Summary

Requires companies that buy small businesses' accounts receivable (factoring providers) to give a written disclosure of key terms before entering factoring transactions expected to be under $500,000. The disclosure must show the discount or percentage taken, fees, any reserve and its terms, the agreement duration, and include a $10,000 example showing discount, fees, maximum reserve, and net proceeds. The bill also preempts state or local laws that would add or conflict with these federal disclosure rules and defines key terms such as "factoring transaction," "provider," "reserve," and "small business concern."

• Factoring providers must give standardized written disclosures to small businesses for factoring deals under $500,000.
• Disclosures must show discount (or percentage), itemized fees, reserve amount and terms, contract duration, and a $10,000 example of net proceeds.
• The disclosure requirement does not apply to changes (modifications) to an existing factoring facility agreement.
• Federal law preempts any state or local disclosure rules that are additional to or inconsistent with this law.
• The bill defines key terms—factoring transaction, factoring facility agreement, provider, reserve, and small business concern.
• Transactions treated as loans or advances against future or non-existent receivables are excluded from the definition of factoring transactions.
• Applies only when the provider is engaged in interstate commerce.
• No new funding, penalties, or federal program authorizations are created in the text provided.