CASH Act

Bill Number

H.R. 3244

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Commerce

Status

Introduced

Latest Action

2025-05-07: Referred to the House Committee on Small Business.

Last Updated

2025-10-09T00:11:25Z

AI-Generated Summary

Purpose

The Capital Access for Small Businesses Harmonization Act (CASH Act) aims to promote transparency in factoring agreements for small businesses. Factoring involves selling unpaid invoices (accounts receivable) to a provider for immediate cash, minus a fee. The law requires providers to disclose key terms upfront to help small businesses make informed decisions, particularly for smaller-scale deals under $500,000, while preventing conflicting state rules.

Key Provisions

• Disclosure Requirements (Section 2): Before entering a factoring facility agreement (a contract outlining terms for multiple factoring deals) with a small business, the provider must give a written disclosure if:
• The total value of transactions (including fees) is under $500,000, or
• No total is specified but both parties expect it to be under $500,000.
• Contents of Disclosure: The document must include:
• The discount (amount or percentage subtracted from the invoice's face value).
• A list of all possible fees.
• Details on any reserve (a portion of payment withheld until the invoice is fully paid).
• The agreement's duration.
• A sample transaction for a $10,000 invoice, showing the discount, fees, reserve, and net payment to the business.
• Disclosures are not required for changes to existing agreements.
• Federal Preemption (Section 3): States and local governments cannot add requirements that conflict with or exceed these federal disclosure rules for factoring terms.
• Definitions (Section 4): Clarifies terms like:
• Factoring transaction: Sale of existing unpaid invoices for goods/services, treated as a true sale (not a loan).
• Provider: A buyer of invoices engaged in interstate business.
• Small business concern: Defined under the Small Business Act (generally, independent businesses with fewer than 500 employees, varying by industry).

Significant Changes to Existing Law

This bill introduces new federal mandates for pre-agreement disclosures in small-scale factoring deals, which were not previously required at the national level. It excludes loans or advances on future (non-existent) invoices from these rules. The preemption clause overrides any stricter or differing state laws, creating a uniform national standard to simplify compliance for providers operating across states.

Potential Impacts

• On Small Businesses (Citizens): Increases transparency, helping owners avoid surprises from hidden discounts, fees, or reserves, potentially improving access to capital and reducing disputes.
• On Providers: Adds paperwork and compliance costs for disclosures in qualifying deals but standardizes rules nationwide, easing multi-state operations.
• On Government Agencies: Minimal direct impact; the Small Business Administration (SBA) may indirectly support enforcement through its oversight of small business definitions, but no new agency roles are created.
• On International Relations: None apparent, as the law focuses on domestic interstate commerce.

Main Stakeholders Affected

• Small Business Concerns: Primary beneficiaries, gaining clearer information to evaluate factoring options.
• Factoring Providers: Must comply with disclosures, affecting their operations and costs, especially for smaller deals.
• State Regulators: Limited by preemption, potentially reducing their ability to impose local protections.

Notable Legal, Constitutional, or Political Implications

• Legal: Establishes a "rule of construction" treating factoring as a true sale if labeled as such, reducing disputes over whether it's a loan (which might trigger other regulations). Preemption ensures consistency but could limit state innovations in consumer protection.
• Constitutional: Aligns with Congress's authority over interstate commerce (Article I, Section 8), avoiding federalism conflicts by not encroaching on purely intrastate activities.
• Political: Supports small business growth by harmonizing rules, potentially appealing to pro-business lawmakers, while emphasizing protection without overly burdensome regulations. No enforcement mechanisms or penalties are specified, leaving implementation details to future rulemaking.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Lucas, Frank D. [R-OK-3]

Recent Actions

• 2025-05-07: Referred to the House Committee on Small Business.
• 2025-05-07: Introduced in House
• 2025-05-07: Introduced in House

Bill Versions

• Capital Access for Small Businesses Harmonization Act — issued 2025-05-07 — PDF (6 pages)