SB 1466: Small business: commercial financing transactions: monitoring fees.
- Session Year: 2023-2024
- House: Senate
- Latest Version Date: 2024-02-16
Current Status:
Failed
(2024-02-29: Referred to Coms. on B. & F.I. and JUD.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
The bill allows lenders and finance companies that make commercial loans to small businesses to charge a monitoring fee when the fee pays for ongoing evaluation, tracking, and review of the business’s collateral (property used to secure the loan) to help maximize the business’s available funds. It also continues to allow a monitoring fee if the loan is more than 60 days past due.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Existing law, the California Financing Law, generally regulates commercial loans made by licensees. Existing law prohibits a covered entity, as defined, from charging specified fees in connection with a commercial financing transaction with a small business or small business owner. In this regard, existing law prohibits a fee for monitoring the small businesss collateral unless the underlying commercial financing transaction is delinquent for more than 60 days. Existing law entitles a recipient to specified relief if a covered entity violates these provisions.
This bill would, additionally, allow a covered entity to charge a monitoring fee to compensate the covered entity for services it provides to the small business with respect to the ongoing evaluation, tracking, and review of the small businesss collateral, as specified.
A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:
(a)A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferors account.
(b)A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.
(c)A fee in addition to an origination fee that does not have a clear corresponding service provided for the fee, including, but not limited to, a risk assessment, due diligence, or platform fee.
(d)A fee for monitoring the small businesss collateral, unless the underlying commercial financing transaction is delinquent for more than 60 days. either of the following is true:
(1)The fee is charged to compensate the covered entity for services it provides to the small business with respect to the ongoing evaluation, tracking, and review of the small businesss collateral for the purpose of optimizing funds available to the small business.
(2)The underlying commercial financing transaction is delinquent for more than 60 days.
(e)A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the businesss assets that exceeds 150 percent of the cost of the filing or termination.
|
Date
|
Status
|
|---|---|
| Feb 29, 2024 | Referred to Coms. on B. & F.I. and JUD. |
| Feb 20, 2024 | From printer. May be acted upon on or after March 18. |
| Feb 16, 2024 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
Bill Author
Bill Co-Author(s):