Requires certain disclosures by providers of commercial financing.

A4580

ASSEMBLY, No. 4580

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MARCH 10, 2026

Sponsored by:

Assemblywoman� VERLINA REYNOLDS-JACKSON

District 15 (Hunterdon and Mercer)

SYNOPSIS

���� Requires certain disclosures by providers of
commercial financing.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

concerning commercial financing and supplementing P.L.1964, c.162
(C.17:9A-59.25 et seq.).

����
Be It Enacted

by the Senate and General Assembly of the State of New Jersey:

���� 1.��� As used in this act:

���� �Broker� means a person who,
for or in expectation of consideration:

���� (1)�� arranges or offers to
arrange commercial financing for a recipient; or

���� (2)�� assists or advises or
offers to assist or advise a recipient in obtaining or attempting to obtain a
commercial financing.

���� Notwithstanding the above definition,
�broker� does not include a provider when referring a recipient to another
provider, or a provider that enters into a written agreement with a financial
institution to arrange for the extension of commercial financing by the
financial institution to a recipient via an online lending platform
administered by the provider.

���� "Closed-end
financing" means a closed-end extension of credit, secured or unsecured
and including equipment financing, that does not meet the definition of a lease
as that term is defined in N.J.S.12A:2A-103 and the proceeds of which the
recipient does not intend to use primarily for personal, family, or household
purposes. "Closed-end financing" includes financing with an
established principal amount and duration.

���� "Commercial
financing" means an open-end financing, closed-end financing, sales-based
financing, factoring transaction, finance lease, as that term is defined in
N.J.S.12A:2A-103, or any other form of financing, the proceeds of which the
recipient does not intend to use primarily for personal, family, or household
purposes.

���� �Commissioner� means the
Commissioner of Banking and Insurance.

���� "Factoring
transaction" means an accounts receivable purchase transaction that
includes an agreement to purchase, transfer, or sell a legally enforceable
claim for payment held by a recipient for goods that the recipient has supplied
or services that the recipient has rendered that have been ordered but for
which payment has not yet been made.

���� "Finance charge"
means the cost of financing as a dollar amount. �Finance charge� includes any
charge payable directly or indirectly by the recipient and imposed directly or
indirectly by the provider as an incident to or a condition of the extension of
financing. It includes all charges that would be included under 12 C.F.R.
s.1026.4 as if the transaction were subject to 12 C.F.R. s.1026.4. �Finance
charge� also includes any charges as determined by the commissioner. As it
relates to an open-end financing, the finance charge shall assume the maximum
amount of credit available to the recipient, in each case, is drawn and held
for the duration of the term or draw period. For the purposes of a factoring
transaction, the finance charge includes the discount taken on the face value
of the accounts receivable.

���� "Financial
institution" means any of the following:

���� (1)�� a bank, trust company,
or industrial loan company that is doing business under the authority of, or in
accordance with, a license, certificate or charter issued by the United States,
this State, or any other state, district, territory, or commonwealth of the
United States;

���� (2)�� a federally chartered
savings and loan association, federal savings bank, federal credit union that
is authorized to transact business in this State, or any credit union service
organization, as defined in 12 C.F.R. s.704.11; or

���� (3)�� a savings and loan
association, savings bank, or credit union that is authorized to transact
business in this State and that is organized under the laws of this or any
other state.

���� "Open-end financing"
means an agreement for one or more extensions of open-end credit, secured or
unsecured, the proceeds of which the recipient does not intend to use primarily
for personal, family, or household purposes. "Open-end financing"
includes credit extended by a provider under a plan in which:

���� (1)�� the provider reasonably
contemplates repeated transactions;

���� (2)�� the provider may impose
a finance charge from time to time on an outstanding unpaid balance; and

���� (3)�� the amount of credit
that may be extended to the recipient during the term of the plan, up to any
limit set by the provider, is generally made available to the extent that any
outstanding balance is repaid.

���� "Person" means an
individual, sole proprietor or other unincorporated organization, association,
joint venture, partnership, limited partnership association, limited liability
company, corporation, trust, or joint stock company.

���� "Provider" means a
person who extends a specific offer of commercial financing to a recipient.
Except as otherwise provided in this act, "provider" also includes a
person, including a broker who solicits and presents specific offers of
commercial financing on behalf of a third party.

���� "Recipient" means a
person, or the authorized representative of a person, who applies for
commercial financing and is made a specific offer of commercial financing by a
provider.� �Recipient� shall not include a person acting as a broker.

���� "Sales-based
financing" means a transaction that is repaid by the recipient to the
provider, over time and as a percentage of sales or revenue, in which the
payment amount may increase or decrease according to the volume of sales made
or revenue received by the recipient. �Sales-based financing� includes a
true-up mechanism where the financing is repaid as a fixed payment but provides
for a reconciliation process that adjusts the payment to an amount that is a
percentage of sales or revenue.

���� "Specific offer"
means the specific terms of commercial financing, including price or amount,
that is quoted to a recipient, based on information obtained from, or about,
the recipient which, if accepted by a recipient, shall be binding on the provider,
as applicable, subject to any specific requirements stated in the terms.� Where
a provider allows a recipient to choose from various offers, �specific offer�
shall mean the specific offer the recipient elects to pursue.

���� 2.��� A provider shall, at the
time of extending a specific offer of sales-based financing in a form and
manner prescribed by the commissioner, disclose to the recipient:

���� a.���� the total amount of the
commercial financing, and the disbursement amount, if different from the
financing amount, after any fees deducted or withheld at disbursement;

���� b.��� the finance charge;

���� c.���� the estimated annual
percentage rate, using the words annual percentage rate or the abbreviation
"APR", expressed as a yearly rate, inclusive of any fees and finance
charges, and calculated in accordance with section 1026.22 of Subpart C of Regulation
Z (12 C.F.R. s.1026.22) of the federal �Truth in Lending Act�
(15 U.S.C. s.1601 et seq.) based on the estimated term
of repayment and the projected periodic payment amounts.� The provider shall
clearly disclose the estimated annual percentage rate as an estimate, and may
include additional statements informing the recipient that the actual annual
percentage rate may vary depending on actual time to repay.� The estimated term
of repayment and the projected periodic payment amounts shall be calculated
based on the projected sales volume, which is the projection of the recipient's
sales.� The projected sales volume may be calculated using the historical
method or the opt-in method.� The provider shall provide notice to the
commissioner on which method the provider will use across all instances of
sales-based financing offered in calculating estimated annual percentage rate
pursuant to this section.� In calculating the projected sales volume:

���� (1) a provider using the
historical method shall use an average historical volume of sales or revenue by
which the financing's payment amounts are based and by which the estimated
annual percentage rate is calculated.� The provider shall fix the historical time
period used to calculate the average historical volume and use that period for
all disclosure purposes for all sales-based financing products offered.� The
fixed historical time period shall be either the preceding time period from the
specific offer or the average sales for the same number of months with the
highest sales volume within the past twelve months.� The fixed historical time
period shall be not less than one month and not more than twelve months; and

���� (2) a provider using the
opt-in method shall determine the estimated annual percentage rate, the
estimated term, and the projected payments, using a projected sales volume that
the provider elects for each disclosure.� The provider using the opt-in method
shall participate in a review process to be determined by the commissioner.� A
provider shall annually issue a report to the commissioner, in a form and
manner to be determined by the commissioner, of estimated annual percentage
rates disclosed to the recipient and actual retrospective annual percentage
rates of completed transactions.� The report shall contain information that the
commissioner determines necessary or appropriate to make a determination of
whether the deviation between the estimated annual percentage rate and actual
retrospective annual percentage rates of completed transactions was
reasonable.� The commissioner may, upon a finding that the use of projected
sales volume by the provider has resulted in an unacceptable deviation between
estimated and actual annual percentage rate, require the provider to use the
historical method.� The commissioner may consider unusual and extraordinary
circumstances impacting the provider's deviation between estimated and actual
annual percentage rate in the determination of such a finding;

���� d.��� the total repayment
amount, which is the disbursement amount plus the finance charge;

���� e.���� the estimated term,
which is the period of time required for the payments, based on the projected
sales volume, to equal the total amount required to be repaid;

���� f.���� the payment amounts,
based on the projected sales volume.� The disclosure shall include, for payment
amounts that are:

���� (1)�� fixed, the payment
amounts and frequency and, if the payment frequency is other than monthly, the
amount of the average projected payments per month; or

���� (2)�� variable, a payment
schedule or a description of the method used to calculate the amounts and
frequency of payments, and the amount of the average projected payments per
month;

���� g.��� a description of all
other potential fees and charges not included in the finance charge, including,
but not limited to, draw fees, late payment fees, returned payment fees, and
fees owed a broker or other third party;

���� h.��� if the recipient were to
elect to pay off or refinance the commercial financing prior to full repayment:

���� (1)�� whether the recipient
would be required to pay any finance charges other than interest accrued since
the recipient�s last payment and, if so, the percentage of any unpaid portion
of the finance charge and maximum dollar amount the recipient could be required
to pay; and

���� (2)�� whether the recipient
would be required to pay any additional fees not already included in the
finance charge; and

���� i.���� a description of
collateral requirements or security interests, if any.

���� 3.��� A provider shall, at the
time of extending a specific offer of closed-end financing, that is not
otherwise considered sales-based financing, in a form and manner prescribed by
the commissioner, disclose to the recipient:

���� a.���� the total amount of the
commercial financing, and the disbursement amount, if different from the
financing amount, after any fees deducted or withheld at disbursement;

���� b.��� the finance charge;

���� c.���� The annual percentage
rate, using only the words �annual percentage rate� or the abbreviation
"APR", expressed as a yearly rate, inclusive of any fees and finance
charges that cannot be avoided by a recipient, and calculated in accordance
with section 1026.22 of Subpart C of Regulation Z (12 C.F.R. s.1026.22) of the
federal �Truth in Lending Act� (15 U.S.C. s.1601 et seq.).� In calculating the
annual percentage rate:

���� (1)�� the annual percentage
rate shall be determined in accordance with either the actuarial method or the
United States Rule method. Explanations, equations and instructions for
determining the annual percentage rate in accordance with the actuarial method
are set forth in appendix J to part 1026 of Subpart C of Regulation Z

(12 C.F.R. s.1026) of the federal �Truth in Lending Act�

(15 U.S.C. s.1601 et seq.). An error in disclosure of the annual percentage
rate or finance charge shall not, in itself, be considered a violation of this
act if:

���� (a)�� the error resulted from
a corresponding error in a calculation tool used in good faith by the creditor;
and

���� (b)�� upon discovery of the
error, the creditor promptly discontinues use of that calculation tool for
disclosure purposes and notifies the Department of Banking and Insurance in
writing of the error in the calculation tool;

���� (2)�� the annual percentage
rate shall be considered accurate if it is not more than 1/8 of 1 percentage
point above or below the annual percentage rate determined in accordance with paragraph
(1) of this subsection; and

���� (3)�� in an irregular
transaction, the annual percentage rate shall be considered accurate if it is
not more than 1/4 of 1 percentage point above or below the annual percentage
rate determined in accordance with paragraph (1) of this subsection. For
purposes of this paragraph, an irregular transaction is one that includes one
or more of the following features: multiple advances, irregular payment periods,
or irregular payment amounts, other than an irregular first period or an irregular
first or final payment;

���� d.��� the total repayment
amount, which is the disbursement amount plus the finance charge;

���� e.���� the term of the
financing;

���� f.���� the payment amounts.�
The disclosure shall include, for payment amounts that are:

���� (1)�� fixed, the payment
amounts and frequency, and, if the term is longer than one month, the average
monthly payment amount; or

���� (2)�� variable, a full payment
schedule or a description of the method used to calculate the amounts and
frequency of payments, and, if the term is longer than one month, the estimated
average monthly payment amount;

���� g.��� a description of all
other potential fees and charges that can be avoided by the recipient,
including, but not limited to, late payment fees, returned payment fees, and
fees owed brokers or other third parties;

���� h.��� if the recipient were to
elect to pay off or refinance the commercial financing prior to full repayment:

���� (1)�� whether the recipient
would be required to pay any finance charges other than interest accrued since
their last payment and, if so, the percentage of any unpaid portion of the
finance charge and maximum dollar amount the recipient could be required to pay;
and

���� (2)�� whether the recipient
would be required to pay any additional fees not already included in the
finance charge; and

���� i.���� a description of
collateral requirements or security interests, if any.

���� 4.��� A provider shall, at the
time of extending a specific offer of open-end financing in a form and manner
prescribed by the commissioner, disclose to the recipient:

���� a.���� the maximum amount of
credit available to the recipient and the amount scheduled to be drawn by the
recipient at the time the offer is extended, if any, less any fees deducted or
withheld at disbursement;

���� b.��� the finance charge;

���� c.���� the annual percentage
rate, using only the words �annual percentage rate� or the abbreviation
"APR", expressed as a nominal yearly rate, inclusive of any fees and
finance charges that cannot be avoided by a recipient, and calculated in
accordance with section 1026.22 of Subpart C of Regulation Z (12 C.F.R.
s.1026.22) of the federal �Truth in Lending Act� (15 U.S.C. s.1601 et seq.),
and based on the maximum amount of credit available to the recipient and the
term resulting from making the minimum required payments term as disclosed.� In
calculating the annual percentage rate:

���� (1)�� the annual percentage
rate shall be determined in accordance with either the actuarial method or the
United States Rule method. Explanations, equations and instructions for
determining the annual percentage rate in accordance with the actuarial method
are set forth in appendix J to part 1026 of Subpart C of Regulation Z
(12 C.F.R. s.1026) of the federal �Truth in Lending
Act� (15 U.S.C. s.1601 et seq.). An error in
disclosure of the annual percentage rate or finance charge shall not, in
itself, be considered a violation of this act if:

���� (a)�� the error resulted from
a corresponding error in a calculation tool used in good faith by the creditor;
and

���� (b)�� upon discovery of the
error, the creditor promptly discontinues use of that calculation tool for
disclosure purposes and notifies the Department of Banking and Insurance in
writing of the error in the calculation tool;

���� (2)�� the annual percentage
rate shall be considered accurate if it is not more than 1/8 of 1 percentage
point above or below the annual percentage rate determined in accordance with paragraph
(1) of this subsection; and

���� (3)�� in an irregular
transaction, the annual percentage rate shall be considered accurate if it is
not more than 1/4 of 1 percentage point above or below the annual percentage
rate determined in accordance with paragraph (1) of this subsection. For
purposes of this paragraph, an irregular transaction is one that includes one
or more of the following features: multiple advances, irregular payment periods,
or irregular payment amounts, other than an irregular first period or an irregular
first or final payment;

���� d.��� the total repayment
amount, which is the draw amount, less any fees deducted or withheld at
disbursement, plus the finance charge. The total repayment amount shall assume
a draw amount equal to the maximum amount of credit available to the recipient
if drawn and held for the duration of the term or draw period;

���� e.���� the term of the plan,
if applicable, or the period over which a draw is amortized;

���� f.���� the payment frequency
and amounts, based on the assumptions used in the calculation of the annual
percentage rate, including a description of payment amount requirements such as
a minimum payment amount, and if the payment frequency is other than monthly,
the amount of the average projected payments per month. For payment amounts
that are variable, the provider should include a payment schedule, or a
description of the method used to calculate the amounts and frequency of
payments, and the estimated average monthly payment amount;

���� g.��� a description of all
other potential fees and charges that can be avoided by the recipient,
including, but not limited to, draw fees, late payment fees, returned payment
fees, and fees owed brokers or other third parties;

���� h.��� if the recipient were to
elect to pay off or refinance the commercial financing prior to full commercial
financing prior to full repayment:

���� (1)�� whether the recipient
would be required to pay any finance charges other than interest accrued since
their last payment. If so, disclosure of the percentage of any unpaid portion
of the finance charge and maximum dollar amount the recipient could be required
to pay; and

���� (2)�� whether the recipient
would be required to pay any additional fees not already included in the
finance charge; and

���� i.���� a description of
collateral requirements or security interests, if any.

���� 5.��� A provider shall, at the
time of extending a specific offer for a factoring transaction in a form and
manner prescribed by the commissioner, disclose to the recipient:

���� a.���� the amount of the
receivables purchase price paid to the recipient and, if different from the
purchase price, the amount disbursed to the recipient after any fees deducted
or withheld at disbursement;

���� b.��� the finance charge;

���� c.���� the estimated annual
percentage rate, calculated pursuant to Appendix J to part 1026 of Subpart C of
Regulation Z (12 C.F.R. s.1026) of the federal �Truth in Lending
Act� (15 U.S.C. s.1601 et seq.), as a single advance,
single payment transaction.� To calculate the estimated annual percentage rate,
the purchase amount is considered the financing amount, the purchase amount
minus the finance charge is considered the payment amount, and the term is
established by the payment due date of the receivables. Alternatively, the
provider may estimate the term for a factoring transaction as the average
payment period, its historical data over a period not to exceed the previous
twelve months, concerning payment invoices paid by the party owing the accounts
receivable in question.� In calculating the annual percentage rate:

���� (1)� the annual percentage
rate shall be determined in accordance with either the actuarial method or the
United States Rule method. Explanations, equations and instructions for
determining the annual percentage rate in accordance with the actuarial method
are set forth in appendix J to part 1026 of Subpart C of Regulation Z

(12 C.F.R. s.1026) of the federal �Truth in Lending Act�

(15 U.S.C. s.1601 et seq.). An error in disclosure of the annual percentage
rate or finance charge shall not, in itself, be considered a violation of this
act if:

���� (a)� the error resulted from a
corresponding error in a calculation tool used in good faith by the creditor;
and

���� (b)
�
upon
discovery of the error, the creditor promptly discontinues use of that
calculation tool for disclosure purposes and notifies the Department of Banking
and Insurance in writing of the error in the calculation tool;

���� (2)� the annual percentage
rate shall be considered accurate if it is not more than 1/8 of 1 percentage
point above or below the annual percentage rate determined in accordance with
paragraph (1) of this subsection; and

���� (3)
�
�in an
irregular transaction, the annual percentage rate shall be considered accurate
if it is not more than 1/4 of 1 percentage point above or below the annual
percentage rate determined in accordance with paragraph (1) of this subsection.
For purposes of this paragraph, an irregular transaction is one that includes
one or more of the following features: multiple advances, irregular payment
periods, or irregular payment amounts, other than an irregular first period or
an irregular first or final payment;

���� d.��� the total payment
amount, which is the purchase plus the finance charge;

���� e.���� a description of all
other potential fees and charges that can be avoided by the recipient; and

����� f.��� a description of the
receivables purchased and any additional collateral requirements or security
interests.

���� 6.��� The commissioner may
require, by regulation, certain disclosures pursuant to this section of a
provider extending a specific offer of commercial financing that is not
open-end financing, closed-end financing, sales-based financing, or a factoring
transaction but otherwise meets the definition of commercial financing pursuant
to section 1 of this act.

���� If the commissioner requires
disclosure pursuant to this section, a provider shall, at the time of extending
a specific offer of a form of financing that is not open-end financing,
closed-end financing, sales-based financing, or a factoring transaction but
otherwise meets the definition of commercial financing pursuant to section 1 of
this act and in a form and manner prescribed by the commissioner, disclose to
the recipient:

���� a.���� the total amount of the
commercial financing, and the disbursement amount, if different from the
financing amount, after any fees deducted or withheld at disbursement;

���� b.��� the finance charge;

���� c.���� the annual percentage
rate, using only the words �annual percentage rate� or the abbreviation
"APR", expressed as a yearly rate, inclusive of any fees and finance
charges, and calculated in accordance with section 1026.22 of Subpart C of
Regulation Z (12 C.F.R. s.1026.22) of the federal �Truth in
Lending Act� (15 U.S.C. s.1601 et seq.). In
calculating the annual percentage rate:

���� (1)�� the annual percentage
rate shall be determined in accordance with either the actuarial method or the
United States Rule method. Explanations, equations and instructions for
determining the annual percentage rate in accordance with the actuarial method
are set forth in appendix J to part 1026 of Subpart C of Regulation Z
(12 C.F.R. s.1026) of the federal �Truth in Lending Act�
(15 U.S.C. s.1601 et seq.). An error in disclosure of
the annual percentage rate or finance charge shall not, in itself, be
considered a violation of this act if:

���� (a)�� the error resulted from
a corresponding error in a calculation tool used in good faith by the creditor;
and

���� (b)�� upon discovery of the
error, the creditor promptly discontinues use of that calculation tool for
disclosure purposes and notifies the Department of Banking and Insurance in
writing of the error in the calculation tool;

���� (2)�� the annual percentage
rate shall be considered accurate if it is not more than 1/8 of 1 percentage
point above or below the annual percentage rate determined in accordance with paragraph
(1) of this subsection; and

���� (3)�� in an irregular
transaction, the annual percentage rate shall be considered accurate if it is
not more than 1/4 of 1 percentage point above or below the annual percentage
rate determined in accordance with paragraph (1) of this subsection. For
purposes of this paragraph, an irregular transaction is one that includes one
or more of the following features: multiple advances, irregular payment periods,
or irregular payment amounts, other than an irregular first period or an irregular
first or final payment;

���� d.��� the total repayment
amount which is the disbursement amount plus the finance charge;

���� e.���� the term of the
financing;

���� f.���� the payment amounts.
The disclosure shall include, for payment amounts that are:

���� (1)�� fixed, the payment
amounts and frequency, and the average monthly payment amount; or

���� (2)�� variable, a payment
schedule or a description of the method used to calculate the amounts and
frequency of payments, and the estimated average monthly payment amount;

���� g.��� a description of all
other potential fees and charges that can be avoided by the recipient,
including, but not limited to, late payment fees and returned payment fees;

���� h.��� if the recipient were to
elect to pay off or refinance the commercial financing prior to full repayment:

���� (1)�� whether the recipient
would be required to pay any finance charges other than interest accrued since
their last payment. If so, disclosure of the percentage of any unpaid portion
of the finance charge and maximum dollar amount the recipient could be required
to pay; and

���� (2)�� whether the recipient
would be required to pay any additional fees not already included in the
finance charge; and

���� i.���� a description of
collateral requirements or security interests, if any.

���� 7.��� Notwithstanding any
other law to the contrary, and in addition to other disclosures required
pursuant to this act, a broker who charges any fees, charges, or commissions
that would be paid by the recipient of the financing shall provide, at the time
of extending a specific offer for a commercial financing transaction in a form
and manner prescribed by the commissioner, a written disclosure, in a document
separate from the provider�s contract with the recipient, stating the
following, if the information is not contained within the disclosure offered by
the provider directly to the recipient:

���� a.���� a list of all fees or
commissions that would be paid to the broker by the recipient in connection
with the commercial financing;

���� b.��� the total dollar amount
of fees, charges, or commissions listed pursuant to subsection a. of this
section; and

���� c.���� any increase to the
annual percentage rate due to the charges listed above and the resulting dollar
cost.

���� 8.��� If, as a condition of
obtaining the commercial financing, the provider requires the recipient to pay
off the balance of an existing commercial financing from the same provider, the
provider shall disclose:

���� a.���� the amount of the new
commercial financing that is used to pay off the portion of the existing
commercial financing that consists of prepayment charges required to be paid
and any unpaid interest expense that was not forgiven at the time of renewal.
For financing for which the total repayment amount is calculated as a fixed
amount, the prepayment charge is equal to the original finance charge
multiplied by the amount of the renewal used to pay off existing financing as a
percentage of the total repayment amount, minus any portion of the total
repayment amount forgiven by the provider at the time of prepayment. If the
amount is more than zero, that amount shall be the answer to the following
question: "Does the renewal financing include any amount that is used to
pay unpaid finance charge or fees, also known as double dipping? Yes, {enter
amount}. If the amount is zero, the answer would be No."; and

���� b.��� if the disbursement
amount will be reduced to pay down any unpaid portion of the outstanding
balance, the actual dollar amount by which such disbursement amount will be
reduced.

���� 9.��� A provider shall obtain
the recipient's written or electronic signature on all disclosures required to
be presented to the recipient pursuant to this act before authorizing the
recipient to proceed further with the commercial financing transaction application.
A provider is not required to obtain the recipient�s signature on any
disclosure for a commercial financing transaction that is not consummated. When
a provider provides multiple disclosures to a recipient during the negotiation
of a commercial financing transaction that is ultimately consummated, the
provider need only obtain the recipient�s signature on the final disclosure
that corresponds to the consummated transaction.

���� 10.� For the purposes of
determining whether a financing is a commercial financing, a provider may rely
on any statement of intended purposes by the recipient. The statement may be a
separate statement signed by the recipient; may be contained in the financing
application, financing agreement, or other document signed or consented to by
the recipient; or may be provided orally by the recipient so long as it is
documented in the recipient's application file by the provider. Electronic
signatures and consents are valid for purposes of the foregoing sentence. The
provider shall not be required to ascertain that the proceeds of commercial
financing are used in accordance with the recipient's statement of intended
purposes.

���� 11.� Nothing in this act shall
prevent a provider from disclosing additional information on a commercial
financing being offered to a recipient but it shall not be a requirement
pursuant to this act. The information required to be disclosed pursuant to
subsections a. through i. of section 6 of this act shall appear in the
disclosure document before any additional information is disclosed by a
provider, and shall be in larger font and visually separated from the
additional disclosure information. If other metrics of financing cost are
disclosed or used in the application process of a commercial financing, the
metrics shall not be presented as a "rate" if they are not the annual
interest rate or the annual percentage rate. The term "interest,� when
used to describe a percentage rate, shall only be used to describe an
annualized percentage rate, including, but not limited to, the annual interest
rate. When a provider states a rate of finance charge or a financing amount to
a recipient during an application process for commercial financing, the
provider shall also state the rate as an "annual percentage rate,� using
that term or the abbreviation "APR.�

����� 12. The
commissioner shall promulgate regulations pursuant to the "Administrative
Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.):

����� a.�� concerning
the calculation or determination of any metric required to be disclosed to a
recipient;

����� b.�� to
develop and prescribe the form and manner in which a provider shall make a
disclosure pursuant to this act, which form and manner shall allow recipients
to easily compare financing options, in a clear and conspicuous manner.� The
regulations shall include the designation and method for disclosing the
information required in this act, or approving forms and methods already used
by providers;

����� c.�� to
define the terms used in this act and as may be necessary and appropriate to
interpret and implement the provisions of this act; and

����� d.�� that
shall, to the extent possible, be consistent with and substantially similar to
regulations concerning commercial financing disclosures adopted by other states
that the commissioner determines have disclosure requirements substantially
similar to or more stringent than the disclosure requirements imposed by this
act.� The regulations adopted pursuant to this section shall also, to the
extent possible, allow the use of commercial lending disclosure forms approved
for use in such other states.

����� 13. a.�
A provider shall have no liability under this act for any failure to comply
with any requirement imposed by this act, if within 60 days after discovering
an error, and prior to the institution of a civil action by a recipient or the
receipt of written notice of the error from the recipient, the provider
notifies the recipient of the error and makes whatever adjustments are
necessary to assure that the recipient will not be required to pay an amount in
excess of the charge actually disclosed, or the dollar equivalent of the annual
percentage rate actually disclosed, whichever is lower. A provider shall
reimburse the recipient in the event an amount was paid by the recipient in
excess of the charge actually owed.

����� b.�� A
provider or financer shall have no liability for inadvertently disclosing a
finance charge, annual percentage rate, periodic payment or irregular payment,
average monthly cost, maximum non‐interest finance charge, or prepayment
fee or charge that exceeds the amount that the provider is required to disclose
under this act.

����� c.�� A
recipient shall not allege as a defense in any action, and a provider shall
have no liability and shall not be required to make any adjustment or
reimbursement under subsection a. of this section for changes in the estimated
annual percentage rate or corresponding payment amounts after consummation of a
transaction where:

����� (1)� the
transaction is �sales-based financing,� as defined in this act;

����� (2)� at
the time the provider extended the specific offer, the provider disclosed an
estimated annual percentage rate as prescribed in section 2 of this act,
including projected periodic payments and projected term based on previous and
projected sales or revenue; and

����� (3)� the
changes in the annual percentage rate or payment amounts result solely from
actual fluctuations in the recipient's sales or revenue as compared to the
projected sales volume used by the provider in the calculation of the estimated
annual percentage rate.

����� 14. a.�
A provider or broker that violates any provision of this act, as determined by
the commissioner, shall be liable to a civil penalty of not more than $2,000
for each violation, or not more than $10,000 for each willful violation.� The
penalty shall be collected by the commissioner in the name of the State in
accordance with the "Penalty Enforcement Law of 1999," P.L.1999,
c.274 (C.2A:58-10 et seq.).

����� b.�� In
addition to any penalty imposed pursuant to subsection a. of this section, upon
a finding by the commissioner that a provider or broker has recklessly or
willfully violated this act, the commissioner may order additional relief,
including, but not limited to, a permanent or preliminary injunction on behalf
of any recipient affected by the violation.

����� c.�� A
recipient or provider that is subject to any violation of this act may bring an
action against the provider or broker and recover a civil penalty, as provided
in subsection a. of this section, if the court finds the provider or broker
recklessly or willfully violated this act.

���� 15.� a.� This act shall not
apply to:

���� (1)�� a financial institution;

���� (2)�� a lender regulated under
the federal �Farm Credit Act� (12 U.S.C. s.2001 et seq.);

���� (3)�� a commercial financing
transaction secured by real property;

���� (4)�� a person or provider who
makes not more than five commercial financing transactions in this State in a
12 month period; ���������� (5)������� an individual commercial financing
transaction in an amount over $500,000 dollars;

���� (6)�� a commercial financing
product that is a factoring transaction, purchase, sale, advance, or similar of
accounts receivables owed to a health care provider because of a patient's
personal injury treated by the health care provider; or

���� (7)�� a lease as defined in
N.J.S.12A:2A-103.

���� b.��� When a provider extends
access to a specific offer of commercial financing or provides disclosures for
commercial financing or lending, it shall not be construed to mean that the
provider engaged in lending, making, funding, or providing commercial financing.

����� 16.��� a.����� A
broker shall not charge any fee that is assessed or collected prior to the
closing of a commercial financing transaction by a broker.

����� b.�� A
broker shall not make or use:

����� (1)� any
false or misleading representations or omit any material fact in the offer or
sale of the services of a broker or engage, directly or indirectly, in any act
that operates or would operate as fraud or deception upon any person in
connection with the offer or sale of the services of a broker, notwithstanding
the absence of reliance by the buyer; or

����� (2)� any
false or deceptive representation in its business dealings.

���� 17.� This act shall take
effect on the 180
th
day next following enactment, except a provider
shall not be required to comply with the requirements of this act until 120
days after final regulations are adopted by the commissioner pursuant to this
act.

STATEMENT

���� This bill requires certain
providers of commercial financing to provide disclosures to recipients.

���� Under the bill, �provider� is
defined to mean a person who extends a specific offer of commercial financing
to a recipient and includes a person, including a broker, who solicits and
presents specific offers of commercial financing on behalf of a third party.�
�Commercial financing� is defined to mean open-end financing, closed-end
financing, sales-based financing, factoring transaction, or any other form of
financing, the proceeds of which the recipient does not intend to us primarily
for personal, family, or household purposes.

���� The bill requires a provider
to, at the time of extending a specific offer of commercial financing that is a
sales-based, closed-end, or open-end financing, or a factoring transaction,
make certain disclosures to the recipient in a form and manner to be determined
by the Commissioner of Banking and Insurance.� The required disclosures vary by
the type of commercial financing or factoring transaction, and include, but are
not limited to:

���� (1)�� the finance charge;

���� (2)�� the estimated annual
percentage rate, using the words �annual percentage rate� or the abbreviation
�APR,� expressed as a yearly rate, inclusive of any fees and finance charges,
and calculated in accordance with section 1026.22 of Subpart C of Regulation Z
(12 C.F.R. s.1026.22) of the federal �Truth in Lending Act� (15 U.S.C. s.1601
et seq.) and according to certain tolerances and requirements; or, for
factoring transactions and sales-based financing transactions, the estimated
yearly total dollar cost;

���� (3)�� the total payment
amount;

���� (4)�� a description of all
other potential fees and charges; and

���� (5)�� a description of
collateral requirements or security interests, if any.

���� The bill also provides that
the commissioner may require by regulation a provider extending a specific
offer of commercial financing that is not open-end financing, closed-end
financing, sales-based financing, or a factoring transaction but otherwise meets
the definition of commercial financing pursuant the bill to make certain
disclosures to the recipient that are delineated in the bill.

���� Under the bill, in addition to
other disclosures required pursuant to the bill, a broker who charges any fees,
charges, or commissions that would be paid by the recipient of the financing is
to provide, at the time of extending a specific offer for a commercial
financing transaction and in a form and manner prescribed by the commissioner,
a written disclosure of certain information, in a document separate from the
provider�s contract with the recipient.

���� The bill stipulates that regulations
issued by the Department of Banking and Insurance pursuant to the bill are
required to be, to the extent possible, consistent with and substantially
similar to regulations concerning commercial financing disclosures adopted in
other states.

���� A provider or broker that
violates any provision of the bill, as determined by the commissioner, is to be
liable to a civil penalty of not more than $2,000 for each violation, or not
more than $10,000 for each willful violation.� In addition, upon a finding by
the commissioner that a provider or broker has recklessly or willfully violated
the provisions of the bill, the commissioner may order additional relief,
including, but not limited to, a permanent or preliminary injunction on behalf
of any recipient affected by the violation.� A recipient or provider that is
subject to a violation of the bill may bring an action against the provider or
broker and recover a civil penalty if the court finds the provider or broker recklessly
or willfully violated the provisions of the bill.

���� This bill removes provisions
giving providers of factoring transactions and sales-based financing
transactions the option of disclosing to the recipient the estimated yearly
total dollar cost of the transaction instead of the estimated annual percentage
rate.� The bill also exempts from the bill leases as defined in N.J.S.12A:2A-103
and includes finance leases within the definition of �commercial financing,�
thereby making finance leases subject to the provisions of the bill.

���� Lastly, this bill protects a
provider from liability and prevents a recipient of commercial financing from
alleging as a defense in any action, changes in the estimated annual percentage
rate (APR) or payment amount after a sales-based financing transaction has been
consummated.� A provider of a sales-based financing transaction will not be
held liable if : (1) the provider of a sales-based financing transaction
provides an estimated APR to a recipient as prescribed in the bill; and (2) the
changes in the APR or payment amount result solely from actual fluctuations in
the recipient�s sales or revenue.