North Dakota expands lending law to cover alternative finance
A significant development for the alternative commercial finance industry emerged from North Dakota this month. The state’s legislature passed House Bill 1127, amending the Money Brokers Act (MBA) to broaden the definition of “loan” to include “alternative financing products as identified by the commissioner through the issuance of an order.” While the MBA has long regulated both consumer and commercial lending, it previously lacked a definition for “loan,” creating ambiguity around whether products like factoring or revenue-based financing were covered.
What’s changed?
With this amendment, the North Dakota Department of Financial Institutions (DFI) now has explicit authority to designate alternative financing products, including some factoring and MCA arrangements, as “loans” subject to the MBA’s licensing, disclosure, and rate cap requirements (the MBA imposes a 36% APR cap). Providers of these products should carefully assess whether their offerings fall within the new definition and monitor for any DFI guidance or enforcement activity. Even absent a formal order, courts may interpret the new language broadly, increasing litigation and compliance risk for nonbank commercial finance providers operating in North Dakota.
Key takeaway
If you offer alternative commercial finance in North Dakota, now is the time to review your product structures and licensing status. The law’s effective date is August 1, 2025, so there is a limited window to evaluate compliance strategies and risk exposure.
Navigating factoring’s fast lane without a regulatory wreck
In the latest issue of the International Factoring Association’s E-Mag, our team explores how the shifting regulatory landscape is changing the way factors and alternative commercial finance companies operate. In “Navigating Factoring’s Fast Lane Without a Regulatory Wreck,” we take a close look at the impact of federal deregulation and the resulting surge in state-level activism.
The article examines how state attorneys general and regulators may respond to reduced federal oversight by advancing new disclosure requirements, licensing regimes, and enforcement priorities. We address the increased risk that non-traditional finance products will be recast as loans under state law, and how this trend is creating new legal and operational challenges for industry participants.
We also discuss the realities of working with fintech partners and digital platforms. As the boundaries between lender, technology provider, and service partner become less clear, it is more important than ever to understand how compliance obligations are shared and how risk is allocated in contracts. The article offers practical recommendations for evaluating technology partnerships, updating agreements, and preparing for more aggressive state enforcement.
We encourage you to read the full piece for practical strategies on managing risk and seizing opportunity in today’s fast-changing market.
Regulatory patchwork: state activism accelerates
While North Dakota’s expansion of its MBA is getting attention, it’s only one example in a much broader wave of state-level activity that is making the compliance landscape more unpredictable for commercial finance companies.
Several other recent and pending state actions illustrate the scope and speed of these changes:
- New York’s FAIR Act (awaiting the governor’s signature) would expand the state’s consumer protection law to cover unfair as well as deceptive acts, increase penalties, and extend protections to small businesses and nonprofits. This signals a willingness to apply consumer-style protections to a broader universe of commercial transactions.
- California’s Rosenthal Act expansion (effective July 1, 2025) brings certain commercial finance transactions under the state’s debt collection rules, further eroding the traditional distinction between consumer and commercial finance.
- Virginia’s Protection of Reproductive Health Information Law (effective July 1, 2025) and Washington’s My Health My Data Act are examples of sector-agnostic privacy laws that reach far beyond traditional healthcare. These statutes regulate not just medical providers but any business that may handle, process, or even infer sensitive health information. For finance providers working with medical practices, clinics, or health-related receivables, these laws create new compliance risks around data collection, storage, and sharing. The reach of these laws means that a broader swath of the commercial finance industry may find itself subject to privacy and consent requirements that were once the domain of HIPAA-covered entities.
- North Dakota has enacted new data security and breach notification requirements (H.B. 1127) for financial corporations regulated by the state’s Department of Financial Institutions (excluding banks and credit unions), effective August 1, 2025. The law closely tracks the federal GLBA Safeguards Rule and requires covered entities to implement comprehensive information security programs, conduct periodic risk assessments, and notify regulators within 45 days of discovering a breach affecting 500 or more consumers.
- New Jersey has published proposed rules under its Data Privacy Act that expand on the definition of “personal data” and outline new compliance obligations for businesses, including requirements for data inventories, privacy impact assessments, and detailed consumer disclosures. The rules, which closely follow privacy regimes in California and Colorado, are open for public comment until August 1, 2025, and are expected to be finalized in 2026.
- Multi-state enforcement actions remain a key trend, with state attorneys general collaborating on cases involving the recharacterization of financial products. For example, several state AGs, including New York, have coordinated investigations and enforcement efforts targeting Buy Now, Pay Later (BNPL) products. These actions have focused on whether BNPL arrangements should be regulated as loans under state law, subject to disclosure, licensing, and usury requirements. This coordinated scrutiny has already resulted in legislative changes and increased enforcement risk for providers operating across state lines.
Federal regulatory developments
- CFPB funding and enforcement: The Senate is moving to cut the CFPB’s funding cap by nearly half, even as the Bureau’s leadership deprioritizes enforcement of high-profile rules (including Dodd-Frank 1071 small business data collection). While the Supreme Court upheld the bureau’s funding structure, political and budgetary headwinds are likely to further constrain its activities.
- Fed and OCC drop “reputational risk” from exams: The Federal Reserve and OCC have announced they will no longer consider “reputational risk” as a standalone component in bank examinations. The FDIC is expected to follow suit. While this reduces regulatory subjectivity, banks and their partners should expect more focus on concrete financial risks and compliance with explicit laws and regulations.
- House passes CEASE Act: The House passed the CEASE Act, which would cap the number of for-profit small business lending companies eligible to make loans under the SBA’s 7(a) program. The bill now heads to the Senate and is intended to address rising default rates and perceived risks associated with nonbank lenders in the program.
- Federal preemption of state AI regulation: The House of Representatives’ version of the “One Big Beautiful Bill Act” included a provision that would impose a 10-year moratorium on new state laws specifically regulating artificial intelligence; however, on June 30 the Senate voted 99-to-1 to remove this provision from its version of the bill.
- FTC staffing and priorities: The FTC announced plans to reduce its workforce by 10% and is shifting away from rulemaking, focusing on core enforcement functions and cost-cutting measures.
Critical insights from Husch Blackwell
Contact us
If you have questions about how these developments impact your business or need help evaluating your compliance strategy, please contact the Husch Blackwell Alternative Commercial Finance team.
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This newsletter is for informational purposes only and does not constitute legal advice. For guidance tailored to your specific situation, please consult your Husch Blackwell attorney.