Maryland small businesses depend on fast, flexible equipment financing to purchase the machinery needed to get work done. Contractors, trucking companies, construction firms, and service providers rely on these programs to keep projects moving and employees working.

SB 881 / HB 1007 seeks to improve transparency in commercial financing. Yet the bill, as written, sweeps in equipment financing programs that were never the target of the legislation.

Equipment financing provided through manufacturers & dealers differs from merchant cash advances. These programs often include seasonal payment schedules, deferred payments, and manufacturer incentives. Forcing these transactions into consumer-style APR formulas would slow approvals, add compliance costs, and reduce financing options for small businesses.

Across the country, 11 states have enacted similar laws. The first two, CA and NY, adopted broad regulations that unintentionally swept in equipment financing and caused delays, higher costs, and reduced flexibility for businesses. The next nine states, UT, VA, GA, FL, CT, TN, MO, CO, and IL, adopted narrower, more targeted definitions & clear exemptions to protect equipment financing while still regulating merchant cash advances. Maryland should follow the approach taken by other states and add the exemption for any entity principally engaged in the business of making commercial financing products in connection with the purchase or lease of products manufactured or distributed by its direct or indirect parent company or any direct or indirect subsidiary thereof.

Take Action. Ask your legislators to support this amendment.