Alert

May 29, 2025

Texas House Passes Bill That Effectively Bans Sales-Based Financing Transactions; Bill Goes to Governor's Desk

On the night of May 28, 2025, the Texas House passed HB 700, which regulates sales-based financing transactions and requires providers and brokers of sales-based financing transactions to register with the Texas Office of Consumer Credit Commissioner. We reported earlier this week that the Senate had passed the bill. The House passed the bill without amendment, sending it to the desk of Governor Greg Abbott, who is unlikely to veto it.

The bill includes the following provision:

Sec. 398.056. CERTAIN AUTOMATIC DEBITS PROHIBITED. A provider or commercial sales-based financing broker may not establish a mechanism for automatically debiting a recipient's deposit account unless the provider or broker holds a valid perfected security interest in the recipient's account under Chapter 9, Business & Commerce Code, with a first priority against the claims of all other persons.

The above provision will operate as a de facto ban on sales-based financing transactions in Texas.

Unless Governor Abbott vetoes the bill, it will go into effect on September 1, 2025.

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Don't Miss out on the Alternative Finance Bar Association Conference June 8-10, 2025 in NYC

The Alternative Finance Bar Association is holding its 7th Annual Legal Issues Conference on June 8-10, 2025. This conference is for small business financing industry legal professionals to stay up-to-date on what is shaping up to be an eventful 2025. Panels include:

REGULATORY UPDATES. Considerations of recent regulatory developments including new state legislation, challenges to bank partnership lending models and whether "MCA" is "credit" under the Equal Credit Opportunity Act.

  • Catherine Brennan, Hudson Cook, LLP
  • Katherine Fisher, Hudson Cook, LLP
  • Andrew Smith, Covington & Burling, LLP

POLITICAL UPDATES FROM THE TRADE ASSOCIATIONS. Hear from industry leaders and lobbyists about what legislators are focused on and opportunities to get involved.

  • Steve Denis, Small Business Finance Association
  • Brian Simon, Hollis Public Affairs
  • Ed D'Alessio, INFiN
  • Derek Hein, Catalyst

IMPLICATIONS OF EXPANDING CONSUMER REGULATION IN THE COMMERCIAL FINANCING SPACE. Discussion of legal and practical implications as state and federal lawmakers and regulators seek additional "consumer" protections for small business.

  • Moderator: Patrick Siegfried, Murray Legal PLLC
  • Christina Grigorian, Katten Muchin Rosenman, LLP
  • Michelle Hemerley, BasePoint Capital, LLC
  • Jean Noonan, Hudson Cook, LLP

New York, New York. Leading litigators discuss recent activity from the New York Attorney General's Office and local courts.

  • Meredith Boylan, Paul Hastings
  • David Picon, Proskauer Rose
  • Lee Vartan, CSG Law
  • Allyson Baker, Paul Hastings

Changes to CALIFORNIA COLLECTION and RECENT DFPI ACTIVITY. Discussion of the impending expansion of California's Rosenthal Act to certain business debts and recent investigations and actions by California's Department of Financial Protection and Innovation.

  • Moderator: Jamie Polon, Murray Legal PLLC
  • Anastasia Caton, Hudson Cook, LLP
  • Scott Pearson, Manatt
  • Eric Knight, Manatt

For more detailed agenda information & a registration link, click here.