HB 693 creates a new subtitle in the Maryland Financial Institutions Article to regulate commercial financing transactions offered to businesses and other non-consumer recipients. The bill defines and covers several categories of commercial financing, including closed-end financing, open-end financing, sales-based financing, factoring transactions, and other forms of business-purpose financing. It requires providers to give standardized disclosures about the amount financed, finance charges, annual percentage rate (APR), repayment term, payment schedule, fees, collateral, and prepayment consequences before a recipient can proceed with an application.
The bill also establishes detailed calculation rules for APR and repayment estimates, including special methods for sales-based financing and factoring transactions. For sales-based financing, providers must estimate repayment terms and APR using projected sales volume, with either a historical method or an opt-in method subject to reporting and oversight by the Commissioner of Financial Regulation. For open-end, closed-end, and other covered commercial financing products, the bill requires disclosures about fixed or variable payments, early payoff or refinancing costs, and any additional charges not included in the finance charge. It also restricts how providers may describe financing costs, requiring that rates be presented as APR when applicable.
HB 693 would significantly expand state law governing business financing by adding disclosure and anti-misleading-labeling requirements similar to consumer truth-in-lending rules, but tailored to commercial transactions. It authorizes the Commissioner to adopt regulations substantially similar to New York’s commercial financing rules, approve comparable disclosure forms from other states, and enforce the subtitle through civil penalties, restitution, and injunctive relief. The bill excludes banks, credit unions, savings associations, certain affiliates, small-volume providers, real-estate-secured transactions, leases, large transactions over $2.5 million, certain dealer and rental vehicle transactions, health-care receivables factoring tied to personal injury treatment, and premium finance agreements.
The overall sentiment reflected by the bill text is consumer-protection oriented for small businesses and other commercial borrowers, with a focus on transparency, comparability, and preventing confusing or misleading cost presentations. Because no committee transcript or vote record is provided, there is no direct evidence of support or opposition from hearings or floor action. The structure of the bill suggests an effort to standardize business financing disclosures rather than prohibit products outright, which may appeal to advocates for small-business transparency while drawing scrutiny from lenders concerned about compliance burden and APR calculation complexity.
Notable points of contention likely include the breadth of covered financing products, the required APR methodology, the use of projected sales volume for sales-based financing, and the reporting/oversight requirements for providers using the opt-in method. Lenders and financing companies may object to the administrative burden, potential liability for disclosure deviations, and the treatment of products such as merchant cash advances and factoring transactions. Small-business advocates, by contrast, are likely to support the bill’s emphasis on clear cost disclosure, prepayment information, and restrictions on how financing terms are marketed.
The bill would add a new Subtitle 12, Commercial Financing, to the Maryland Financial Institutions Article and create a comprehensive disclosure and enforcement framework for business-purpose financing. It would require covered providers to calculate and disclose APR, total repayment amounts, payment schedules, fees, and prepayment terms for sales-based, closed-end, open-end, factoring, and other commercial financing products, while also limiting how financing costs may be described during the application process. The Commissioner of Financial Regulation would gain rulemaking and enforcement authority, including the ability to impose civil penalties, order restitution, and seek injunctive relief. The subtitle would take effect October 1, 2025, and would exempt several categories of lenders and transactions, including banks, credit unions, real-estate-secured loans, leases, and certain large or specialized commercial transactions.
The bill appears generally favorable toward transparency and borrower protection in the commercial financing market, especially for small businesses that may have difficulty comparing complex financing products. Its design mirrors truth-in-lending concepts and suggests an intent to curb confusing pricing practices rather than eliminate commercial financing options. No committee testimony or recorded votes were provided, so there is no direct evidence of formal support or opposition in the available materials. Based on the text alone, the bill likely has support among small-business and consumer-protection advocates and resistance from commercial lenders and financing platforms that would face new disclosure, calculation, and reporting obligations.
The main areas of contention are likely to be the bill’s detailed APR and repayment calculation requirements, especially for sales-based financing and factoring transactions, and the extent to which those rules impose compliance costs on providers. Providers may also contest the opt-in method’s reporting obligations, the Commissioner’s authority to require a switch to the historical method, and the prohibition on presenting non-APR cost metrics as rates. Another likely point of dispute is the bill’s treatment of prepayment and refinancing, including disclosures about so-called double dipping and unpaid finance charges. Supporters would likely emphasize that these provisions are necessary to prevent misleading offers and improve comparability for small businesses, while opponents may argue that the rules are overly prescriptive and may reduce access to capital.