Since 2018, seven states—California, Connecticut, Florida, Georgia, New York, Utah, and Virginia—have enacted laws requiring specific disclosures in commercial financing transactions. Three of those enactments came in 2023, and similar bills are currently pending in a handful of other states.

While these disclosure laws share the same aim—to encourage competition and provide for a more informed decision-making process—they are quite varied with respect to the transactions and institutions to which they apply as well as the information that must be disclosed. And a single transaction may fall within the scope of multiple statutes, requiring a financial provider to navigate a complex patchwork of differing, and sometimes conflicting, state laws.

Recognizing the risk of increasing non-uniformity among the states, the Uniform Law Commission (“ULC”) announced on January 9, 2024, that it will convene a drafting committee to propose a uniform or model act addressing commercial financing disclosure. The ULC’s decision came after a series of meetings held in March, August, and November of 2023.

To achieve consistency, clarity, and efficiency in the disclosure rules, the drafting committee will consider several issues. To begin with, the committee will evaluate whether certain types of institutions and transactions should be excluded from disclosure requirements altogether. For example, the existing state laws are generally inapplicable to regulated financial institutions such as banks. The committee will consider whether it would be sensible to extend the exclusion to transactions involving an affiliate of a regulated entity or where that entity’s involvement in the transaction is minor and fleeting, such as when a bank oversees an on-line application process.

The committee also intends to keep the mandated disclosures limited to a few targeted data points. To that end, it will undertake an analysis of what information would be most useful to finance recipients and how such information can be efficiently and consistently ascertained by the financing providers. The committee recognizes, however, that one of the principal challenges in mandating disclosure in this area is that commercial transactions can take several forms—e.g., term loans, revolving loans, credit sales, and sales of future receivables. Thus, the committee will evaluate whether and to what extent the disclosure rules should vary depending on the type of financing transaction.

Most of the existing state disclosure laws also impose remedies in the event a financing provider fails to comply. These remedies likewise vary among the states, ranging from fines as low as $500 to as much as $100,000. Some states expressly prohibit a private cause of action in the event of a violation, others do not. One state (California) even provides for criminal sanctions. The drafting committee will assess what remedies are necessary to compel compliance without increasing the cost of doing so, as such costs would likely fall on all parties to the transaction. In the end, the ULC hopes to develop a set of uniform rules that will benefit both financing recipients and providers alike.

Back to Commercial Litigation Update Blog

Search This Blog

Blog Editors


Related Services



Jump to Page


Sign up to receive an email notification when new Commercial Litigation Update posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.