Virginia HB 1027 —
disclosure, plus broker rules.

Virginia House Bill 1027 — along with its Senate companion, SB 1027 — was enacted in 2022 and took operative effect on July 1, 2022. While California's SB 1235 had been on the books since 2018 but was still working through rulemaking, and New York's CFDL was similarly stalled, Virginia went live first. By the summer of 2022, every non-bank commercial finance provider and every broker doing covered business with a Virginia recipient was required to be in compliance.

What distinguished Virginia early on was the law's emphasis on the broker side of the market. The disclosure obligations on funders are real but largely parallel to California's; the broker registration framework is what made Virginia notable.

Scope and threshold

The framework applies to commercial financing of $500,000 or less extended to a recipient with its principal place of business in Virginia. The covered product types include the broad set seen in other state regimes: term loans, lines of credit, factoring, accounts receivable financing, asset-based lending, and merchant cash advances. Federally insured depository institutions, real-estate-secured financing, and certain narrow exempt categories are outside scope.

The recipient's location — Virginia, in this case — is the trigger. A funder or broker based anywhere in the country must comply with Virginia's framework when extending offers to Virginia-based recipients.

What the disclosure must contain

Virginia's required transactional disclosure parallels the structure adopted in other state regimes. The key fields:

Total amount of commercial financingand disbursement amount — the capital offered and the net amount delivered to the recipient.

Finance charge — the total dollar cost of the financing.

Total payment and the breakdown of payments — dollar amount, frequency, number.

Estimated APR for indeterminate-term products, computed under prescribed methodology.

Prepayment policy — whether the recipient can prepay and whether prepayment reduces the dollar cost.

The disclosure must be delivered before the recipient executes the financing contract, and the recipient typically signs the disclosure as acknowledgment of receipt.

The broker piece — why Virginia is different

The feature that made Virginia stand out among the first wave of state laws is the treatment of brokers. Independent broker shops — sometimes called ISOs — historically intermediated a meaningful share of MCA and small-business credit volume in the United States. Brokers shop a merchant's file across multiple funders and earn commissions on closed deals. In a typical pre-disclosure-law environment, the merchant might never see how much the broker was paid, which made it difficult to evaluate the true all-in cost of the capital.

Virginia put broker registration at the center of the framework from day one. Brokers operating in Virginia must register with the Virginia State Corporation Commission's Bureau of Financial Institutions and are subject to ongoing obligations including, in covered contexts, disclosure of broker compensation in the transactions they facilitate. For a Virginia merchant, that means a paper trail on the broker side of the deal — and the ability to compare offers from multiple brokers on a more honest basis.

How the broker rules change shopping behavior

One common pattern in pre-disclosure-law commercial finance was a merchant who would let three or four broker shops shop a single file. Each broker would come back with offers. The merchant would compare the headline cost figures — factor rate, payback, daily debit — without visibility into how much each broker had added to the deal as compensation. The funder might be quoting a 1.35 factor; the broker might be marking that up to 1.42 in the offer presented to the merchant, with the seven points of spread becoming broker commission.

Under Virginia's framework, the all-in cost in the offer the merchant sees is subject to disclosure, and broker compensation comes into view. The result is a shopping environment where two brokers offering offers from the same underlying funder can be compared honestly. The broker with thinner compensation produces a better deal for the merchant; the broker with fatter compensation looks worse. Over time, that pressure shifts behavior across the broker channel — including for funders and brokers operating in multiple states.

Recipient rights and remedies

The Virginia framework gives the Bureau of Financial Institutions supervisory authority over registered providers and brokers. A recipient who believes they've received a non-compliant offer — for example, an offer without the required disclosure, or an offer from an unregistered broker — can file a complaint with the SCC. The Commission has authority to investigate, require corrective action, and impose civil penalties.

Importantly, registration is verifiable. A Virginia merchant can confirm that the funder and broker they're working with are properly registered before signing any paper. That verification step is one of the more useful concrete tools the law creates for merchants.

How Virginia compares to the rest of the country

As of late 2022, the four most developed state regimes — Virginia, California (then about to go live), New York (still in rulemaking), and Utah (just signed) — each took a slightly different angle. Virginia was the most broker-focused. California became the most disclosure-detailed. New York adopted the highest threshold and over time developed strong broker rules. Utah added the registration model.

For a multi-state operator or funder, the practical implication is that compliance looks different in each jurisdiction. A funder operating in Virginia must register its brokers and deliver Virginia-format disclosures. A funder operating in California must register with DFPI to the extent applicable and deliver CA-format disclosures on a different methodology. A funder operating in both must maintain both pipelines simultaneously.

What a Virginia operator should expect

A Virginia merchant receiving a covered offer should see, at minimum: a standardized transactional disclosure delivered before contract signing; if a broker is involved, evidence that the broker is registered with the SCC; and, in covered contexts, visibility into broker compensation. If any of those elements is missing, ask. A compliant funder or broker will produce the documentation within the same business day. A non-compliant counterparty is a reason to walk away — or to file with the SCC.

How Goliath approaches this

Goliath is a direct lender. We deliver transparent cost disclosures on every offer regardless of which state the recipient operates in. In Virginia specifically, our offers include the full Virginia-aligned disclosure pack, and we work only with brokers who are properly registered with the SCC. We believe broker transparency improves the market for everyone — it rewards brokers who add real value to a file and pressures the ones who don't.

This article is general information, not legal advice. Commercial finance laws evolve quickly; consult licensed counsel in your jurisdiction before making decisions based on this content.