- 1Vermont's House Bill 648 was signed June 16, 2026 and takes effect July 1, 2027.
- 2It mirrors Texas's ban on automatic debits for sales-based financing.
- 3COJs are banned, APRs are required and solicitors need a lending license.
Vermont has followed Texas in prohibiting automatic debits on sales-based financing. The new law, House Bill 648, was signed by the governor on June 16, 2026, and takes effect on July 1, 2027.
What the law does
The automatic debit provision is identical to Texas's. It bars a provider from setting up a mechanism to automatically debit a recipient's deposit account unless the provider holds a validly perfected security interest in that account under Title 9A, with first priority against all other claims.
Other provisions in the law, as summarized:
- Confessions of judgment are banned.
- APRs are required.
- Nobody may solicit a Vermont-based business with funding without a lending license.
Technically, the law applies only to deals where the funding amount is below $1 million. The enacted text is available from the legislature.
Where it came from
Although Vermont copied some of the language enacted in Texas, the underlying effort originated in the factoring industry, which took full credit for the Texas law.
Source reporting: deBanked.
