Governor Brown Signs California Rate Disclosure Bill-1235

On Sunday, September 30, 2018 Governor Brown signed into law California Senate Bill 1235.  The new law will require consumer-like disclosures to be made on certain commercial finance products under $500,000, including small business loans and merchant cash advances, among other things. It does not cover true leases. There is no date certain for the law to take effect.  Rather, the California Department of Business Oversight ("DBO") is required to adopt regulations addressing details such as the methods of calculation, the format, the time and the manner of the new disclosures.  The DBO will specify the date by which finance companies are required to comply.
The new law requires that the following be included in qualifying commercial loans:

(1) The total amount of funds provided.
(2) The total dollar cost of the financing.
(3) The term or estimated term.
(4) The method, frequency, and amount of payments.
(5) A description of prepayment policies.
(6) The total cost of the financing expressed as an annualized rate

It is unlikely that compliance with the new law will be required before late 2019 or early 2020.  We will be monitoring closing for updates from the DBO and will keep you apprised. 

22917 Burbank Blvd.
Woodland Hills, CA 91367-4203.
(818) 888-2220
Marshall Goldberg

(Selected for Inclusion in 2019 SuperLawyers Magazine-10th consecutive year)
Unanticipated or unexpected growth may overwhelm a business, especially one that's growing. Perhaps you've increased your marketing team and they've ably responded adding new accounts. As sales increase and expectations rise, so do the risks inherent in the business. However, there are ways a small business can more easily facilitate growth while minimizing all the corresponding associated pitfalls. One such way is to engage in the factoring services of a third party.   Read More
A year ago, the U.S. Court of Appeals for the Ninth Circuit certified the case, De La Torre v. CashCall, S241434, to the California Supreme Court. The inquiry and question? "Can the interest rate on consumer loans of $2500 or more governed by California Finance Code § 22303, render the loans unconscionable under California Finance Code § 22302?" The Federal court stated that deciding the issue itself would involve it in "impermissible economic policy-making." In August 2018, the California Supreme Court held that otherwise legal loans may be held unconscionable under the CFLL and California courts indeed have the power to make such a determination.   Read More
There are a variety of ways that a factoring service may benefit a business, thus helping it overcome the typical challenges related to consistency and growth, especially those obstacles encountered by a smaller business enterprise. Factoring doesn't increase the debt of the business. There is no need or requirement for the encumbering of assets, i.e., collateral. Read More
The primary purpose of licensing laws is to ensure that license applicants are ethically, financially, & professionally qualified to serve consumers. Under the Residential Mortgage Lending Act (RMLA), licensees have certain duties to fulfill. in Cal. Fin. Code §50124(a), the RMLA creates specific affirmative duties for licensees. A residential mortgage lender or servicer must do all of the following: Read More
Under the Residential Mortgage Lending Act (RMLA), the Commissioner of Business Oversight (the "Commissioner") of the State of California has multiple functions, powers, and duties (Cal. Fin. Code §50301). The Commissioner may also review the business dealings of any residential mortgage lender and servicer California licensee for compliance with the RMLA (Cal. Fin. Code §50302). Read More

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October 2018


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Glass & Goldberg
22917 Burbank Blvd.
Woodland Hills, CA 91367-4203 
Phone: (818) 888-2220
 Fax: (818) 888 -2229
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