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Signed Into Law
Signed June 20, 2025Effective 2025-06-20
HB700

Regular Session

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.

Government Affairs & Regulatory Compliance Analysis

HB700: Government Affairs Overview

HB700 establishes a comprehensive regulatory framework for non-bank commercial financing (Merchant Cash Advance, factoring, and revenue-based financing) in Texas. Providers and brokers dealing in transactions under $1 million must now register with the Office of Consumer Credit Commissioner (OCCC) and adhere to strict Truth-in-Lending-style disclosure requirements. While registration has a phase-in period, conduct requirements and contract prohibitions are effective September 1, 2025.

Rep. John McQueeney·House Bill·Regular Session

Critical
Medium Cost
Effective:2025-06-20
Enforcing Agencies

Finance Commission of Texas • Office of Consumer Credit Commissioner (OCCC)

Business Impact

Who HB700 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: critical

Significant regulatory changes (effective 2025-06-20). Review with your legal and compliance teams to understand implications.

🏦

Banking & Finance

Affected business types:

  • Banks
  • Credit unions
  • Financial services firms
  • Insurance companies
View all banking & finance legislation
🏭

Manufacturing & Business

Affected business types:

  • Manufacturers
  • Industrial facilities
  • Supply chain companies
  • Logistics providers
View all manufacturing & business legislation

Key Operational Considerations

  • 1Confession of Judgment (COJ): You must strip any COJ clauses from Texas contracts immediately. Inclusion renders the provision void and unenforceable.
  • 2Broker Agreements: Update indemnification clauses to hold brokers liable if they fail to provide accurate fee data required for your disclosures.
  • 3Sales 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.

Estimated Cost Impact

mediumModerate costs expected for implementation.

Enforcing Agencies

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HB700
Relating to disclosures for certain commercial sales-based financing transactions, the effect of certain commercial sales-based financing contract pro...
Critical Urgency
Heavily Contested
House Vote116 - 28
YEA
NAY
81% in favor144 voting
Senate Vote31 - 0
YEA
100% in favor31 voting
28
Total Opposition Votes
Cost Impact
Medium
Effective
2025-06-20
Enforcing Agencies
Finance Commission of TexasOCCC
Primary Author: Rep. John McQueeney
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025 (Statutory conduct requirements begin).
  • Compliance Deadline:
  • September 1, 2025: You must provide financial disclosures and remove prohibited terms (Confessions of Judgment) from contracts.
  • December 31, 2026: Deadline for existing businesses to complete registration with the OCCC.
  • Agency Rulemaking: The Finance Commission and OCCC must adopt rules regarding fees, forms, and "unfair or deceptive practices" by September 1, 2026.
  • *Regulatory Gray Zone:* Between Sept 1, 2025, and Sept 1, 2026, the law is in effect, but official agency forms will not exist. You must create good-faith interim disclosure forms to comply with the statute during this gap.

Immediate Action Plan

  • 1. Audit Contracts (Immediate): Redline all Texas agreements to remove Confession of Judgment clauses and ensure Security Agreements cover deposit accounts.
  • 2. Update CRM/LOS: Configure your loan origination software to generate the required Disclosure Form and force a "two-signature" workflow (Disclosure first, Contract second).
  • 3. Establish UCC Protocol: Mandate UCC-1 filings for all accounts where you intend to use auto-debiting; second-lien positions lose the statutory right to auto-debit.
  • 4. Draft Interim Disclosures: Do not wait for OCCC forms. Work with counsel to create a compliant disclosure template for use starting September 1, 2025.

Operational Changes Required

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.

Strategic Ambiguities & Considerations

  • APR Calculation Methodology: The statute requires disclosing an APR equivalent for variable-term products but does not yet specify the math (e.g., Historical Method vs. Underwriting Method). Until the OCCC rules are finalized in 2026, document your internal calculation logic clearly to defend against audit.
  • "Unfair or Abusive" Practices: The Finance Commission has broad authority to define these terms later. This creates a risk that specific collection tactics or marketing claims currently in use could be banned retroactively or in the future.
  • "Specific Offer" Definition: The disclosure trigger is a "specific offer." It is unclear if a preliminary term sheet qualifies. To mitigate risk, treat any document presenting a price and amount as a specific offer requiring full disclosure.

Need Compliance Guidance on This Legislation?

JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 14, 2025
Passed House
May 12, 2025
Passed Senate
May 26, 2025
Signed
Jun 20, 2025
Effective
Jun 20, 2025
TopicsBusiness & CommerceBusiness & Commerce--generalCivil Remedies & LiabilitiesFinancialFinancial--generalMortgage Brokers & BankersBanking, Texas Department ofFinance Commission of TexasConsumer Credit Commissioner, Office of
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House Authors

Rep. John McQueeneyRepublican · Primary Author

Senate Sponsor

Sen. Charles PerryRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

Explore more bills from this author and on related topics

More from Rep. John McQueeney

View all bills by Rep. John McQueeney

Related by Topic

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Quick Reference

Frequently Asked Questions

Common questions about HB700

Q

What does Texas HB700 do?

HB700 establishes a comprehensive regulatory framework for non-bank commercial financing (Merchant Cash Advance, factoring, and revenue-based financing) in Texas. Providers and brokers dealing in transactions under $1 million must now register with the Office of Consumer Credit Commissioner (OCCC) and adhere to strict Truth-in-Lending-style disclosure requirements. While registration has a phase-in period, conduct requirements and contract prohibitions are effective September 1, 2025.

Q

Who authored HB700?

HB700 was authored by Texas Representative John McQueeney during the Regular Session.

Q

When was HB700 signed into law?

HB700 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce HB700?

HB700 is enforced by Finance Commission of Texas and Office of Consumer Credit Commissioner (OCCC).

Q

How significant are the changes in HB700?

The regulatory priority for HB700 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB700?

The cost impact of HB700 is estimated as "medium". This may vary based on industry and implementation requirements.

Q

What topics does HB700 address?

HB700 addresses topics including business & commerce, business & commerce--general, civil remedies & liabilities, financial and financial--general.

Q

What are the key dates for HB700?

Key dates for HB700: Effective date is 2025-06-20. Rulemaking: Adopt initial rules identifying unlawful, unfair, deceptive, or abusive acts or practices. (2026-09-01); Adopt rules setting registration/renewal fees and adopting the official registration form. (2026-09-01). Consult with legal counsel regarding applicability.

Q

What are the penalties under HB700?

HB700 establishes the following penalties: civil penalty of $10,000 per violation for Violation of Chapter 398 (e.g., failure to register, failure to disclose, prohibited contract terms).; contractual voidance penalty of N/A for Inclusion of confession of judgment provisions (provision becomes void and unenforceable).. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by HB700?

HB700 primarily affects Texas businesses and commercial enterprises, banks, credit unions, and financial services firms. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026