shall serve notice of his or her action, | ||||||
9 | including, but not limited to, a statement of the reasons for | ||||||
10 | the action, either personally or by certified mail. Service by | ||||||
11 | certified mail shall be deemed completed when the notice is | ||||||
12 | deposited in the U.S. mail. | ||||||
13 | (c) Within 10 days after service of the cease and desist | ||||||
14 | order, the licensee or other person may request a hearing in | ||||||
15 | writing. The Secretary shall schedule a hearing within 90 days | ||||||
16 | after the request for a hearing unless otherwise agreed to by | ||||||
17 | the parties. | ||||||
18 | (d) The Secretary may include in any cease and desist | ||||||
19 | order such orders as may be reasonably necessary to correct, | ||||||
20 | eliminate, or remedy the conduct. | ||||||
21 | (e) The powers vested in the Secretary by this Section are | ||||||
22 | in addition to any and all other powers and remedies vested in | ||||||
23 | the Secretary by law, and nothing in this Section shall be | ||||||
24 | construed as requiring that the Secretary shall employ the | ||||||
25 | power conferred in this subsection instead of or as a | ||||||
26 | condition precedent to the exercise of any other power or |
| |||||||
| |||||||
1 | remedy vested in the Secretary.
| ||||||
2 | Section 80. Injunction. The Secretary may, through the | ||||||
3 | Attorney General, bring an action in the circuit court to | ||||||
4 | enjoin a person from violating this Act in the name of the | ||||||
5 | people of the State of Illinois.
| ||||||
6 | Section 85. Investigation and examination. The Department | ||||||
7 | may investigate or examine providers and persons reasonably | ||||||
8 | believed to be providers for compliance with this Act and its | ||||||
9 | implementing rules.
| ||||||
10 | Section 90. Civil action. A civil claim may be asserted | ||||||
11 | against a provider for violation of this Act. Additionally, a | ||||||
12 | prevailing person other than a provider may be awarded | ||||||
13 | reasonable attorney's fees and court costs.
| ||||||
14 | Section 95. Violations. | ||||||
15 | (a) Nothing in this Act shall be construed to restrict the | ||||||
16 | exercise of powers or the performance of the duties that the | ||||||
17 | Illinois Attorney General is authorized to exercise or perform | ||||||
18 | by law. | ||||||
19 | (b) Any violation of this Act constitutes an unlawful | ||||||
20 | practice in violation of the Consumer Fraud and Deceptive | ||||||
21 | Business Practices Act. | ||||||
22 | (c) The Illinois Attorney General may enforce a violation |
| |||||||
| |||||||
1 | of this Act as an unlawful practice under the Consumer Fraud | ||||||
2 | and Deceptive Business Practices Act.
| ||||||
3 | Section 100. No evasion. An agreement, contract, or | ||||||
4 | transaction that is structured to evade this Act shall be | ||||||
5 | deemed to be covered by this Act.
| ||||||
6 | Section 105. Registration. | ||||||
7 | (a) All providers shall be required to pay a registration | ||||||
8 | fee of $1,000 to the Department and register with the | ||||||
9 | Department in the manner and form directed by the Secretary | ||||||
10 | within one year after the effective date of this Act and renew | ||||||
11 | the registration each calendar year thereafter in the manner | ||||||
12 | and form directed by the Secretary. | ||||||
13 | (b) Before December 1 of each year, a provider must pay to | ||||||
14 | the Secretary, and the Department must receive, a registration | ||||||
15 | fee of $1,000 for the following calendar year. A provider's | ||||||
16 | registration shall automatically expire on January 1 of each | ||||||
17 | year unless the registration fee has been paid prior thereto. | ||||||
18 | (c) Any commercial financing made or offered by a provider | ||||||
19 | that violates this Section is null and void and no person or | ||||||
20 | entity shall have any right to collect, attempt to collect, | ||||||
21 | receive, or retain any funded amount or charges related to the | ||||||
22 | commercial financing.
| ||||||
23 | Section 110. Judicial review. All final administrative |
| |||||||
| |||||||
1 | decisions of the Department under this Act are subject to | ||||||
2 | judicial review under the Administrative Review Law and any | ||||||
3 | rules adopted under the Administrative Review Law.
| ||||||
4 | Section 900. The Consumer Fraud and Deceptive Business | ||||||
5 | Practices Act is amended by adding Section 2BBBB as follows:
| ||||||
6 | (815 ILCS 505/2BBBB new) | ||||||
7 | Sec. 2BBBB. Violations of the Small Business Truth in | ||||||
8 | Lending Act. Any person who violates the Small Business Truth | ||||||
9 | in Lending Act commits an unlawful practice within the meaning | ||||||
10 | of this Act.
| ||||||
11 | Section 997. Severability. The provisions of this Act are | ||||||
12 | severable under Section 1.31 of the Statute on Statutes. If | ||||||
13 | any clause, sentence, provision, or part of this Act or its | ||||||
14 | application to any person or circumstance is adjudged to be | ||||||
15 | unconstitutional or invalid for any reason by any court of | ||||||
16 | competent jurisdiction, that judgment shall not impair, | ||||||
17 | affect, or invalidate other provisions or applications of this | ||||||
18 | Act, which shall remain in full force and effect thereafter.
| ||||||
19 | Section 999. Effective date. This Act takes effect upon | ||||||
20 | becoming law.
|