AN ACT CONCERNING COMMERCIAL FINANCING.

sHB5211 / File No. 729 1

House of Representatives

File No. 729
General Assembly
February Session, 2026 (Reprint of File No. 134)

Substitute House Bill No. 5211
As Amended by House Amendment
Schedule "A"

Approved by the Legislative Commissioner
April 28, 2026

AN ACT CONCERNING COMMERCIAL FINANCING.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

Section 1. Section 36a -861 of the general statutes is repealed and the 1
following is substituted in lieu thereof (Effective July 1, 2027): 2
As used in this section and sections 36a-862 to 36a-872, inclusive: 3
(1) "Commercial financing" means any extension of sales -based 4
financing by a provider, [in an amount not exceeding two hundred fifty 5
thousand dollars,] the proceeds of which the recipient does not intend 6
to use primarily for personal, family or household purposes; 7
(2) "Commercial financing broker" means a person, other than a 8
financer, who, for compensation or the expectation of compensation, 9
offers, or offers to obtain, commercial financing for a recipient from a 10
provider that is not exempt; 11
(3) "Finance charge" means the cost of financing expressed as a dollar 12

sHB5211 File No. 729

sHB5211 / File No. 729 2

amount, including (A) any charge payable directly or indirectly by the 13
recipient and imposed directly or indirectly by the provider as an 14
incident to, or a condition of, the extension of financing, and (B) all 15
charges that would be included under the definition of "finance charge" 16
in 12 CFR 1026.4, as amended from time to time, as if the transaction 17
were subject to said section; 18
(4) "Financer" means a person who provides, or will provide, 19
commercial financing to a recipient; 20
(5) "Person" means an individual, corporation, partnership, limited 21
liability company, joint venture, association, joint stock company, trust 22
or unincorporated organization, including, but not limited to, a sole 23
proprietorship; 24
(6) "Provider" means a person who extends a specific offer of 25
commercial financing to a recipient and includes, unless otherwise 26
exempt under this section, a commercial financing broker, but does not 27
include any (A) bank, out -of-state bank, bank holding company, 28
Connecticut credit union, federal credit union, out-of-state credit union 29
or any subsidiary or affiliate of the foregoing, as those terms are defined 30
in section 36a -2, (B) person acting in such person's capacity as a 31
technology services provider to an entity exempt under this section for 32
use as part of the exempt entity's commercial financing program, 33
provided such person has no interest, arrangement or agreement to 34
purchase any interest in the commercial financing extended by the 35
exempt entity in connection with such program, (C) lender regulated 36
under the federal Farm Credit Act, 12 USC 2001 et seq., as amended 37
from time to time, (D) person or provider who extends or brokers a 38
commercial financing transaction secured by real property, (E) person 39
or provider who extends or brokers a lease, as defined in section 42a -40
2A-102, (F) person or provider who extends or brokers a purchase -41
money obligation, as defined in section 42a -9-103a, (G) person or 42
provider who extends not more than five commercial financing 43
transactions in this state in a twelve -month period, (H) person or 44
provider who extends or brokers a commercial financing transaction 45
sHB5211 File No. 729

sHB5211 / File No. 729 3

entered into pursuant to a commercial financing agreement or 46
commercial open-end credit plan of at least fifty thousand dollars, in 47
which the recipient is (i) a dealer, as defined in section 14 -1, or an 48
affiliate of such a dealer, or (ii) a motor vehicle rental company, or an 49
affiliate of such a company, or (I) person or provider who extends or 50
brokers a commercial financing transaction in connection with the sale 51
of products or services that such person or provider manufactures, 52
licenses or distributes, or whose parent company, subsidiary or affiliate 53
manufactures, licenses or distributes; 54
(7) "Recipient" means a person, or the authorized representative of a 55
person, who applies for commercial financing and is made a specific 56
offer of commercial financing by a provider, but does not include a 57
person acting as a commercial financing broker; 58
(8) "Sales-based financing" means a transaction that is repaid by the 59
recipient to the provider over time (A) as a percentage of sales or 60
revenue, in which the payment amount may increase or decrease 61
according to the volume of sales made or revenue received by the 62
recipient, or (B) according to a fixed payment mechanism that provides 63
for a reconciliation process that adjusts the payment to an amount that 64
is a percentage of sales or revenue; and 65
(9) "Specific offer" means the specific terms of commercial financing, 66
including, but not limited to, a price or amount, that is quoted to a 67
recipient based on information obtained from or about the recipient, 68
which, if accepted by the recipient, would be binding on the provider, 69
subject to any specific requirements stated in such terms. 70
Sec. 2. Section 36a -863 of the general statutes is repealed and the 71
following is substituted in lieu thereof (Effective July 1, 2027): 72
A provider shall provide to a recipient, when the provider extends a 73
specific offer for sales -based financing, the following disclosures in a 74
format prescribed by the Banking Commissioner: 75
(1) The total amount of the commercial financing. 76
sHB5211 File No. 729

sHB5211 / File No. 729 4

(2) The disbursement amount, which is the amount paid to the 77
recipient or on the recipient's behalf, excluding any finance charges that 78
are deducted or withheld at disbursement. 79
(3) The finance charge. 80
(4) The estimated annual percentage rate, using the words "annual 81
percentage rate" or the abbreviation "APR", expressed as a yearly rate, 82
inclusive of any fees and finance charges, and determined in accordance 83
with 12 CFR 1026.22, as amended from time to time, based on the 84
estimated term of repayment and the projected periodic payment 85
amounts. The estimated term of repayment and the projected periodic 86
payment amounts shall be calculated based on a projection of the 87
volume of the recipient's sales or revenue. The projected volume of such 88
sales or revenue may be calculated using the safe harbor method, as 89
described in subparagraph (A) of this subdivision, or the underwriting 90
method, as described in subparagraph (B) of this subdivision. The 91
provider shall use either such safe harbor method or such underwriting 92
method to determine the estimated annual percentage rate in all 93
instances of sales-based financing offered by the provider. 94
(A) A provider using the safe harbor method shall use an average of 95
the recipient's volume of sales or revenue during a time period fixed by 96
the provider. Such fixed time period shall (i) have occurred during the 97
twelve months immediately preceding the specific offer, (ii) be at least 98
three and not more than twelve consecutive months in length, and (iii) 99
be used by the provider for all disclosure purposes for all sales -based 100
financing products offered by the provider. 101
(B) A provider using the underwriting method shall use the projected 102
volume of sales or revenue on which the provider relied in the 103
underwriting of the specific offer. A provider using the underwriting 104
method shall, not later than October 1, 2027, and annually thereafter, 105
report data to the commissioner disclosing the estimated annual 106
percentage rates the provider disclosed to recipients and the actual 107
retrospective annual percentage rates of completed transactions. The 108
sHB5211 File No. 729

sHB5211 / File No. 729 5

report shall contain such information as the commissioner may 109
prescribe as necessary or appropriate for the purpose of determining 110
whether the deviation between the estimated annual percentage rates 111
and the actual retrospective annual percentage rates of completed 112
transactions was reasonable. The commissioner shall establish the 113
method of reporting and may, upon a finding by the commissioner that 114
the use of projected sales or revenue volume by the provider has 115
resulted in an unacceptable deviation between the disclosed and actual 116
annual percentage rates, require the provider to use the safe harbor 117
method. The commissioner may consider unusual and extraordinary 118
circumstances impacting the provider's deviation between estimated 119
and actual annual percentage rates in making such finding. 120
(C) Nothing in this subdivision shall be construed to impose liability 121
on a provider as a result of the actual annual percentage rate charged by 122
the provider differing from the estimated annual percentage rate 123
disclosed by the provider in accordance with this subdivision. 124
[(4)] (5) The total repayment amount, which is the disbursement 125
amount plus the finance charge. 126
[(5)] (6) The estimated time period required for the periodic payments 127
to equal the total repayment amount. 128
[(6)] (7) The payment amounts as follows: 129
(A) For payment amounts that are fixed, the payment amounts and 130
frequency; or 131
(B) For payment amounts that are variable, a payment schedule or a 132
description of the method used to calculate the amounts and frequency 133
of payments, and the amount of the average projected payments per 134
month. 135
[(7)] (8) A description of all other potential fees and charges not 136
included in the finance charge, including, but not limited to, draw fees, 137
late payment fees and returned payment fees. 138
sHB5211 File No. 729

sHB5211 / File No. 729 6

[(8)] (9) (A) Any finance charge the recipient will be required to pay 139
if the recipient elects to pay off or refinance the commercial financing 140
prior to full repayment, other than interest accrued since the recipient's 141
last payment, and the percentage of any unpaid portion of such finance 142
charge and the maximum dollar amount of such finance charge the 143
recipient will be required to pay; and 144
(B) Any additional fees, not already included in the finance charge, 145
the recipient will be required to pay if the recipient elects to pay off or 146
refinance the commercial financing prior to full repayment. 147
[(9)] (10) A description of collateral requirements or security interests, 148
if any. 149
[(10)] (11) Whether, in connection with the specific offer of sales -150
based financing, the provider will pay compensation directly to a 151
commercial financing broker out of the financed amount and, if so, the 152
amount of such compensation. 153
Sec. 3. Section 36a-868 of the 2026 supplement to the general statutes 154
is repealed and the following is substituted in lieu thereof (Effective 155
October 1, 2026): 156
(a) No commercial financing contract entered into on or after July 1, 157
2024, and before October 1, 2026, shall contain any provision waiving a 158
recipient's right to notice, judicial hearing or prior court order under 159
chapter 903a in connection with the provider obtaining any 160
prejudgment remedy, including, but not limited to, attachment, 161
execution, garnishment or replevin upon commencing any litigation 162
against the recipient. Any such provision in a commercial financing 163
contract [entered into on or after July 1, 2024,] shall be unenforceable. 164
(b) No commercial financing contract entered into on or after October 165
1, 2026, shall contain any (1) provision waiving a recipient's right to 166
notice, judicial hearing or prior court order under chapter 903a in 167
connection with the provider obtaining any prejudgment remedy; or (2) 168
nondisclosure provision requiring a recipient to maintain the 169
sHB5211 File No. 729

sHB5211 / File No. 729 7

confidentiality of the commercial financing contract or its terms. Any 170
provision prohibited by this subsection that is included in a commercial 171
financing contract shall be void. 172
This act shall take effect as follows and shall amend the following
sections:

Section 1 July 1, 2027 36a-861
Sec. 2 July 1, 2027 36a-863
Sec. 3 October 1, 2026 36a-868

sHB5211 File No. 729

sHB5211 / File No. 729 8

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of
the General Assembly, solely for purposes of information, summarization and explanation and do not
represent the intent of the General Assembly or either chamber thereof for any purpose. In general,
fiscal impacts are based upon a variety of informational sources, including the analyst’s professional
knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final
products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note

State Impact:
Agency Affected Fund-Effect FY 27 $ FY 28 $
Banking Dept. BF - Revenue
Gain
None Minimal
Banking Dept.1 BF - Potential
Cost
None 167,400
Note: BF=Banking Fund
Municipal Impact: None
Explanation
The bill: (1) requires certain providers of sales -based financing to
disclose an estimated annual percentage rate (APR) for all sales -based
financing transactions and comply with other new requirements, and
(2) expands the types of such providers that must register with the
Department of Banking. The bill results in both a potential cost of up to
$167,400 and a minimal annual revenue gain to the Banking Fund,
beginning in FY 28 and annually thereafter.
The bill's potential cost is associated with one new financial examiner
that may be needed if the bill's changes result in a significantly higher
volume or complexity of consumer complaints. There were 10
complaints to the banking department regarding sale s-based financing
in the last year.

1The fringe benefit costs for employees funded out of other appropriated funds are
budgeted within the fringe benefit account of those funds, as opposed to the fringe
benefit accounts within the Office of the State Comptroller. The estimated active
employee fringe benefit cost associated with most personnel changes for other
appropriated fund employees is 85.92% of payroll in FY 27.
sHB5211 File No. 729

sHB5211 / File No. 729 9

Should this position be needed, the annual cost is expected to be
$90,000 in salary and $77,400 in fringe benefits, beginning in FY 28.
Other expenses for the new position would total $2,000 upon hiring, for
a laptop and related supplies.
The bill also results in revenue gain to the Banking Fund of $1,000 per
each new registration and a $500 annual fee, beginning in FY 28. The
number of new entities registering is expected to be low, resulting in
minimal revenue gain.
House "A" eliminates the original bill and its associated fiscal impact,
and results in the impact described above.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to: (1) the volume of complaints
associated with the bill's new requirements on sales -based financing
providers, (2) the number of newly registered commercial fina ncing
providers, and (3) inflation.

sHB5211 File No. 729

sHB5211 / File No. 729 10

OLR Bill Analysis
sHB 5211 (as amended by House "A")*

AN ACT CONCERNING COMMERCIAL FINANCING.

SUMMARY
This bill makes the following changes to the law on required
disclosures for sales-based financing transactions and registration of the
financing providers and brokers (see BACKGROUND):
1. eliminates the $250,000 threshold above which transactions are
exempt from having the disclosures, thus making all sales-based
financing transactions subject to the law’s requirements and
requiring their providers and brokers to be registered with the
banking department;
2. requires financing providers to disclose, when extending a
specific financing offer, an estimated annual percentage rate
(APR);
3. relieves the providers from liability if an actual APR charged
differs from the disclosed estimated APR; and
4. prohibits these financing contracts entered into on or after
October 1, 2026, from having a nondisclosure provision that
requires the recipient to keep the contract confidential and makes
the provision void if it is included in the contract.
Under existing law, which applies to the bill’s provisions, violations
of the financing disclosure requirements are subject to various
enforcement actions by the banking commissioner, such as (1)
registration suspension or revocation ; (2) civil penalties of up to
$100,000 per violation; or (3) injunctive relief (CGS § 36a-872).
sHB5211 File No. 729

sHB5211 / File No. 729 11

The bill also makes technical and conforming changes.
*House Amendment “A” (1) delays, from October 1, 2026, to July 1,
2027, the effective date for (a) subjecting providers of larger financing
transactions to the law’s registration and disclosure requirements and
(b) requiring the estimated APR disclosures; (2) removes requirem ents
in the underlying bill for providers to notify the banking department
about which method they choose to calculate estimated APR and
disclose an APR when giving certain information to the financing
recipient after extending a specif ic offer; (3) removes an underlying
provision on deceptive use of “interest” or “rate” in communications;
and (4) makes the contract nondisclosure provisions void, rather than
unenforceable.
EFFECTIVE DATE: July 1, 2027, except the nondisclosure provision
prohibition for the financing contracts is effective October 1, 2026.
§ 2 — ESTIMATED APR DISCLOSURE
Under existing law, lenders providing this financing must generally
disclose to applicants information such as the financing amount,
payment amount, finance charges and other potential fees, term, and
any prepayment amount. The banking commissioner sets the format for
providing the disclosures.
The bill additionally requires them to disclose the estimated APR
(using the words “annual percentage rate” or the APR abbreviation).
The rate must be shown as a yearly rate, including any fees and finance
charges and calculated in accordance with federal regulations under the
federal Truth in Lending Act (12 C.F.R. § 1026.22), based on the
estimated term of repayment and projected periodic payment amounts
calculated using the recipient’s projected sales or revenue.
Methods for Calculating Projected Sales or Revenue Volume
The bill allows the projected sales or revenue volume to be calculated
using either the “safe harbor” method or the “underwriting” method.
But it requires the provider to use either the safe harbor method or the
sHB5211 File No. 729

sHB5211 / File No. 729 12

underwriting method to calculate the estimated APR in all sales -based
financing offerings it makes.
Safe Harbor Method. Under the safe harbor method, the provider
must use an average of the recipient’s sales or revenue volume during a
fixed period. The period must be (1) from the 12 months immediately
before the specific offer, (2) between three and 12 consecutive months in
length, and (3) used for all disclosures of sales-based financing products
the provider offers.
Underwriting Method. Under the underwriting method, the
provider must use the projected sales or revenue volume that it relied
on to underwrite the specific offer.
Providers choosing this method must participate in a review process
the commissioner sets. Beginning October 1, 2027, they must annually
report data to the commissioner on the (1) estimated APRs they
disclosed to recipients and (2) actual retrospective APRs of completed
transactions.
Under the bill, the report must have information that the
commissioner may require to determine if the deviation between the
estimated and actual retrospective APRs was reasonable. The
commissioner must establish the reporting method and may, upon
finding that the use of projected sales or revenue volume resulted in an
unacceptable deviation between the estimated and actual APRs, require
the provider to use the safe harbor method instead. As part of making
this finding, the commissioner may consider unusual and extraordinary
circumstances affecting the provider’s deviation between estimated and
actual APRs.
BACKGROUND
Sales-Based Financing
By law, sales-based financing is a transaction in which the recipient
repays over time (1) as a percentage of sales or revenue, and the
payment may increase or decrease according to the recipient’s sales or
sHB5211 File No. 729

sHB5211 / File No. 729 13

revenue, or (2) according to a mechanism where repayment is as a fixed
amount but with a reconciliation process that adjusts to an amount that
is a percentage of sales or revenue.
COMMITTEE ACTION
Banking Committee
Joint Favorable Substitute
Yea 9 Nay 4 (03/10/2026)

Judiciary Committee
Joint Favorable
Yea 35 Nay 5 (04/10/2026)