HB700

HB700 regulates certain business financing repaid from a percentage of sales or revenue, including fixed payments that can be reconciled to that percentage. It is not a consumer-loan law: the proceeds must not be primarily for personal, family or household use. Covered online providers and brokers serving Texans are included even without a Texas office. Final law

For a specific financing offer under $1 million, the provider must disclose the financing amount, actual disbursement excluding withheld finance charges, dollar finance charge, total repayment, estimated repayment period, payment amounts and frequency—or the variable-payment method and projected monthly average. Required disclosures also cover other potential fees, early-payoff or refinancing charges, collateral, and whether the provider pays a broker and how much. If obtaining new financing requires paying off existing financing, the provider must disclose the new funds used for prepayment charges or unforgiven interest/finance charges and the amount that reduces the cash actually disbursed. The recipient must sign the required disclosures before the application is finalized. This is not a statutory requirement to quote an annual percentage rate.

Both providers and brokers doing covered business for compensation must register with the Office of Consumer Credit Commissioner (OCCC), pay cost-covering registration fees, renew annually by January 31 after initial registration, and update changed information within 90 days. Registration requires business and service-agent details and specified legal/disciplinary history involving the business and its controllers, officers or directors.

A financing contract containing a confession-of-judgment provision—or a similar provision—is void and unenforceable. Such provisions generally allow judgment without the usual opportunity to contest the claim. Automatic withdrawals from a recipient’s deposit account are prohibited unless the provider or broker has a validly perfected security interest in that account with first priority over everyone else’s claims under Texas commercial law. That is a substantial condition, not blanket permission to debit an account.

OCCC administers the chapter and can take enforcement actions for the listed rule, disclosure and registration violations, suspend or terminate registrations, and assess civil penalties. A chapter violation carries a $10,000 civil penalty per violation. The chapter itself creates no private right to sue. The Finance Commission must adopt rules against specified unfair, deceptive or abusive practices, but may not set a maximum APR, finance charge or fee for these transactions.

Exemptions include banks, credit unions and their affiliates; qualifying technology-service providers that have no interest or agreement to purchase the financing; Farm Credit lenders; real-estate-secured transactions; leases; qualifying financing plans of at least $50,000 for vehicle dealers/rental businesses; and specified financing connected to the seller’s or affiliate’s products or services. The law also excludes sales-based financing from Finance Code 306.103’s special treatment of account purchases; that section otherwise treats the discount as not interest and the parties’ purchase characterization as conclusive. This does not itself resolve every transaction’s treatment under other lending laws. Account-purchase statute

The act took effect September 1, 2025, but gives providers and brokers already doing business on that date until December 31, 2026 to register. Initial rules, fee rules and registration forms were due by September 1, 2026. Those are statutory deadlines, not a claim here that every implementation step has been completed. Official history