An Act Allowing Certain Commercial Financing Contracts To Contain Provisions Waiving The Right To Notice, Judicial Hearing Or Prior Court Order In Connection With A Prejudgment Remedy.
Impact
If enacted, SB01093 would amend section 36a-868 of the general statutes, specifically targeting the power of merchant cash advance businesses. By limiting their contract terms, the bill would create a more equitable playing field in commercial financing. This could lead to increased trust and transparency between businesses and their financing providers, as well as potentially reduce the risk of abuse of power by lenders who might otherwise leverage such remedies against borrowers without prior notification.
Summary
SB01093 aims to regulate the practices of merchant cash advance businesses by prohibiting them from including provisions in their commercial financing contracts that allow for ex parte prejudgment remedies. This type of legal remedy typically enables a party to seek a court order without prior notification to the other party, thereby potentially disadvantaging the recipient of the financing. The intent of the bill is to promote fairness in the financial agreements made between these businesses and their clients, ensuring that commercial financing recipients are better protected from unilateral legal actions that could arise from alleged breaches of contract.
Contention
The bill's provisions may lead to some contention within the financial industry. Supporters argue it protects smaller businesses from predatory practices often associated with merchant cash advances, while opponents might contend that such regulations could hinder the flexible lending options available to businesses. The ongoing discussions suggest that there may be differing views on the balance between protecting business interests and promoting free market practices within the commercial financing sector.
An Act Concerning Motor Vehicle Assessments For Property Taxation, Innovation Banks, The Interest On Certain Tax Underpayments, The Assessment On Insurers, School Building Projects, The South Central Connecticut Regional Water Authority Charter And Certain State Historic Preservation Officer Procedures.
An Act Concerning Mortgages, The Residential Heating Equipment Financing Program, The Connecticut Housing Finance Authority And Mobile Manufactured Homes.
An Act Concerning Consumer Credit, Certain Bank Real Estate Improvements, The Connecticut Uniform Securities Act, Shared Appreciation Agreements, Innovation Banks, The Community Bank And Community Credit Union Program And Technical Revisions To The Banking Statutes.