Missouri's Commercial Financing Disclosure Law and the broker bond behind it

Missouri is the state where checking the broker is easy. Anyone brokering commercial financing in Missouri for compensation has to be registered with the state's Division of Finance and carry a $10,000 surety bond. That is a verifiable fact about the person calling you, and most states do not give you one.

Where it lives

The whole regime is packed into a single statute, RSMo 427.300, which opens by naming itself the Commercial Financing Disclosure Law. Subsection 2 defines the terms, subsection 3 sets the disclosures, subsection 4 lists exemptions, subsection 5 handles broker registration, subsection 6 sets penalties and subsection 7 deals with timing.

A provider is a person completing five or more commercial financing transactions in a year. A commercial financing transaction covers commercial loans, accounts receivable purchase transactions and commercial open-end credit plans, in each case for a business purpose. A broker is a person who, for compensation, obtains commercial financing offers for a business.

The disclosures

Subsection 3 requires the provider to give you the total amount of funds provided, the total disbursed, the total of payments, the total dollar cost of the financing, the manner and frequency and amount of each payment, and the prepayment position.

No annual percentage rate. No prescribed form. The same six-figure pattern Kansas and Florida use.

Broker registration and the bond

Subsection 5 is the part worth acting on. No person may engage in business as a broker in Missouri for compensation unless, before conducting that business, they have filed a registration with the Division of Finance. The initial registration fee is $100. A renewal registration form is due on or before 31 January each year with a $50 renewal fee. Every broker must obtain a surety bond, in the amount of $10,000, issued by a surety authorised to do business in the state.

Ask a Missouri broker for their registration and check it against the Division of Finance. A bond is not a guarantee of good behaviour, but an unregistered broker operating without one has already told you how they treat rules.

Exemptions

Subsection 4 excludes depository institutions, farm credit lenders, real-estate-secured transactions, leases, and transactions exceeding $500,000. As with the other states in this family, the largest deals carry the least disclosure.

The definition of provider does work here too. A provider is someone completing five or more commercial financing transactions in a year, so an occasional funder — a supplier extending terms, an investor doing one deal — is outside the statute entirely. If a funder tells you the law does not apply to them, one of the two questions worth asking is which exemption they are relying on. The other is how many transactions they do in Missouri in a year.

Timing, and why you should check the current status

Subsection 7 is unusual and worth reading carefully. The requirements take effect either six months after the Division of Finance finalises promulgating rules, if the Division intends to promulgate them, or on 28 February 2025 if it does not.

That is a conditional commencement, and the status of any implementing rules can change what applies to your deal. Before you tell a funder what Missouri requires of them, confirm the current position with the Division of Finance and read the current text of 427.300.

Enforcement

Subsection 6 sets penalties in the $500 to $20,000 range and vests enforcement in the Attorney General only. Like Florida and Kansas, Missouri does not create a private right of action out of this statute.

What to do with a Missouri offer

1. Ask for the six disclosure items in writing while you are still shopping, not at signing.
2. Divide total dollar cost by the amount actually disbursed. That is your cost per dollar received.
3. Ask separately for the expected duration and the assumption behind it. Missouri does not require a term on the sheet, and without one the cost figure has no time dimension.
4. Check the broker's registration and bond. It takes one email.
5. Read the prepayment line. If early payoff saves nothing, then a fast repayment schedule is pure cash-flow strain with no price benefit.

Deriving the term Missouri does not require

The gap in the Missouri disclosure set is time. You get total payments and total dollar cost, and nothing that says how long. You can usually recover it from the two figures you do get.

Divide $80,400 by $1,340 and the schedule is 60 weekly payments — about 13.9 months. Divide $22,800 by the $57,600 actually disbursed and the cost is 39.6 cents per dollar received, not the 38 cents the funded amount implies. Solve for the rate that makes 60 payments of $1,340 equal $57,600 and the annualised figure is near 61%.

None of that required anything the funder did not already have to give you. The statute stops one division short of a comparable price, and the division takes ten seconds.

Two cautions on doing it. If the payment amount is an estimate — which it is on any sales-based deal with a reconciliation right — the derived term is an estimate too, so ask what revenue assumption produced it. And if the disclosure shows a payment frequency rather than a fixed amount, ask for the estimated payment in dollars and the assumption behind it, in writing, before you divide anything.

What Missouri does not do

There is no rate cap in this statute and no state approval of pricing. Registration of brokers is a filing requirement, not a competency test. And the $500,000 ceiling means a growing business can move out of the protected band precisely as the sums get serious.

This is general information and not legal advice for your situation.