Virginia Passes Landmark Sales-Based Financing Bill

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Virginia Capitol Building in RichmondThe Virginia State legislature unanimously passed HB1027 on Monday, a law aimed squarely at revenue-based financing providers. Virginia Delegate Kathy Tran (D) celebrated the passage on twitter by saying that the law will “protect small business owners from merchant cash advances.”

The law will require “a provider or broker of sales-based financing to register with the State Corporation Commission (the Commission) in accordance with procedures established by the Commission,” the legislative summary reads. Furthermore, it will require “a sales-based financing provider to provide certain disclosures to a recipient at the time of extending a specific offer of sales-based financing.”

That is just the tip of the iceberg. The bill’s language changed somewhat since it was first introduced in January.

Despite some industry pushback, there was no opposition to the bill on either side of the political aisle and it passed through both chambers unanimously. Virginia has become the third state, following California and New York, to pass a commercial financing disclosure law.

Above: The February 3, 2022 debate on the bill

Delegate Tran thanked The Commonwealth Institute, the Virginia Poverty Law Center, and the Richmond Black Restaurant Experience for their support in making the law happen. The bill now just needs the governor’s signature to become law.

The final vote in the House can be seen below

Last modified: March 7, 2022
Sean Murray

Category: Regulation

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