The CASH Act requires companies that provide factoring services to small businesses to give clear written disclosures before entering into a factoring agreement. Factoring is when a business sells its unpaid invoices to another company in exchange for immediate cash, typically at a discount. The disclosure requirement applies to agreements where the total transaction amount is expected to be less than $500,000 and must include specific details such as the discount rate, all fees, reserve amounts, the agreement duration, and a sample $10,000 transaction showing the actual cash the business would receive. The bill establishes a federal standard for these disclosures and prevents states from imposing additional or conflicting requirements on factoring providers. This legislation aims to protect small businesses by ensuring they have clear information about the costs and terms of factoring agreements before they commit to using these services.
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