California Legislature Passes Interest Disclosure Law Requirement for Commercial Lenders. 

On Friday evening August 31, 2018, at the end of the legislative session, the California Senate, by a vote of 28-6, passed California Senate Bill 1235, after the Assembly earlier passed the bill by a 69-3 vote. The bill is now on the desk of Governor Jerry Brown for signature.  The bill is expected to become effective January 1, 2019. SB-1235

The disclosures will be required for all "Commercial Financing" transactions, which is defined in the bill as accounts receivable purchase transactions, including factoring, asset-based lending transactions, commercial loans, commercial open-end credit plans,
or lease financing transactions intended by the recipient for use primarily for other than personal, family, or household purposes.

"Lease Financing" means providing a lease for goods if the lease includes a purchase option that creates a security interest in the goods leased, as defined by California Commercial Code Sections 1201(b)(35) and 1203. It will not apply to true leases.

"Factoring" is defined in the bill as an accounts receivable purchase, transaction that includes an agreement to purchase, transfer, or sell a legally enforceable claim for payment held by a recipient for goods the recipient has supplied or services the recipient has rendered that has been ordered but for which payment has not been made. 

The bill also requires the disclosure by "Merchant Cash Advance" companies when the transaction requires a recipient of funds to forward or otherwise sell to the company all or a portion of accounts, payment intangibles, or cash receipts that are owed to the recipient or are collected by the recipient during a specified period or in a specific amount. 

The new law when signed will require the recipient's signature on the following disclosures before consummating the commercial financing transaction.  

(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. 

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

(Selected for Inclusion in 2019 SuperLawyers Magazine-10th consecutive year)

Contact Information

Call us at (818) 888-2220 or visit us on the web at t o learn more about the firm and to sign up for future newsletters. 
September Update 2018


Please check out our Blog Site at   where you will find p osts, articles, FAQs etc. several times a week which we believe will be of interest to you.  Feel free to contact us with questions or comments.  
Reach us at     
     Phone: (818) 888-2220


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