Within a month, Virginia and Utah both enacted legislation aimed at controlling merchant cash advance transactions through registration and disclosure requirements. The Virginia statute becomes effective July 1, 2022, with a registration deadline of November 1, 2022. The Utah statute becomes effective January 1, 2023.
The Virginia Act adds a new chapter to the Financial Institutions title of the Virginia Code governing Sales-Based Financing Providers. See Va. Code Ann §§ 6.2-2228 et seq. “Sales-based financing” is defined as a transaction that is repaid by the recipient to the provider, over time, as a percentage of sales or revenue, in which the payment amount may increase or decrease according to the volume of sales made or revenue received by the recipient and includes a mechanism where the financing is repaid as a fixed payment but provides for a reconciliation process that adjusts the payment to an amount that is a percentage of sales or revenue. Read More