H.R. 3244: Capital Access for Small Businesses Harmonization Act

This bill, titled the Capital Access for Small Businesses Harmonization Act or CASH Act, aims to improve transparency in factoring facility agreements for small businesses. Here is a breakdown of the bill's main provisions:

Disclosure Requirements

Before a provider can enter into a factoring facility agreement with a small business, they must provide written disclosures if:

• The total amount of factoring transactions authorized under the agreement is less than $500,000.
• Or the agreement does not specify the total amount, but both the provider and the small business expect it to be under $500,000.

Contents of the Disclosure

The required disclosures must include:

• The difference in dollar amount or percentage between the face value of a claim sold and the amount the provider will pay the small business.
• A list of any associated fees with the agreement.
• The amount and terms of any reserve that the provider may hold.
• The duration of the agreement.
• An illustrative example of a transaction based on a $10,000 claim, detailing the elements listed above.

Limitations on Disclosure Requirements

The bill clarifies that providers do not need to disclose modifications to existing agreements.

Federal Preemption

No state or local government may impose additional or conflicting requirements for disclosures on providers regarding factoring transactions under this Act.

Definitions

The bill establishes several key definitions, clarifying terms such as:

• Factoring Transaction: Refers to the sale of accounts receivable from a small business for goods or services that have been supplied, where the repayment primarily comes from the account debtor's payment.
• Factoring Facility Agreement: An agreement that sets the terms for the factoring transactions between the provider and the small business.
• Provider: An individual or entity that purchases accounts in a factoring transaction and engages in interstate commerce.
• Reserve: The portion of payment that the provider may hold until claims for payment are settled.
• Small Business Concern: Defined according to the Small Business Act.

Relevant Companies

None found