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HB 700

Relating to disclosures for certain commercial sales-based financing transactions, the effect of certain commercial sales-based financing contract provisions, and the registration of commercial sales-based financing brokers and providers; authorizing a fee and providing a civil penalty.

89th Legislature (2025) Introduced by John McQueeney and 1 co-sponsor

Texas requires sales-based financing brokers and providers to register, disclose terms clearly, and avoid predatory contract practices, with penalties for violations beginning September 1, 2025.

Effective on 9/1/25
#banking #texasdepartmentof(v8741) #business&commerce--general(i0050) #consumercreditcommissioner #officeof(v0242) #civilremedies&liabilities(i0065) #financecommissionoftexas(v0133) #financial--general(i0365) #mortgagebrokers&bankers(s0098)
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Bill Summary · HB 700

Legislative bill overview

HB 700 establishes regulatory requirements for commercial sales-based financing (CSBF) in Texas, including mandatory disclosures, registration of brokers and providers, and restrictions on certain contract provisions. The bill creates a licensing framework with associated fees and civil penalties for violations, effective September 1, 2025.

Why is this important

Sales-based financing is a growing alternative lending mechanism where businesses repay loans through a percentage of future revenue rather than fixed installments. Without regulatory oversight, these arrangements can trap businesses in unfavorable terms with unclear costs. This bill aims to protect small business borrowers by requiring transparency and preventing predatory contract language while establishing state oversight of the CSBF industry.

Potential points of contention

  • Compliance burden: New registration requirements and disclosure obligations may increase operational costs for brokers and providers, potentially reducing availability of this financing option or raising borrowing costs
  • Definition and scope: The specific definition of covered transactions and exemptions will determine how broadly the law applies; ambiguity could create compliance uncertainty or unintended loopholes
  • Enforcement authority: The bill's designation of enforcement mechanisms and civil penalty structures could affect whether violations are adequately deterred or whether penalties are considered excessive by industry stakeholders

Compiled from official sources — confirm details with the bill’s official record.

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