SB 869: Commercial financing.

The California Financing Law (CFL) provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Financial Protection and Innovation. Innovation, including by regulating the provision of commercial loans, as defined. A willful violation of the CFL is a crime, except as specified.

This bill would, beginning January 1, 2026, generally provide for the regulation under the CFL of commercial financing, which the bill would define to mean an accounts receivable purchase transaction, including factoring, asset-based lending transaction, commercial loan, or lease financing, intended by the recipient for use primarily for a purpose other than a personal, family, or household purpose. The bill would prohibit a person from engaging in the business of a commercial financing provider, as defined, or commercial financing broker, as defined, without obtaining a license from the commissioner. The bill would prohibit a commercial financing provider or a commercial financing broker from, among other things, taking an instrument in which blanks are left to be filled in after execution. The bill would require a licensed commercial financing provider to do certain things, including permitting payment to be made in advance in any amount on any commercial financing transaction at any time. The bill would require a licensed commercial financing broker to do certain things, including delivering to the recipient at the time the final negotiation or arrangement is made a statement showing in clear and distinct terms the name, address, and license number of the commercial financing broker and the commercial financing provider, as prescribed. By expanding the scope of the crime of willfully violating the CFL, this bill would impose a state-mandated local program. The bill would make various conforming changes to the CFL.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.