Small Businesses in California will get protection from
predatory lenders starting 1 January 2019.
Amendments to the
California Financing Law (CFL) will provide small
businesses in California that borrow from $5,000 to
$500,000, protection from lenders that charge high interest
rates, hidden fees and unfavorable lending terms.
The new law requires all online lenders to disclose the
following when they offer financing of between $5,000 and
$500,000 to a business owner:
Total amount of financing
Total cost of financing
The method, frequency and amount of payments
The law will cover traditional term loans, lines of credit,
merchant cash advances, lease financing, factoring, and
Lenders will be prohibited from making a materially false or
misleading statement to a borrower about the terms or
conditions of a loan.
The law applies to lending institutions such as banks, trust
companies, or industrial loan companies doing business under
the authority of, or in accordance with, a license,
certificate, or charter issued by the United States, the
state of California, or any other state, district,
territory, or commonwealth of the United States that is
authorized to transact business in California.
The law does not apply to lending institutions such as
federally chartered savings and loan association, federal
savings bank, or federal credit union that is authorized to
transact business in this state.