Disclosures for small businesses that enter into factoring facility agreements

(a) In general Prior to entering into a factoring facility agreement with a small business concern, the provider for such agreement shall provide to such small business concern a written disclosure of the terms of factoring transactions under such agreement if— (1) the aggregate dollar amount of factoring transactions authorized under such agreement, including any fees and other charges, is less than $500,000; or (2) such agreement does not specify the aggregate dollar amount of factoring transactions authorized under such agreement, such provider and the small business concern reasonably believe that the aggregate dollar amount of factoring transactions under such agreement, including any fees and other charges, will be less than $500,000. (b) Disclosure contents Each disclosure required under subsection (a) with respect to a factoring facility agreement shall include the following: (1) The amount or percentage, as applicable, of the difference between the face value of a claim for payment sold in a factoring transaction and the amount the provider will pay to small business concern for such claim under such factoring facility agreement. (2) A list of any fees that may be charged under such factoring facility agreement. (3) The amount and terms of any reserve under such factoring facility agreement. (4) The duration of such factoring facility agreement. (5) An example of a factoring transaction under such factoring facility agreement for a claim for payment sold in a factoring transaction with a face value of $10,000 that demonstrates— (A) the amount or percentage described in paragraph (1); (B) any fees that apply with respect to factoring transactions under such factoring facility agreement; (C) the maximum amount of the reserve for such factoring transactions under such factoring facility agreement; and (D) the net amount the provider pays to the small business concern for such claim in such factoring transaction. (c) Rule of construction Nothing in this section shall be construed to require a provider to provide to a small business concern the disclosure required under subsection (a) with respect to the modification of a factoring facility agreement.