,,ii #aahth ,,congress #ast ,session ,s4 #bjba ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,june #ae1 #bjbc,mr4 ,menendez 7for himself1 ,mr4 ,brown1 ,mr4 ,wyden1 and ,mr4 ,cardin7 introduced the following bill2 which was read twice and referred to the ,committee on ,banking1 ,housing1 and ,urban ,affairs ,a ,,bill ,to amend the ,truth in ,lending ,act to apply that ,act to small business financing1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,small ,business ,financing ,disclosure ,act of #bjbc4 #b4 ,application of the ,truth in ,lending to small business financing 7a7 ,in general ,the ,truth in ,lending ,act 7#ae ,u4,s4,c4 #afja et seq47 is amended by adding at the end the following3 #f ,small ,business ,financing #aia4 ,definitions4 #aib4 ,application of this title to small business financing4 #aic4 ,additional disclosures4 #aid4 ,restrictions on double-dipping4 #aie4 ,additional provisions4 #aia4 ,definitions ,in this chapter3 7#a7 ,closed-end commercial credit ,the term closed-end commercial credit-- 7,a7 means a secured or unsecured closed-end extension of credit1 including financing with an established principal amount such as equipment financing that is not a lease1 as defined in section #b;,a-#ajc of the ,uniform ,commercial ,code1 the proceeds of which the recipient does not intend to use primarily for personal1 family or household purposes2 and 7,b7 includes financing with an established principal amount and duration4 7#b7 ,consumer financial product or service ,the term consumer financial product or service has the meaning given the term in section #ajjb of the ,consumer ,financial ,protection ,act of #bjaj 7#ab ,u4,s4,c4 #edha74 7#c7 ,director ,the term ,director means the ,director of the ,bureau4 7#d7 ,factoring ,the term factoring means a transaction that includes an agreement to purchase1 transfer1 or sell a legally enforceable claim for payment held by a recipient for goods the recipient has supplied or services the recipient has rendered that have been ordered but for which payment has not yet been made4 7#e7 ,finance charge 7,a7 ,in general ,the term finance charge-- 7i7 means the cost of financing as a dollar amount2 and 7ii7 includes any charge payable directly or indirectly by the recipient of the financing and imposed directly or indirectly by the provider of the financing as an incident to or a condition of the extension of financing4 7,b7 ,calculation in open-end commercial credit plans ,in any open-end commercial credit plan1 the finance charge shall be computed assuming the maximum amount of credit available to the recipient1 in each case1 is drawn and repaid at the minimum rate4 7,c7 ,calculation in factoring transactions ,in any factoring transaction1 the finance charge includes the discount taken on the face value of the accounts receivable4 7,d7 ,calculation in lease financing transactions ,in any lease financing transaction1 the finance charge includes the sum of the lease payments and1 if there is a fixed-price purchase option or a purchase option with a price that can be calculated at the time of disclosure1 the purchase price listed in the contract that the lessee may pay to acquire the leased goods at the end of the lease1 minus-- 7i7 if the finance company selects1 manufactures1 or supplies the goods to be leased1 the price that the finance company would sell the goods in a cash transaction2 or 7ii7 if the finance company does not select1 manufacture1 or supply the goods to be leased1 the price the finance company will pay to acquire the property to be leased4 7,e7 ,inclusion of certain prepayment charges 7i7 ,in general ,if1 as a condition of obtaining the offered commercial financing the provider requires the recipient to pay off the balance of an existing loan or advance from the same provider1 any prepayment charge or penalty required to be paid on the existing financing shall be included as a financing charge4 7ii7 ,treatment when repayment amount is calculated as a fixed amount ,for purposes of clause 7i71 for financing for which the total repayment amount is calculated as a fixed amount1 the prepayment charge is equal to the original finance charge multiplied by the required prepayment amount as a percentage of the total repayment amount1 minus any portion of the total repayment amount forgiven by the provider at the time of prepayment4 7#f7 ,open-end commercial credit plan ,the term open-end commercial credit plan means any small business financing provided by a person under a plan that-- 7,a7 the person reasonably contemplates repeat transactions2 7,b7 prescribes the terms of the transactions2 and 7,c7 provides for a finance charge that may be computed from time to time on the outstanding unpaid balance4 7#g7 ,provider ,the term provider mean a person who offers or provides small business financing4 7#h7 ,recipient ,the term recipient means a person who is presented an offer of small business financing4 7#i7 ,sales-based financing ,the term sales-based financing-- 7,a7 means a transaction for an extension of financing to a recipient that is repaid by the recipient1 over time1 as a percentage of sales or revenue1 in which the payment amount may increase or decrease according to the volume of sales made or revenue received by the recipient2 and 7,b7 includes transactions with a true-up mechanism4 7#aj7 ,small business ,the term small business has the meaning given the term small-business concern in section #c of the ,small ,business ,act 7#ae ,u4,s4,c4 #fcb74 7#aa7 ,small business financing ,the term small business financing-- 7,a7 means any line of credit1 closed-end commercial credit1 sales-based financing1 or other non-equity obligation or alleged obligation of a partnership1 corporation1 cooperative1 association1 sole proprietorship1 or other entity that is not more than #b1ejj1jjj2 and 7,b7 does not include any obligation or alleged obligation of an individual that is primarily for personal1 family1 or household purposes4 7#ab7 ,specific offer ,the term specific offer means the specific terms of small business financing1 including price or amount1 that is quoted to a recipient1 based on information obtained from1 or about the recipient1 which1 if accepted by a recipient1 shall be binding on the provider1 as applicable1 subject to any specific requirements stated in such terms4 #aib4 ,application of this title to small business financing 7a7 ,in general ,this title shall apply to small business financing made to a small business to the same extent that this title applies to extensions of credit made to a consumer4 7b7 ,rulemaking ,the ,director shall prescribe regulations necessary to carry out this chapter4 7c7 ,bureau authority ,for purposes of carrying out this chapter and other ,federal laws1 including the ,consumer ,financial ,protection ,act of #bjaj 7#ab ,u4,s4,c4 #edha et seq471 the ,bureau shall have the same authority with respect to small business financing as the ,bureau has with respect to consumer financial products and services4 #aic4 ,additional disclosures 7a7 ,in general ,any provider offering small business financing to a small business shall disclose the following information to a recipient at the time of extending a specific offer for small business financing3 7#a7 ,financing amount ,the total amount to be paid to the small business1 taking into account all fees and charges to be withheld at disbursement4 7#b7 ,annual percentage rate 7,a7 ,closed-end commercial credit ,with respect to closed-end commercial credit1 the annual percentage rate1 using only the words annual percentage rate or the abbreviation ,,apr1 expressed as a yearly rate1 including any fees and finance charges that cannot be avoided by a recipient4 7,b7 ,open-end commercial credit plans ,with respect to open-end commercial credit plans1 the annual percentage rate1 using only the words annual percentage rate or the abbreviation ,,apr1 expressed as a nominal yearly rate1 including any fees and finance charges that cannot be avoided by a recipient1 based on the maximum amount of credit available to the recipient and the term resulting from making the minimum required payments term as disclosed4 7,c7 ,sales-based financing 7i7 ,in general ,with respect to sales-based financing1 the estimated annual percentage rate1 using the words annual percentage rate or the abbreviation ,,apr1 expressed as a yearly rate1 including any fees and finance charges1 based on the estimated term of repayment and the projected periodic payment amounts4 7ii7 ,calculation of certain payment amounts ,the estimated term of repayment and the projected periodic payment amounts shall be calculated based on the projected sales volume of the recipient4 7iii7 ,calculation of projected sales volumes ,for purposes of clause 7ii71 the projected sales volume may be calculated-- 7,i7 according to a method defined by the ,director based on the historical sales volume of the recipient over a defined period of time that is used for all sales-based financing transactions by that provider2 or 7,,ii7 by a method other than the method described in subclause 7,i7 that is defined by the provider and approved by the ,director1 with ongoing monitoring by the ,director for accuracy based on a comparison of the annual percentage rate as disclosed to the recipient and as calculated retrospectively upon repayment of the financing4 7,d7 ,factoring 7i7 ,in general ,with respect to factoring1 the estimated annual percentage rate1 using that term4 7ii7 ,calculation ,to calculate the estimated annual percentage rate under clause 7i7-- 7,i7 the purchase amount shall be considered the financing amount2 7,,ii7 the purchase amount minus the total cost of financing shall be considered the payment amount2 and 7,,iii7 the term is established by the payment due date of the receivables4 7iii7 ,alternate method to estimate term ,notwithstanding clause 7ii77,,iii71 a provider may estimate the term for a factoring transaction as the average payment period1 its historical data over a period not to exceed the previous #ab months1 concerning payment invoices paid by the party owing the accounts receivable in question4 7#c7 ,payment amount ,with respect to small business financing other than factoring-- 7,a7 for payment amounts that are fixed-- 7i7 the payment amounts and frequency 7e4g41 daily1 weekly1 monthly72 and 7ii7 if the term is longer than one month and payment frequency is other than monthly1 the average total monthly payment amount2 or 7,b7 for payment amounts that are variable-- 7i7 a full payment schedule or a description of the method used to calculate the amounts and frequency of payments2 and 7ii7 if the term is longer than one month1 the estimated average total monthly payment amount4 7#d7 ,term ,for financing other than factoring1 the term of the small business financing-- 7,a7 in months or in years2 or 7,b7 if the term is not fixed1 the estimated term1 calculated using the same assumptions used to calculate the estimated annual percentage rate4 7#e7 ,finance charge ,the finance charge of the small business financing1 broken down to show what expenses and fees are included in the finance charge4 7#f7 ,prepayment cost or savings ,if a recipient elects to pay off or refinance the small business financing prior to full repayment1 the provider shall disclose-- 7,a7 whether the recipient would be required to pay any finance charges other than interest accrued since the last payment by the recipient2 7,b7 if the recipient is required to pay the finance charges described in subparagraph 7,a71 the percentage of any unpaid portion of the finance charge and maximum dollar amount the recipient could be required to pay2 and 7,c7 whether the recipient would be required to pay any additional fee not already included in the finance charge4 7#g7 ,collateral requirements ,any collateral requirement that will be imposed on the small business in connection with the small business financing4 7b7 ,form of disclosures 7#a7 ,in general ,disclosures pursuant to this section shall be disclosed in writing1 at the time a specific offer is made1 and in a manner that is clear1 conspicuous1 complete1 and allows the small business to compare the range of small business financing options that the small business may be considering4 7#b7 ,prominence of disclosures ,in making any disclosure pursuant to this section1 the disclosures required under paragraphs 7#a71 7#b71 and 7#c7 of subsection 7a7 shall be displayed most prominently4 #aid4 ,restrictions on double-dipping ,if a lender of small business financing refinances or modifies an existing loan with a fixed fee as the primary financing charge1 the lender may not charge a fee on the outstanding principal of the loan unless there is a tangible benefit to the small business4 #aie4 ,additional provisions 7a7 ,rule of construction ,nothing in this chapter may be construed to prevent a provider from providing or disclosing additional information on a small business financing being offered to a recipient unless the additional information may not be disclosed as part of the disclosure required by this chapter4 7b7 ,use of terms 7#a7 ,rate ,if other metrics of financing cost are disclosed or used in the application process of a small business financing1 the metrics shall not be presented as a rate if they are not the annual interest rate or the annual percentage rate4 7#b7 ,interest ,the term interest1 when used to describe a percentage rate to a recipient or potential recipient1 shall only be used to describe annualized percentage rates1 such as the annual interest rate4 7c7 ,requirement ,to state ,,apr ,if a provider states in writing a rate of finance charge or a financing amount to a recipient during an application process for small business financing1 the provider shall also state the annual percentage rate or1 in the case of sales-based financing or factoring1 the estimated annual percentage rate1 with equal or greater prominence1 using the term annual percentage rate or the abbreviation ,,apr4 4 7b7 ,technical and conforming amendment ,the table of chapters for title ,i of the ,consumer ,credit ,protection ,act is amended by adding at the end the following3 #f4 ,small ,business ,financing#aia4 4 7c7 ,rulemaking deadline ,not later than the end of the #b-year period beginning on the date of enactment of this ,act1 the ,director of the ,bureau of ,consumer ,financial ,protection shall prescribed final regulations to carry out the amendments made by this section4 7d7 ,effective date ,the amendments made by subsection 7a7 shall take effect on the date that is #cf months after the date of enactment of this ,act4