| Disclosure law | In effect (since July 1, 2024); sales-based financing of $250,000 or less |
|---|---|
| Covers factoring? | No |
| APR in disclosure? | No, dollar figures |
| UCC filing office | Connecticut Office of the Secretary of the State, Business Services Division (filed through business.ct.gov) |
| State agencies pay | On the date the contract sets, or if none, within 45 days of a properly completed claim or receipt of the goods or services, whichever is later |
| Late-pay interest (state) | Monthly effective yield of the state Short Term Investment Fund (STIF) on late amounts |
| Lien deadline (private) | Generally 90 days after the claimant stops furnishing labor or materials, recorded with the town clerk, with a copy served on the owner within 30 days after recording (§49-34) |
| Public payment bond | State and municipal public works contracts over $100,000 |
Who uses invoice factoring in Connecticut?
Connecticut receivables are anchored by a few large, slow payers. Submarine work at General Dynamics Electric Boat in Groton, jet engines at Pratt & Whitney in East Hartford and helicopters at Sikorsky in Stratford support a deep base of machine shops, fabricators and engineering firms on net 45 to net 90 terms with quality holds. Hartford's insurance headquarters buy IT, staffing and facilities services. Hospital systems such as Yale New Haven Health and Hartford HealthCare pay medical staffing and service vendors, and state agencies and towns pay a long list of contractors.
Defense suppliers usually see flow-down terms from the prime and payment tied to inspection, so 60 days or more is common. State agencies generally have 45 days to pay a proper claim when the contract sets no date. Construction runs on the state's 30-day owner and 25-day contractor pay clocks, but retainage and change orders stretch real collection times.
- Industries that factor most: Aerospace and defense manufacturing, Submarine and shipbuilding supply chain, Insurance and financial services vendors, Healthcare staffing and services, Construction subcontracting, Precision machining.
- Metro areas: Hartford, New Haven, Bridgeport-Stamford, Waterbury, New London-Groton.
- Federal installations that buy from local firms: Naval Submarine Base New London, U.S. Coast Guard Academy, Bradley Air National Guard Base.
What does Connecticut's commercial financing disclosure law require?
Connecticut commercial (sales-based) financing disclosure and registration law, passed as Public Act 23-201 (SB 1032, 2023) (Conn. Gen. Stat. §§36a-861 to 36a-872), has been in effect since July 1, 2024. It requires covered providers to give a written cost disclosure before a business signs. Scope: sales-based financing of $250,000 or less.
It does not appear to reach invoice factoring transactions, though it covers other commercial financing.
It does not require an APR. Expect dollar figures instead: amount financed, amount disbursed, total cost and payment terms.
Registration: Providers and brokers of sales-based financing must register annually with the Connecticut Department of Banking through NMLS (registration deadline was October 1, 2024).
Exemptions: Banks, credit unions and their affiliates, Farm Credit lenders, real-estate-secured deals, leases, purchase-money obligations, vendor financing, and providers that extend no more than 5 deals in Connecticut in 12 months.
Enforcement: Banking Commissioner, who can suspend or revoke registrations, seek injunctions and impose civil penalties of up to $100,000 per violation (§36a-872).
The law defines commercial financing as sales-based financing only, repaid as a share of sales or through a reconciliation mechanism, so a standard invoice factoring deal is not covered. A 2026 bill (HB 5211) to add an APR disclosure and drop the $250,000 cap passed the House but did not pass the Senate before the session ended.
Compare offers side by side in the proposal decoder, and see every state's law in our disclosure law tracker.
How do UCC filings work in Connecticut?
Where UCC-1s are filed in Connecticut: Connecticut Office of the Secretary of the State, Business Services Division (filed through business.ct.gov). The state posts a free UCC lien search on its business portal; copies of liens are fee-based. Fixture filings go to town land records.
A factor will search that index on your exact legal name before it funds, and will file its own UCC-1 on your accounts receivable at closing. Anyone already claiming your receivables, such as a bank, an SBA lender or a merchant cash advance provider, must release, subordinate or sign an intercreditor agreement first. Search your own name first at the official Connecticut UCC search; old filings from paid-off lenders are common and can take a week or more to terminate. More in UCC liens and intercreditor agreements.
How fast do government payers in Connecticut pay?
Connecticut state agency deadline (Conn. Gen. Stat. §4a-71): On the date the contract sets, or if none, within 45 days of a properly completed claim or receipt of the goods or services, whichever is later. Late interest: Monthly effective yield of the state Short Term Investment Fund (STIF) on late amounts. Exceptions are listed in §4a-72. On state and municipal public works, separate payment rules for contractors and subs apply under §49-41a.
Federal agencies follow the Prompt Payment Act: generally 30 days after a proper invoice, with interest at the Treasury rate (4.75% for July 1, 2026 to December 31, 2026) when they pay late. To factor federal invoices, the funder usually needs an assignment of claims acknowledged by the contracting officer, which adds a week or two to setup. See factoring for government contractors and the prompt payment interest calculator.
What do Connecticut lien and prompt pay rules mean for construction factoring?
Funders that factor construction receivables check lien and bond rights before they advance on a pay application, because those rights are what get an unpaid sub paid. Described generally:
- Mechanics lien deadline (private work, Conn. Gen. Stat. §49-33 et seq.): Generally 90 days after the claimant stops furnishing labor or materials, recorded with the town clerk, with a copy served on the owner within 30 days after recording (§49-34). To enforce: Foreclosure action and lis pendens within 1 year after the lien is recorded (§49-39).
- Preliminary notice: Not required before work. Subs without a written, owner-assented contract must serve a notice of intent on the owner and original contractor within 90 days after they stop work (§49-35).
- Private prompt pay (Conn. Gen. Stat. §§42-158i to 42-158n): owner to contractor: 30 days after a written payment request; contractor to sub: 25 days after the contractor receives payment covering the sub's work; late interest: 1% per month, starting 10 days after the unpaid party sends notice.
- Public projects (Conn. Gen. Stat. §§49-41 and 49-42): you cannot lien public property, so payment bonds take its place. Bond required: State and municipal public works contracts over $100,000. Claim notice: Notice of claim on the surety (copy to the contractor) no later than 180 days after the claimant last furnished labor or materials, after waiting 60 days unpaid; retainage claims run from the payment date.
- Read every lien waiver before you sign it, and ask counsel how a waiver signed before payment affects your rights. More in factoring for construction subcontractors.
What else should a Connecticut business know?
- Connecticut's financing law bans prejudgment remedy waivers and requires a 3-day hold on specific offers, but only for covered sales-based financing.
- Revenue-based advances of $250,000 or less require a provider registered with the Department of Banking; invoice factoring does not.
Questions people ask
Is invoice factoring legal in Connecticut?
Yes. Factoring is a sale of receivables and is legal in Connecticut. The state's commercial financing law covers only sales-based financing, such as revenue-based advances of $250,000 or less, so a standard factoring facility does not need a state registration or a state disclosure form. The factor will still file a UCC-1 with the Secretary of the State and notify your customers to pay it.
Does Connecticut require a disclosure for factoring deals?
No state form is required for ordinary invoice factoring. Connecticut's disclosure rules, in effect since July 1, 2024, apply to sales-based financing of $250,000 or less, repaid as a share of sales. Those deals need a standard Department of Banking disclosure and a registered provider. A 2026 bill to add an APR disclosure did not pass. Ask any factor for a written fee schedule anyway.
Where do I search for UCC liens in Connecticut?
Use the Secretary of the State's free UCC lien search on the business.ct.gov portal. Search your exact legal name and any prior names. A factor will run the same search before funding and will need any lender with a lien on your receivables, such as a bank or SBA lender, to release or subordinate it. Fixture filings sit in town land records instead.
How fast do Connecticut state agencies and contractors have to pay?
State agencies generally must pay on the contract date or, if none is set, within 45 days of a proper claim, with interest tied to the state's STIF yield after that. On private construction, owners generally pay within 30 days of a written request and contractors pay subs within 25 days of being paid, with 1% monthly interest after notice.
How fast can a Connecticut business get funded by factoring?
With a clean file (current AR aging, invoices, a clear UCC search and creditworthy customers), first funding commonly takes about one to three weeks, and later invoices usually fund within a day or two of verification. Federal receivables take longer because of the assignment of claims.
Sources
- Connecticut General Statutes, Chapter 669 (commercial financing, §36a-861 et seq.)
- Connecticut Department of Banking, guidance on Public Act 23-201
- Connecticut General Assembly, HB 5211 (2026) bill status
- OLR bill analysis, sHB 5211 (2026)
- Connecticut General Statutes, Chapter 847 (liens and public works bonds)
- Connecticut General Statutes, Chapter 742b (construction contracts prompt payment)
- Connecticut General Statutes, Chapter 58 (§4a-71 state prompt payment)
- Business.CT.gov, UCC forms and fees
- Levelset, Connecticut mechanics lien FAQs
- Venable, state commercial financing disclosure laws (2026)
General information, not legal advice. Statutes and deadlines change and have exceptions; check the source or ask counsel before relying on one. Spot an error? Tell us and we will fix it.