Navigating State Disclosure Laws in Equipment Financing: A Strategic Advantage for Dealers and Vendors

A White Paper by Golden Sun Funding

In recent years, several U.S. states have enacted commercial financing disclosure laws requiring greater transparency in equipment financing and leasing transactions. These laws affect various financing structures, including Equipment Finance Agreements (EFA), $1 buyout leases, $101 buyout leases, fair market value (FMV) leases, and 10% purchase upon termination (PUT) agreements.

For equipment dealers and vendors in the agriculture and construction sectors, understanding these regulations is essential to ensuring compliance and maintaining a competitive edge. Golden Sun Funding is committed to supporting its partners with compliant, transparent, and efficient financing solutions that align with state-specific disclosure requirements.

This white paper outlines the states with active disclosure laws, the implications for dealers and vendors, and a strategic marketing approach to leverage these regulations as a business advantage.

States Requiring Disclosure Agreements for Equipment Financing

California

Effective Date: December 9, 2022

Requirement: Lenders must disclose key loan terms, including APR, total repayment amount, and finance charges for commercial financing offers of $500,000 or less.

New York

Effective Date: August 1, 2023

Requirement: Applies to financing transactions up to $2.5 million, requiring disclosure of loan terms, repayment amounts, and other key financial details.

Utah

Effective Date: January 1, 2023

Requirement: Mandates disclosures for commercial financing amounts of $1 million or less.

Virginia

Effective Date: July 1, 2022

Requirement: Focused on sales-based financing, requiring clear communication of repayment terms.

Florida

Effective Date: January 1, 2024

Requirement: Requires disclosure for transactions of $500,000 or less, ensuring borrowers have clear visibility into financial obligations.

Georgia

Effective Date: January 1, 2024

Requirement: Mandates transparency in commercial financing agreements below $500,000.

Connecticut

Effective Date: July 1, 2024

Requirement: Requires commercial lenders to disclose loan terms to ensure transparency in business transactions.

Kansas

Effective Date: July 1, 2024

Requirement: Similar to Connecticut, Kansas mandates commercial financing disclosures to protect small business borrowers.

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Implications for Dealers and Vendors

Challenges

  • Increased Regulatory Complexity: Dealers must ensure their financing partners comply with state-specific disclosure laws.
  • Longer Sales Cycles: Additional paperwork and disclosures may extend the financing approval process.
  • Customer Concerns: Business owners may have questions about new financing requirements, necessitating additional education.

Opportunities

  • Competitive Differentiation: Dealers who partner with fully compliant financing providers can use transparency as a selling point.
  • Enhanced Customer Trust: Clear disclosures lead to greater borrower confidence and long-term customer relationships.
  • Streamlined Sales Process: By aligning with an experienced financing partner like Golden Sun Funding, dealers can navigate regulatory complexities with ease.

As commercial financing disclosure laws become more widespread, equipment dealers and vendors must align with knowledgeable, compliant financing partners. Golden Sun Funding is committed to providing transparent, state-compliant financing solutions that empower dealers and business owners alike.

For more information or to discuss partnership opportunities, contact Golden Sun Funding today.