Illinois 2023-2024 Regular Session

Illinois House Bill HB3064 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3064 Introduced , by Rep. Hoan Huynh SYNOPSIS AS INTRODUCED: New Act815 ILCS 505/2BBBB new 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. LRB103 28771 BMS 55154 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3064 Introduced , by Rep. Hoan Huynh SYNOPSIS AS INTRODUCED: New Act815 ILCS 505/2BBBB new New Act 815 ILCS 505/2BBBB new 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. LRB103 28771 BMS 55154 b LRB103 28771 BMS 55154 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3064 Introduced , by Rep. Hoan Huynh SYNOPSIS AS INTRODUCED:
3	3	New Act815 ILCS 505/2BBBB new New Act 815 ILCS 505/2BBBB new
4	4	New Act
5	5	815 ILCS 505/2BBBB new
6	6	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.
7	7	LRB103 28771 BMS 55154 b LRB103 28771 BMS 55154 b
8	8	LRB103 28771 BMS 55154 b
9	9	A BILL FOR
10	10	HB3064LRB103 28771 BMS 55154 b HB3064 LRB103 28771 BMS 55154 b
11	11	HB3064 LRB103 28771 BMS 55154 b
12	12	1 AN ACT concerning regulation.
13	13	2 Be it enacted by the People of the State of Illinois,
14	14	3 represented in the General Assembly:
15	15	4 Section 1. Short title. This Act may be cited as the Small
16	16	5 Business Truth in Lending Act.
17	17	6 Section 3. Applicability. This Act applies to transactions
18	18	7 occurring on or after January 1, 2024.
19	19	8 Section 5. Purpose and construction.
20	20	9 (a) The purpose of this Act is to protect business owners
21	21	10 from predatory business loans.
22	22	11 (b) This Act shall be liberally construed to effectuate
23	23	12 its purpose.
24	24	13 Section 10. Definitions. As used in this Act:
25	25	14 "Commercial financing" means open-end financing,
26	26	15 closed-end financing, sales-based financing, factoring
27	27	16 transaction, or another form of financing that the recipient
28	28	17 does not intend to use the proceeds of primarily for personal,
29	29	18 family, or household purposes. For purposes of determining
30	30	19 whether a financing is a commercial financing, the provider
31	31	20 may rely on any statement of intended purposes or on
32	32	21 electronic signatures or consents by the recipient. The
33	33
34	34
35	35
36	36	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3064 Introduced , by Rep. Hoan Huynh SYNOPSIS AS INTRODUCED:
37	37	New Act815 ILCS 505/2BBBB new New Act 815 ILCS 505/2BBBB new
38	38	New Act
39	39	815 ILCS 505/2BBBB new
40	40	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.
41	41	LRB103 28771 BMS 55154 b LRB103 28771 BMS 55154 b
42	42	LRB103 28771 BMS 55154 b
43	43	A BILL FOR
44	44
45	45
46	46
47	47
48	48
49	49	New Act
50	50	815 ILCS 505/2BBBB new
51	51
52	52
53	53
54	54	LRB103 28771 BMS 55154 b
55	55
56	56
57	57
58	58
59	59
60	60
61	61
62	62
63	63
64	64	HB3064 LRB103 28771 BMS 55154 b
65	65
66	66
67	67	HB3064- 2 -LRB103 28771 BMS 55154 b HB3064 - 2 - LRB103 28771 BMS 55154 b
68	68	HB3064 - 2 - LRB103 28771 BMS 55154 b
69	69	1 statement may be a separate statement signed by the recipient;
70	70	2 may be contained in the financing application, financing
71	71	3 agreement, or other document signed or consented to by the
72	72	4 recipient; or may be provided orally by the recipient so long
73	73	5 as it is documented in the recipient's application file by the
74	74	6 provider. The provider shall not be required to ascertain that
75	75	7 the proceeds of a commercial financing are used in accordance
76	76	8 with the recipient's statement of intended purposes.
77	77	9 "Closed-end financing" means a closed-end extension of
78	78	10 credit, secured or unsecured, recourse or nonrecourse,
79	79	11 including equipment financing that does not meet the
80	80	12 definition of a lease under Section 2A-103 of the Uniform
81	81	13 Commercial Code, that the recipient does not intend to use the
82	82	14 proceeds of primarily for personal, family, or household
83	83	15 purposes. "Closed-end financing" includes financing with an
84	84	16 established principal amount and duration.
85	85	17 "Department" means the Department of Financial and
86	86	18 Professional Regulation.
87	87	19 "Factoring transaction" means an accounts receivable
88	88	20 purchase transaction that includes an agreement to purchase,
89	89	21 transfer, or sell a legally enforceable claim for payment held
90	90	22 by a recipient for goods the recipient has supplied or
91	91	23 services the recipient has rendered that have been ordered but
92	92	24 for which payment has not yet been made.
93	93	25 "Finance charge" means the cost of financing as a dollar
94	94	26 amount. "Finance charge" includes any charge payable directly
95	95
96	96
97	97
98	98
99	99
100	100	HB3064 - 2 - LRB103 28771 BMS 55154 b
101	101
102	102
103	103	HB3064- 3 -LRB103 28771 BMS 55154 b HB3064 - 3 - LRB103 28771 BMS 55154 b
104	104	HB3064 - 3 - LRB103 28771 BMS 55154 b
105	105	1 or indirectly by the recipient and imposed directly or
106	106	2 indirectly by the provider as an incident to or a condition of
107	107	3 the extension of financing. "Finance charge" includes all
108	108	4 charges that would be included under 12 CFR 1026.4 as if the
109	109	5 transaction were subject to 12 CFR 1026.4. "Finance charge"
110	110	6 includes any charges as determined by the Secretary. For the
111	111	7 purposes of an open-end financing, "finance charge" means the
112	112	8 maximum amount of credit available to the recipient, in each
113	113	9 case, that is drawn and held for the duration of the term or
114	114	10 draw period. For the purposes of a factoring transaction,
115	115	11 "finance charge" includes the discount taken on the face value
116	116	12 of the accounts receivable.
117	117	13 "Open-end financing" means an agreement for one or more
118	118	14 extensions of open-end credit, secured or unsecured, that the
119	119	15 recipient does not intend to use the proceeds of primarily for
120	120	16 personal, family, or household purposes. "Open-end financing"
121	121	17 includes credit extended by a provider under a plan in which:
122	122	18 (i) the provider reasonably contemplates repeated
123	123	19 transactions; (ii) the provider may impose a finance charge
124	124	20 from time to time on an outstanding unpaid balance; and (iii)
125	125	21 the amount of credit that may be extended to the recipient
126	126	22 during the term of the plan is generally made available to the
127	127	23 extent that any outstanding balance is repaid.
128	128	24 "Person" means an individual, entity, corporation,
129	129	25 partnership, limited liability company, joint venture,
130	130	26 association, joint stock company, trust, or unincorporated
131	131
132	132
133	133
134	134
135	135
136	136	HB3064 - 3 - LRB103 28771 BMS 55154 b
137	137
138	138
139	139	HB3064- 4 -LRB103 28771 BMS 55154 b HB3064 - 4 - LRB103 28771 BMS 55154 b
140	140	HB3064 - 4 - LRB103 28771 BMS 55154 b
141	141	1 organization including, but not limited to, a sole
142	142	2 proprietorship.
143	143	3 "Provider" means a person who extends a specific offer of
144	144	4 commercial financing to a recipient. Unless otherwise exempt,
145	145	5 "provider" includes a person who solicits and presents
146	146	6 specific offers of commercial financing on behalf of a third
147	147	7 party. For purposes of determining whether a financing is a
148	148	8 commercial financing, the mere extension of a specific offer
149	149	9 or provision of disclosures for a commercial financing is not
150	150	10 sufficient to conclude that a provider is originating, making,
151	151	11 funding, or providing commercial financing.
152	152	12 "Recipient" means a person who applies for commercial
153	153	13 financing and is made a specific offer of commercial financing
154	154	14 by a provider or an authorized representative of such person.
155	155	15 "Recipient" does not include a person acting as a broker in a
156	156	16 transaction they broker.
157	157	17 "Sales-based financing" means a transaction that is repaid
158	158	18 by the recipient to the provider, over time, as a percentage of
159	159	19 sales or revenue, in which the payment amount may increase or
160	160	20 decrease according to the volume of sales made or revenue
161	161	21 received by the recipient or a transaction that includes a
162	162	22 true-up mechanism where the financing is repaid as a fixed
163	163	23 payment but provides for a reconciliation process that adjusts
164	164	24 the payment to an amount that is a percentage of sales or
165	165	25 revenue.
166	166	26 "Secretary" means the Secretary of Financial and
167	167
168	168
169	169
170	170
171	171
172	172	HB3064 - 4 - LRB103 28771 BMS 55154 b
173	173
174	174
175	175	HB3064- 5 -LRB103 28771 BMS 55154 b HB3064 - 5 - LRB103 28771 BMS 55154 b
176	176	HB3064 - 5 - LRB103 28771 BMS 55154 b
177	177	1 Professional Regulation or a person authorized by the
178	178	2 Secretary.
179	179	3 "Specific offer" means the specific terms of commercial
180	180	4 financing, including price or amount, that is quoted to a
181	181	5 recipient based on information obtained from or about the
182	182	6 recipient, that, if accepted by a recipient, shall be binding
183	183	7 on the provider, as applicable, subject to any specific
184	184	8 requirements stated in such terms.
185	185	9 Section 15. Exemptions. This Act does not apply to, and
186	186	10 shall not place any additional requirements or obligations
187	187	11 upon, any of the following:
188	188	12 (1) A bank, trust company, or industrial loan company
189	189	13 doing business under the authority of, or in accordance
190	190	14 with, a license, certificate, or charter issued by the
191	191	15 United States, this State, or any other state, district,
192	192	16 territory, or commonwealth of the United States that is
193	193	17 authorized to transact business in this State.
194	194	18 (2) A federally chartered savings and loan
195	195	19 association, federal savings bank, or federal credit union
196	196	20 that is authorized to transact business in this State.
197	197	21 (3) A savings and loan association, savings bank, or
198	198	22 credit union organized under the laws of this State or any
199	199	23 other state that is authorized to transact business in
200	200	24 this State.
201	201	25 (4) A person acting in its capacity as a technology
202	202
203	203
204	204
205	205
206	206
207	207	HB3064 - 5 - LRB103 28771 BMS 55154 b
208	208
209	209
210	210	HB3064- 6 -LRB103 28771 BMS 55154 b HB3064 - 6 - LRB103 28771 BMS 55154 b
211	211	HB3064 - 6 - LRB103 28771 BMS 55154 b
212	212	1 services provider, such as licensing software and
213	213	2 providing support services, to an entity exempt under this
214	214	3 Section for use as part of the exempt entity's commercial
215	215	4 financing program, if such person has no interest,
216	216	5 arrangement, or agreement to purchase any interest in the
217	217	6 commercial financing extended by the exempt entity in
218	218	7 connection with such program.
219	219	8 (5) A lender regulated under the federal Farm Credit
220	220	9 Act, 12 U.S.C. 2001 et seq.
221	221	10 (6) A commercial financing transaction secured by real
222	222	11 property.
223	223	12 (7) A lease as defined in Section 2A-103 of the
224	224	13 Uniform Commercial Code.
225	225	14 (8) Any person or provider who makes no more than 5
226	226	15 commercial financing transactions in this State in a
227	227	16 12-month period.
228	228	17 (9) An individual commercial financing transaction in
229	229	18 an amount over $2,500,000.
230	230	19 (10) A commercial financing transaction in which the
231	231	20 recipient is a vehicle dealer subject to Section 5-101 or
232	232	21 5-102 of the Illinois Vehicle Code, an affiliate of such a
233	233	22 dealer, a rental vehicle company as defined in Section 10
234	234	23 of the Renter's Financial Responsibility and Protection
235	235	24 Act, or an affiliate of such a company pursuant to a
236	236	25 commercial financing agreement or commercial open-end
237	237	26 credit plan of at least $50,000, including any commercial
238	238
239	239
240	240
241	241
242	242
243	243	HB3064 - 6 - LRB103 28771 BMS 55154 b
244	244
245	245
246	246	HB3064- 7 -LRB103 28771 BMS 55154 b HB3064 - 7 - LRB103 28771 BMS 55154 b
247	247	HB3064 - 7 - LRB103 28771 BMS 55154 b
248	248	1 loan made pursuant to such a commercial financing
249	249	2 transaction.
250	250	3 Section 20. Sales-based financing disclosure requirements.
251	251	4 A provider subject to this Act shall provide the following
252	252	5 disclosures to a recipient, according to formatting prescribed
253	253	6 by the Secretary, if any, at the time of extending a specific
254	254	7 offer of sales-based financing:
255	255	8 (1) The total amount of the commercial financing, and,
256	256	9 if different from the financing amount, the disbursement
257	257	10 amount after any amount deducted or withheld at
258	258	11 disbursement.
259	259	12 (2) The finance charge.
260	260	13 (3) The estimated annual percentage rate, using the
261	261	14 words annual percentage rate or the abbreviation "APR",
262	262	15 expressed as a yearly rate, inclusive of any fees and
263	263	16 finance charges, and calculated in accordance with the
264	264	17 federal Truth in Lending Act, Regulation Z, 12 CFR
265	265	18 1026.22, based on the estimated term of repayment and the
266	266	19 projected periodic payment amounts, regardless of whether
267	267	20 such act or such rule would require such a calculation.
268	268	21 The estimated term of repayment and the projected periodic
269	269	22 payment amounts shall be calculated based on the
270	270	23 projection of the recipient's sales, which may be referred
271	271	24 to as the projected sales volume. The projected sales
272	272	25 volume may be calculated using the historical method or
273	273
274	274
275	275
276	276
277	277
278	278	HB3064 - 7 - LRB103 28771 BMS 55154 b
279	279
280	280
281	281	HB3064- 8 -LRB103 28771 BMS 55154 b HB3064 - 8 - LRB103 28771 BMS 55154 b
282	282	HB3064 - 8 - LRB103 28771 BMS 55154 b
283	283	1 the opt-in method. The provider shall provide notice to
284	284	2 the Secretary on which method the provider intends to use
285	285	3 across all instances of sales-based financing offered in
286	286	4 calculating the estimated annual percentage rate pursuant
287	287	5 to this Section, according to the following:
288	288	6 (i) A provider using the historical method shall
289	289	7 use an average historical volume of sales or revenue
290	290	8 by which the financing's payment amounts are based and
291	291	9 the estimated annual percentage rate is calculated.
292	292	10 The provider shall fix the historical time period used
293	293	11 to calculate the average historical volume and use
294	294	12 such period for all disclosure purposes for all
295	295	13 sales-based financing products offered. The fixed
296	296	14 historical time period shall either be the preceding
297	297	15 time period from the specific offer or, alternatively,
298	298	16 the provider may use average sales for the same number
299	299	17 of months with the highest sales volume within the
300	300	18 past 12 months. The fixed historical time period shall
301	301	19 be no less than one month and shall not exceed 12
302	302	20 months.
303	303	21 (ii) A provider using the opt-in method shall
304	304	22 determine the estimated annual percentage rate, the
305	305	23 estimated term, and the projected payments, using a
306	306	24 projected sales volume that the provider elects for
307	307	25 each disclosure, if they participate in a review
308	308	26 process prescribed by the Secretary. A provider shall,
309	309
310	310
311	311
312	312
313	313
314	314	HB3064 - 8 - LRB103 28771 BMS 55154 b
315	315
316	316
317	317	HB3064- 9 -LRB103 28771 BMS 55154 b HB3064 - 9 - LRB103 28771 BMS 55154 b
318	318	HB3064 - 9 - LRB103 28771 BMS 55154 b
319	319	1 on an annual basis, report data to the Secretary of
320	320	2 estimated annual percentage rates disclosed to the
321	321	3 recipient and actual retrospective annual percentage
322	322	4 rates of completed transactions. The report shall
323	323	5 contain such information as the Department may adopt
324	324	6 by rule as necessary or appropriate for the purpose of
325	325	7 making a determination of whether the deviation
326	326	8 between the estimated annual percentage rate and
327	327	9 actual retrospective annual percentage rates of
328	328	10 completed transactions was reasonable. The Secretary
329	329	11 shall establish the method of reporting and may, upon
330	330	12 a finding that the use of projected sales volume by the
331	331	13 provider has resulted in an unacceptable deviation
332	332	14 between estimated and actual annual percentage rate,
333	333	15 require the provider to use the historical method. The
334	334	16 Secretary may consider unusual and extraordinary
335	335	17 circumstances impacting the provider's deviation
336	336	18 between estimated and actual annual percentage rate in
337	337	19 the determination of such finding.
338	338	20 (4) The total repayment amount, which is the
339	339	21 disbursement amount plus the finance charge.
340	340	22 (5) The estimated term is the period of time required
341	341	23 for the periodic payments, based on the projected sales
342	342	24 volume, to equal the total amount required to be repaid.
343	343	25 (6) The payment amounts, based on the projected sales
344	344	26 volume:
345	345
346	346
347	347
348	348
349	349
350	350	HB3064 - 9 - LRB103 28771 BMS 55154 b
351	351
352	352
353	353	HB3064- 10 -LRB103 28771 BMS 55154 b HB3064 - 10 - LRB103 28771 BMS 55154 b
354	354	HB3064 - 10 - LRB103 28771 BMS 55154 b
355	355	1 (i) for payment amounts that are fixed, the
356	356	2 payment amounts and frequency (e.g., daily, weekly,
357	357	3 monthly), and, if the payment frequency is other than
358	358	4 monthly, the amount of the average projected payments
359	359	5 per month; or
360	360	6 (ii) for payment amounts that are variable, a
361	361	7 payment schedule or a description of the method used
362	362	8 to calculate the amounts and frequency of payments and
363	363	9 the amount of the average projected payments per
364	364	10 month.
365	365	11 (7) A description of all other potential fees and
366	366	12 charges not included in the finance charge, including, but
367	367	13 not limited to, draw fees, late payment fees, and returned
368	368	14 payment fees.
369	369	15 (8) If the recipient elects to pay off or refinance
370	370	16 the commercial financing before full repayment, the
371	371	17 provider must disclose:
372	372	18 (i) whether the recipient would be required to pay
373	373	19 any finance charges other than interest accrued since
374	374	20 their last payment; if so, disclosure of the
375	375	21 percentage of any unpaid portion of the finance charge
376	376	22 and maximum dollar amount the recipient could be
377	377	23 required to pay; and
378	378	24 (ii) whether the recipient would be required to
379	379	25 pay any additional fees not already included in the
380	380	26 finance charge.
381	381
382	382
383	383
384	384
385	385
386	386	HB3064 - 10 - LRB103 28771 BMS 55154 b
387	387
388	388
389	389	HB3064- 11 -LRB103 28771 BMS 55154 b HB3064 - 11 - LRB103 28771 BMS 55154 b
390	390	HB3064 - 11 - LRB103 28771 BMS 55154 b
391	391	1 (9) A description of collateral requirements or
392	392	2 security interests, if any.
393	393	3 Section 25. Closed-end commercial financing disclosure
394	394	4 requirements. A provider subject to this Act shall provide the
395	395	5 following disclosures to a recipient, according to formatting
396	396	6 prescribed by the Secretary, if any, at the time of extending a
397	397	7 specific offer for closed-end financing:
398	398	8 (1) The total amount of the commercial financing, and,
399	399	9 if different from the financing amount, the disbursement
400	400	10 amount after any amount deducted or withheld at
401	401	11 disbursement.
402	402	12 (2) The finance charge.
403	403	13 (3) The annual percentage rate, using only the words
404	404	14 annual percentage rate or the abbreviation "APR",
405	405	15 expressed as a yearly rate, inclusive of any fees and
406	406	16 finance charges that cannot be avoided by a recipient, and
407	407	17 calculated in accordance with the federal Truth in Lending
408	408	18 Act, Regulation Z, 12 CFR 1026.22, regardless of whether
409	409	19 such act or such rule would require such a calculation.
410	410	20 (4) The total repayment amount, which is the
411	411	21 disbursement amount plus the finance charge.
412	412	22 (5) The term of the financing.
413	413	23 (6) The payment amounts:
414	414	24 (i) for payment amounts that are fixed, the
415	415	25 payment amounts and frequency (e.g., daily, weekly,
416	416
417	417
418	418
419	419
420	420
421	421	HB3064 - 11 - LRB103 28771 BMS 55154 b
422	422
423	423
424	424	HB3064- 12 -LRB103 28771 BMS 55154 b HB3064 - 12 - LRB103 28771 BMS 55154 b
425	425	HB3064 - 12 - LRB103 28771 BMS 55154 b
426	426	1 monthly), and, if the term is longer than one month,
427	427	2 the average monthly payment amount; or
428	428	3 (ii) for payment amounts that are variable, a full
429	429	4 payment schedule or a description of the method used
430	430	5 to calculate the amounts and frequency of payments,
431	431	6 and, if the term is longer than one month, the
432	432	7 estimated average monthly payment amount.
433	433	8 (7) A description of all other potential fees and
434	434	9 charges that can be avoided by the recipient, including,
435	435	10 but not limited to, late payment fees and returned payment
436	436	11 fees.
437	437	12 (8) If the recipient elects to pay off or refinance
438	438	13 the commercial financing before full repayment, the
439	439	14 provider must disclose:
440	440	15 (i) whether the recipient would be required to pay
441	441	16 any finance charges other than interest accrued since
442	442	17 their last payment; if so, disclosure of the
443	443	18 percentage of any unpaid portion of the finance charge
444	444	19 and maximum dollar amount the recipient could be
445	445	20 required to pay; and
446	446	21 (ii) whether the recipient would be required to
447	447	22 pay any additional fees not already included in the
448	448	23 finance charge.
449	449	24 (9) A description of collateral requirements or
450	450	25 security interests, if any.
451	451
452	452
453	453
454	454
455	455
456	456	HB3064 - 12 - LRB103 28771 BMS 55154 b
457	457
458	458
459	459	HB3064- 13 -LRB103 28771 BMS 55154 b HB3064 - 13 - LRB103 28771 BMS 55154 b
460	460	HB3064 - 13 - LRB103 28771 BMS 55154 b
461	461	1 Section 30. Open-end commercial financing disclosure
462	462	2 requirements. A provider subject to this Act shall provide the
463	463	3 following disclosures to a recipient, according to formatting
464	464	4 prescribed by the Secretary, if any, at the time of extending a
465	465	5 specific offer for open-end financing:
466	466	6 (1) The maximum amount of credit available to the
467	467	7 recipient (e.g., the credit line amount), and the amount
468	468	8 scheduled to be drawn by the recipient at the time the
469	469	9 offer is extended, if any, less any amount deducted or
470	470	10 withheld at disbursement.
471	471	11 (2) The finance charge.
472	472	12 (3) The annual percentage rate, using only the words
473	473	13 annual percentage rate or the abbreviation "APR",
474	474	14 expressed as a nominal yearly rate, inclusive of any fees
475	475	15 and finance charges that cannot be avoided by a recipient,
476	476	16 and calculated in accordance with the federal Truth in
477	477	17 Lending Act, Regulation Z, 12 CFR 1026.22, and based on
478	478	18 the maximum amount of credit available to the recipient
479	479	19 and the term resulting from making the minimum required
480	480	20 payments term as disclosed, regardless of whether such act
481	481	21 or such rule would require such a calculation.
482	482	22 (4) The total repayment amount, which is the draw
483	483	23 amount, less any fees deducted or withheld at
484	484	24 disbursement, plus the finance charge. The total repayment
485	485	25 amount shall assume a draw amount equal to the maximum
486	486	26 amount of credit available to the recipient if drawn and
487	487
488	488
489	489
490	490
491	491
492	492	HB3064 - 13 - LRB103 28771 BMS 55154 b
493	493
494	494
495	495	HB3064- 14 -LRB103 28771 BMS 55154 b HB3064 - 14 - LRB103 28771 BMS 55154 b
496	496	HB3064 - 14 - LRB103 28771 BMS 55154 b
497	497	1 held for the duration of the term or draw period.
498	498	2 (5) The term of the plan, if applicable, or the period
499	499	3 over which a draw is amortized.
500	500	4 (6) The payment frequency and amounts, based on the
501	501	5 assumptions used in the calculation of the annual
502	502	6 percentage rate, including a description of payment amount
503	503	7 requirements such as a minimum payment amount, and if the
504	504	8 payment frequency is other than monthly, the amount of the
505	505	9 average projected payments per month. For payment amounts
506	506	10 that are variable, the provider should include a payment
507	507	11 schedule or a description of the method used to calculate
508	508	12 the amounts and frequency of payments and the estimated
509	509	13 average monthly payment amount.
510	510	14 (7) A description of all other potential fees and
511	511	15 charges that can be avoided by the recipient, including,
512	512	16 but not limited to, draw fees, late payment fees, and
513	513	17 returned payment fees.
514	514	18 (8) Were the recipient to elect to pay off or
515	515	19 refinance the commercial financing before full repayment,
516	516	20 the provider must disclose:
517	517	21 (i) whether the recipient would be required to pay
518	518	22 any finance charges other than interest accrued since
519	519	23 their last payment; if so, disclosure of the
520	520	24 percentage of any unpaid portion of the finance charge
521	521	25 and maximum dollar amount the recipient could be
522	522	26 required to pay; and
523	523
524	524
525	525
526	526
527	527
528	528	HB3064 - 14 - LRB103 28771 BMS 55154 b
529	529
530	530
531	531	HB3064- 15 -LRB103 28771 BMS 55154 b HB3064 - 15 - LRB103 28771 BMS 55154 b
532	532	HB3064 - 15 - LRB103 28771 BMS 55154 b
533	533	1 (ii) whether the recipient would be required to
534	534	2 pay any additional fees not already included in the
535	535	3 finance charge.
536	536	4 (9) A description of collateral requirements or
537	537	5 security interests, if any.
538	538	6 Section 35. Factoring transaction disclosure requirements.
539	539	7 A provider subject to this Act shall provide the following
540	540	8 disclosures to a recipient, according to formatting prescribed
541	541	9 by the Secretary, if any, at the time of extending a specific
542	542	10 offer for a factoring transaction:
543	543	11 (1) The amount of the receivables purchase price paid
544	544	12 to the recipient, and, if different from the purchase
545	545	13 price, the disbursement amount after any amount deducted
546	546	14 or withheld at disbursement.
547	547	15 (2) The finance charge.
548	548	16 (3) The estimated annual percentage rate, using that
549	549	17 term, calculated according to the federal Truth in Lending
550	550	18 Act, Regulation Z, 12 CFR 1026 Appendix J, as a "single
551	551	19 advance, single payment transaction", regardless of
552	552	20 whether such act or such rule would require such a
553	553	21 calculation. To calculate the estimated annual percentage
554	554	22 rate, the purchase amount is considered the financing
555	555	23 amount, the purchase amount minus the finance charge is
556	556	24 considered the payment amount, and the term is established
557	557	25 by the payment due date of the receivables. As an
558	558
559	559
560	560
561	561
562	562
563	563	HB3064 - 15 - LRB103 28771 BMS 55154 b
564	564
565	565
566	566	HB3064- 16 -LRB103 28771 BMS 55154 b HB3064 - 16 - LRB103 28771 BMS 55154 b
567	567	HB3064 - 16 - LRB103 28771 BMS 55154 b
568	568	1 alternate method of establishing the term, the provider
569	569	2 may estimate the term for a factoring transaction as the
570	570	3 average payment period based on its historical data over a
571	571	4 period not to exceed the previous 12 months, concerning
572	572	5 payment invoices paid by the party or parties owing the
573	573	6 accounts receivable in question.
574	574	7 (4) The total payment amount, which is the purchase
575	575	8 amount plus the finance charge.
576	576	9 (5) A description of all other potential fees and
577	577	10 charges that can be avoided by the recipient.
578	578	11 (6) A description of the receivables purchased and any
579	579	12 additional collateral requirements or security interests.
580	580	13 Section 40. Other forms of financing disclosure
581	581	14 requirements. The Secretary may require disclosure by a
582	582	15 provider extending a specific offer of commercial financing
583	583	16 which is not an open-end financing, closed-end financing,
584	584	17 sales-based financing, or factoring transaction but otherwise
585	585	18 meets the definition of commercial financing. Subject to such
586	586	19 rules by the Secretary, a provider subject to this Act shall
587	587	20 provide the following disclosures to a recipient, according to
588	588	21 formatting prescribed by the Secretary, if any, at the time of
589	589	22 extending a specific offer of other forms of financing:
590	590	23 (1) The total amount of the commercial financing, and,
591	591	24 if different from the financing amount, the disbursement
592	592	25 amount after any fees deducted or withheld at
593	593
594	594
595	595
596	596
597	597
598	598	HB3064 - 16 - LRB103 28771 BMS 55154 b
599	599
600	600
601	601	HB3064- 17 -LRB103 28771 BMS 55154 b HB3064 - 17 - LRB103 28771 BMS 55154 b
602	602	HB3064 - 17 - LRB103 28771 BMS 55154 b
603	603	1 disbursement.
604	604	2 (2) The finance charge.
605	605	3 (3) The annual percentage rate, using only the words
606	606	4 annual percentage rate or the abbreviation "APR",
607	607	5 expressed as a yearly rate, inclusive of any fees and
608	608	6 finance charges, and calculated in accordance with the
609	609	7 relevant sections of the federal Truth in Lending Act,
610	610	8 Regulation Z, 12 CFR 1026.22, or this Act, regardless of
611	611	9 whether such act or such rule would require such a
612	612	10 calculation.
613	613	11 (4) The total repayment amount which is the
614	614	12 disbursement amount plus the finance charge.
615	615	13 (5) The term of the financing.
616	616	14 (6) The payment amounts:
617	617	15 (i) for payment amounts that are fixed, the
618	618	16 payment amounts and frequency (e.g., daily, weekly,
619	619	17 monthly), and the average monthly payment amount; or
620	620	18 (ii) for payment amounts that are variable, a
621	621	19 payment schedule or a description of the method used
622	622	20 to calculate the amounts and frequency of payments,
623	623	21 and the estimated average monthly payment amount.
624	624	22 (7) A description of all other potential fees and
625	625	23 charges that can be avoided by the recipient, including,
626	626	24 but not limited to, late payment fees and returned payment
627	627	25 fees.
628	628	26 (8) If the recipient elects to pay off or refinance
629	629
630	630
631	631
632	632
633	633
634	634	HB3064 - 17 - LRB103 28771 BMS 55154 b
635	635
636	636
637	637	HB3064- 18 -LRB103 28771 BMS 55154 b HB3064 - 18 - LRB103 28771 BMS 55154 b
638	638	HB3064 - 18 - LRB103 28771 BMS 55154 b
639	639	1 the commercial financing before full repayment, the
640	640	2 provider must disclose:
641	641	3 (i) whether the recipient would be required to pay
642	642	4 any finance charges other than interest accrued since
643	643	5 their last payment; if so, disclosure of the
644	644	6 percentage of any unpaid portion of the finance charge
645	645	7 and maximum dollar amount the recipient could be
646	646	8 required to pay; and
647	647	9 (ii) whether the recipient would be required to
648	648	10 pay any additional fees not already included in the
649	649	11 finance charge.
650	650	12 (9) A description of collateral requirements or
651	651	13 security interests, if any.
652	652	14 Section 45. Complaint disclosure. All commercial financing
653	653	15 shall include a clear and conspicuous notice on how to file a
654	654	16 complaint with the Department.
655	655	17 Section 50. Disclosure requirements for renewal financing.
656	656	18 If, as a condition of obtaining the commercial financing, the
657	657	19 provider requires the recipient to pay off the balance of an
658	658	20 existing commercial financing from the same provider, then the
659	659	21 provider must disclose the following:
660	660	22 (1) The amount of the new commercial financing that is
661	661	23 used to pay off the portion of the existing commercial
662	662	24 financing that consists of prepayment charges required to
663	663
664	664
665	665
666	666
667	667
668	668	HB3064 - 18 - LRB103 28771 BMS 55154 b
669	669
670	670
671	671	HB3064- 19 -LRB103 28771 BMS 55154 b HB3064 - 19 - LRB103 28771 BMS 55154 b
672	672	HB3064 - 19 - LRB103 28771 BMS 55154 b
673	673	1 be paid and any unpaid interest expense that was not
674	674	2 forgiven at the time of renewal. For financing for which
675	675	3 the total repayment amount is calculated as a fixed
676	676	4 amount, the prepayment charge is equal to the original
677	677	5 finance charge multiplied by the amount of the renewal
678	678	6 used to pay off existing financing as a percentage of the
679	679	7 total repayment amount, minus any portion of the total
680	680	8 repayment amount forgiven by the provider at the time of
681	681	9 prepayment. If the amount is more than zero, such amount
682	682	10 shall be the answer to the following question: "Does the
683	683	11 renewal financing include any amount that is used to pay
684	684	12 unpaid finance charge or fees, also known as double
685	685	13 dipping? Yes, [enter amount]. If the amount is zero, the
686	686	14 answer would be No."
687	687	15 (2) If the disbursement amount will be reduced to pay
688	688	16 down any unpaid portion of the outstanding balance, then
689	689	17 the actual dollar amount by which the disbursement amount
690	690	18 will be reduced.
691	691	19 Section 55. Required signature. The provider shall obtain
692	692	20 the recipient's signature, which may be fulfilled by an
693	693	21 electronic signature, on all disclosures required to be
694	694	22 presented to the recipient by this Act before authorizing the
695	695	23 recipient to proceed further with the commercial financing
696	696	24 transaction application.
697	697
698	698
699	699
700	700
701	701
702	702	HB3064 - 19 - LRB103 28771 BMS 55154 b
703	703
704	704
705	705	HB3064- 20 -LRB103 28771 BMS 55154 b HB3064 - 20 - LRB103 28771 BMS 55154 b
706	706	HB3064 - 20 - LRB103 28771 BMS 55154 b
707	707	1 Section 60. Additional information. Nothing in this Act
708	708	2 shall prevent a provider from providing or disclosing
709	709	3 additional information on a commercial financing being offered
710	710	4 to a recipient, however, such additional information shall not
711	711	5 be disclosed as part of the disclosure required by this Act. If
712	712	6 other metrics of financing cost are disclosed or used in the
713	713	7 application process of a commercial financing, then these
714	714	8 metrics shall not be presented as a "rate" if they are not the
715	715	9 annual interest rate or the annual percentage rate. The term
716	716	10 "interest", when used to describe a percentage rate, shall
717	717	11 only be used to describe annualized percentage rates, such as
718	718	12 the annual interest rate. When a provider states a rate of
719	719	13 finance charge or a financing amount to a recipient during an
720	720	14 application process for commercial financing, the provider
721	721	15 shall also state the rate as an "annual percentage rate",
722	722	16 using that term or the abbreviation "APR".
723	723	17 Section 65. Rules. The Department is hereby authorized and
724	724	18 empowered to adopt such rules as may in the judgment of the
725	725	19 Secretary be consistent with the purposes of this Act, or
726	726	20 appropriate for the effective administration of this Act,
727	727	21 including, but not limited to:
728	728	22 (1) Rules in connection with the calculation or
729	729	23 determination of any metric required to be disclosed to a
730	730	24 recipient.
731	731	25 (2) Rules as necessary to develop and prescribe
732	732
733	733
734	734
735	735
736	736
737	737	HB3064 - 20 - LRB103 28771 BMS 55154 b
738	738
739	739
740	740	HB3064- 21 -LRB103 28771 BMS 55154 b HB3064 - 21 - LRB103 28771 BMS 55154 b
741	741	HB3064 - 21 - LRB103 28771 BMS 55154 b
742	742	1 disclosure formatting to be used by providers that allows
743	743	2 for recipients to easily compare financing options in a
744	744	3 clear and conspicuous manner; such rules may include the
745	745	4 designation and method for disclosing the information
746	746	5 required in this Act or approving adequate forms and
747	747	6 methods already used by providers.
748	748	7 (3) Rules as may define the terms used in this Act and
749	749	8 as may be necessary and appropriate to interpret and
750	750	9 implement the provisions of this Act.
751	751	10 (4) Rules as may be necessary for the enforcement and
752	752	11 administration of this Act.
753	753	12 (5) Rules appropriate for the protection of consumers
754	754	13 in this State.
755	755	14 (6) Rules as may be necessary and appropriate to
756	756	15 define improper or fraudulent business practices in
757	757	16 connection with commercial financing.
758	758	17 (7) Rules as may be necessary to charge and collect
759	759	18 fees necessary to cover the costs of administering this
760	760	19 Act, including, but not limited to, registration,
761	761	20 investigation, and examination fees.
762	762	21 The Department may adopt rules pursuant to this Act upon
763	763	22 this Act becoming law with such rules not to take effect
764	764	23 earlier than January 1, 2024.
765	765	24 Section 70. Penalties.
766	766	25 (a) Upon a finding by the Secretary that a provider has
767	767
768	768
769	769
770	770
771	771
772	772	HB3064 - 21 - LRB103 28771 BMS 55154 b
773	773
774	774
775	775	HB3064- 22 -LRB103 28771 BMS 55154 b HB3064 - 22 - LRB103 28771 BMS 55154 b
776	776	HB3064 - 22 - LRB103 28771 BMS 55154 b
777	777	1 violated the provisions of this Act or the rules adopted
778	778	2 pursuant to this Act, the provider shall be ordered to pay the
779	779	3 Department a civil penalty for each violation of this Act or
780	780	4 any rule a sum not to exceed $10,000 for each violation or, if
781	781	5 such violation is willful, $20,000 for each violation.
782	782	6 (b) In addition to any penalty imposed pursuant to
783	783	7 subsection (a), the Secretary may order additional relief,
784	784	8 including, but not limited to:
785	785	9 (i) restitution;
786	786	10 (ii) refund of moneys or return of real property;
787	787	11 (iii) disgorgement or compensation for unjust
788	788	12 enrichment, with any disgorged amounts returned to the
789	789	13 affected businesses, to the extent practicable; and
790	790	14 (iv) limits on the activities or functions of the
791	791	15 person, including, but not limited to, prohibiting a
792	792	16 person from being a provider.
793	793	17 (c) The Secretary shall serve notice of the action,
794	794	18 including, but not limited to, a statement of the reasons for
795	795	19 the action, either personally or by certified mail. Service by
796	796	20 certified mail shall be deemed completed when the notice is
797	797	21 deposited in the U.S. mail.
798	798	22 (d) Within 10 days after service of the action, the person
799	799	23 may request a hearing in writing. The Secretary shall schedule
800	800	24 a hearing within 90 days after the request for a hearing unless
801	801	25 otherwise agreed to by the parties.
802	802
803	803
804	804
805	805
806	806
807	807	HB3064 - 22 - LRB103 28771 BMS 55154 b
808	808
809	809
810	810	HB3064- 23 -LRB103 28771 BMS 55154 b HB3064 - 23 - LRB103 28771 BMS 55154 b
811	811	HB3064 - 23 - LRB103 28771 BMS 55154 b
812	812	1 Section 75. Cease and desist order.
813	813	2 (a) The Secretary may issue a cease and desist order if, in
814	814	3 the opinion of the Secretary, a licensee or other person is
815	815	4 violating or is about to violate any provision of this Act or
816	816	5 any rule or requirement imposed in writing by the Department.
817	817	6 The cease and desist order permitted by this Section may be
818	818	7 issued before a hearing.
819	819	8 (b) The Secretary shall serve notice of his or her action,
820	820	9 including, but not limited to, a statement of the reasons for
821	821	10 the action, either personally or by certified mail. Service by
822	822	11 certified mail shall be deemed completed when the notice is
823	823	12 deposited in the U.S. mail.
824	824	13 (c) Within 10 days after service of the cease and desist
825	825	14 order, the licensee or other person may request a hearing in
826	826	15 writing. The Secretary shall schedule a hearing within 90 days
827	827	16 after the request for a hearing unless otherwise agreed to by
828	828	17 the parties.
829	829	18 (d) The Secretary may include in any cease and desist
830	830	19 order such orders as may be reasonably necessary to correct,
831	831	20 eliminate, or remedy the conduct.
832	832	21 (e) The powers vested in the Secretary by this Section are
833	833	22 in addition to any and all other powers and remedies vested in
834	834	23 the Secretary by law, and nothing in this Section shall be
835	835	24 construed as requiring that the Secretary shall employ the
836	836	25 power conferred in this subsection instead of or as a
837	837	26 condition precedent to the exercise of any other power or
838	838
839	839
840	840
841	841
842	842
843	843	HB3064 - 23 - LRB103 28771 BMS 55154 b
844	844
845	845
846	846	HB3064- 24 -LRB103 28771 BMS 55154 b HB3064 - 24 - LRB103 28771 BMS 55154 b
847	847	HB3064 - 24 - LRB103 28771 BMS 55154 b
848	848	1 remedy vested in the Secretary.
849	849	2 Section 80. Injunction. The Secretary may, through the
850	850	3 Attorney General, bring an action in the circuit court to
851	851	4 enjoin a person from violating this Act in the name of the
852	852	5 people of the State of Illinois.
853	853	6 Section 85. Investigation and examination. The Department
854	854	7 may investigate or examine providers and persons reasonably
855	855	8 believed to be providers for compliance with this Act and its
856	856	9 implementing rules.
857	857	10 Section 90. Civil action. A civil claim may be asserted
858	858	11 against a provider for violation of this Act. Additionally, a
859	859	12 prevailing person other than a provider may be awarded
860	860	13 reasonable attorney's fees and court costs.
861	861	14 Section 95. Violations.
862	862	15 (a) Nothing in this Act shall be construed to restrict the
863	863	16 exercise of powers or the performance of the duties that the
864	864	17 Illinois Attorney General is authorized to exercise or perform
865	865	18 by law.
866	866	19 (b) Any violation of this Act constitutes an unlawful
867	867	20 practice in violation of the Consumer Fraud and Deceptive
868	868	21 Business Practices Act.
869	869	22 (c) The Illinois Attorney General may enforce a violation
870	870
871	871
872	872
873	873
874	874
875	875	HB3064 - 24 - LRB103 28771 BMS 55154 b
876	876
877	877
878	878	HB3064- 25 -LRB103 28771 BMS 55154 b HB3064 - 25 - LRB103 28771 BMS 55154 b
879	879	HB3064 - 25 - LRB103 28771 BMS 55154 b
880	880	1 of this Act as an unlawful practice under the Consumer Fraud
881	881	2 and Deceptive Business Practices Act.
882	882	3 Section 100. No evasion. An agreement, contract, or
883	883	4 transaction that is structured to evade this Act shall be
884	884	5 deemed to be covered by this Act.
885	885	6 Section 105. Registration.
886	886	7 (a) All providers shall be required to pay a registration
887	887	8 fee of $1,000 to the Department and register with the
888	888	9 Department in the manner and form directed by the Secretary
889	889	10 within one year after the effective date of this Act and renew
890	890	11 the registration each calendar year thereafter in the manner
891	891	12 and form directed by the Secretary.
892	892	13 (b) Before December 1 of each year, a provider must pay to
893	893	14 the Secretary, and the Department must receive, a registration
894	894	15 fee of $1,000 for the following calendar year. A provider's
895	895	16 registration shall automatically expire on January 1 of each
896	896	17 year unless the registration fee has been paid prior thereto.
897	897	18 (c) Any commercial financing made or offered by a provider
898	898	19 that violates this Section is null and void and no person or
899	899	20 entity shall have any right to collect, attempt to collect,
900	900	21 receive, or retain any funded amount or charges related to the
901	901	22 commercial financing.
902	902	23 Section 110. Judicial review. All final administrative
903	903
904	904
905	905
906	906
907	907
908	908	HB3064 - 25 - LRB103 28771 BMS 55154 b
909	909
910	910
911	911	HB3064- 26 -LRB103 28771 BMS 55154 b HB3064 - 26 - LRB103 28771 BMS 55154 b
912	912	HB3064 - 26 - LRB103 28771 BMS 55154 b
913	913	1 decisions of the Department under this Act are subject to
914	914	2 judicial review under the Administrative Review Law and any
915	915	3 rules adopted under the Administrative Review Law.
916	916	4 Section 900. The Consumer Fraud and Deceptive Business
917	917	5 Practices Act is amended by adding Section 2BBBB as follows:
918	918	6 (815 ILCS 505/2BBBB new)
919	919	7 Sec. 2BBBB. Violations of the Small Business Truth in
920	920	8 Lending Act. Any person who violates the Small Business Truth
921	921	9 in Lending Act commits an unlawful practice within the meaning
922	922	10 of this Act.
923	923	11 Section 997. Severability. The provisions of this Act are
924	924	12 severable under Section 1.31 of the Statute on Statutes. If
925	925	13 any clause, sentence, provision, or part of this Act or its
926	926	14 application to any person or circumstance is adjudged to be
927	927	15 unconstitutional or invalid for any reason by any court of
928	928	16 competent jurisdiction, that judgment shall not impair,
929	929	17 affect, or invalidate other provisions or applications of this
930	930	18 Act, which shall remain in full force and effect thereafter.
931	931	19 Section 999. Effective date. This Act takes effect upon
932	932	20 becoming law.
933	933
934	934
935	935
936	936
937	937
938	938	HB3064 - 26 - LRB103 28771 BMS 55154 b