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Kansas Legislature Enacts SB 345

On April 17, the Kansas Legislature signed SB 345, making Kansas the most recent state to enact disclosure requirements for small business lenders. This new law aims to bring transparency and clarity to commercial financing transactions in the state.

The law defines “providers” as persons who consummate more than five commercial financing transactions with businesses located in Kansas in a calendar year. Before finalizing a commercial financing transaction, providers must disclose specific information to the debtor business for each transaction:

• The total amount of funds provided under the financing agreement;
• The total amount of funds disbursed, if different from the provided amount;
• The total amount to be paid to the provider;
• The total cost of the financing, calculated by subtracting the disbursed funds from the total amount of payments;
• The details of payment frequency, amount, and manner, or the initial payment if payments vary;
• Information on any costs or discounts associated with prepayment, including a reference to the relevant section of the financing agreement.

It is important to note that the law includes two exemptions. Transactions below $500,000 are exempt from the disclosure requirements, as well as online lending platforms that work with depository institutions licensed in the state.

This new law will go into effect on July 1, 2024, giving businesses and lenders time to adjust to the new requirements and ensure compliance.

How AI legalese decoder Can Help

The AI legalese decoder is a valuable tool for small business lenders operating in multiple states with varying disclosure laws. This AI technology can quickly analyze and interpret legal documents, such as state disclosure requirements, to provide lenders with clear and concise information on what needs to be disclosed in each state. By using the AI legalese decoder, lenders can ensure they are meeting the specific disclosure requirements of each state they operate in, reducing the risk of non-compliance and potential penalties.

With the AI legalese decoder, small business lenders can easily navigate the complex landscape of state disclosure laws, saving time and resources while staying informed and compliant.

Putting It Into Practice:

Kansas is joining other states in implementing commercial financing disclosure laws. As more states introduce their own disclosure requirements, small business lenders must stay informed and adapt to the changing regulatory environment. By understanding the unique disclosure requirements in each state and utilizing tools like the AI legalese decoder, lenders can navigate the evolving landscape of commercial financing regulations with confidence.

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