Louisiana Introduces Unique Commercial Finance Disclosure Law Without Exemptions

Louisiana's new law, enacted on June 8, effective August 1, 2025, requires revenue-based financing transactions to include detailed disclosure requirements, making it the first state to do so without exemptions for insured depository institutions or any maximum dollar amount. This law mirrors those in other states, excluding credit transactions like loans and focusing on merchant cash advances (MCAs). Unlike other state laws, HB 470 does not exempt any types of entities, making it a departure from the growing trend of commercial finance disclosure laws.

Key Takeaways:

• Louisiana House Bill 470, enacted on June 8, 2025, introduces unique commercial finance disclosure requirements for revenue-based financing transactions.
• The law defines revenue-based financing transactions as agreements where a person sells a percentage of sales, revenue, or income, and payment obligations increase and decrease according to sales volume.
• Exemptions for insured depository institutions, banks, and other depository institutions, as well as licensed money transmitters and small business transactions, are not included in the law.
• The law requires providers of revenue-based financing to provide a written disclosure, including total funds provided, total amount disbursed, total to be paid to the provider, and the dollar cost to the recipient.
• Disclosures are required at or before the consummation of the transaction, with only one disclosure required for each transaction.
• The law is silent on whether the disclosure requirements should apply to a broker as well as a provider.
• As the law does not authorize any administrative agency to promulgate rules, providers will likely be responsible for designing their own disclosures.

Statistics:

• Effective date of the law: August 1, 2025.
• Number of exemptions for certain companies and transactions in other state laws: Numerous.
• States with entity exemptions: Several, including Texas and others.
• Amounts beyond which transactions are exempt: Varying, from $250,000 to $2.5 million.

Sources:

• HB 470, Louisiana House Bill 470
• Texas Sales-Based Financing Disclosure Law
• Other commercial finance disclosure laws in various states