Relating to disclosures for certain commercial sales-based financing transactions, the effect of certain commercial sales-based financing contract provisions, and the registration of commercial sales-based financing brokers and providers; authorizing a fee and providing a civil penalty.

Contracts

• Confession of Judgment (COJ): You must strip any COJ clauses from Texas contracts immediately. Inclusion renders the provision void and unenforceable.
• Security Agreements: To maintain the right to auto-debit (ACH) a borrower's account, you must possess a validly perfected first-priority security interest. Ensure your Security Agreements grant rights to deposit accounts and that your operations team files UCC-1s immediately upon closing.
• Broker Agreements: Update indemnification clauses to hold brokers liable if they fail to provide accurate fee data required for your disclosures.

Hiring/Training

• Sales Workflow: Sales teams must be retrained to stop "closing on the fly." The law requires the borrower to sign a specific Disclosure Form *before* signing the final contract.
• Underwriting: Staff must be trained to calculate an "Estimated APR" for sales-based products, a metric previously not required for commercial financing in Texas.

Reporting & Record-Keeping

• The "Texas Disclosure": You must generate and archive a disclosure document for every offer under $1 million, containing the Total Repayment Amount, Finance Charge, and Estimated APR.
• Registration Updates: You are required to notify the OCCC within 90 days of any change in control, name, or address.
• Annual Renewal: Prepare for an annual reporting and renewal cycle due by January 31 of each year.

Fees & Costs

• Registration Fees: Amounts are TBD by OCCC rulemaking but must cover regulatory costs.
• Civil Penalties: Budget for potential liabilities of $10,000 per violation. A systemic error in your disclosure software could result in cumulative penalties scaling with your loan volume.