Equipment Finance: Understanding Licensing Obligations

Equipment Leasing & Finance Magazine
1 minute read | January.28.2019

Licensing Considerations, Generally

The applicability of state licensing laws may depend on multiple factors, including transaction structures, business entity types and whether the activities are appropriately classified as “commercial” or another type of non-consumer transaction. Although the myriad of rules can be cumbersome to navigate, licensure can also carry ancillary benefits. For example, depending on the state, obtaining the requisite license may permit a company to avoid adhering to the state usury laws. On the other hand, failure to obtain the requisite license may have adverse consequences, such as cease and desist orders, fines and other settlement agreements. In addition, a company may have difficulty enforcing contracts with counterparties and could open itself up to its own contractual liability, which may trigger repurchase or indemnification obligations if the lack of licensure is deemed a breach of contractual representations and warranties.