MCA leads in California.
California requires an estimated APR on commercial financing offers of $500,000 or less, and its financing-broker licensing regime is the broadest in the country.
- Disclosure law
- Yes
- Registration
- Yes
- State calling act
- Federal only
The rules.
- Disclosure law
- Commercial Financing Disclosure Law (SB 1235), with DFPI regulations
- In force
- Regulations took effect 9 December 2022
- Threshold
- Transactions of $500,000 or less
- Must contain
- Amount financed, total dollar cost, term, payment amount and frequency, prepayment policy, and an estimated annualised rate.
- Annualised rate
- Required. California is one of only two states that insists on an annualised figure.
- Registration
- A California Financing Law licence is required to broker commercial loans, and the Department of Financial Protection and Innovation reads its jurisdiction broadly. Advances structured as purchases of receivables sit in genuinely contested territory, which is why a large number of California brokers hold a CFL licence regardless of how their paper is drafted.
- Calling
- No FTSA-style telephone solicitation act, so the federal TCPA is the operative calling rule. What California does have is the strongest privacy regime in the country: since January 2023 the CCPA as amended by the CPRA reaches business contact data, which means a merchant can ask what you hold on them and ask you to delete it.
sources disagree on some effective dates, so confirm against the statute
What changes for a broker.
- The disclosure obligation attaches to the offer, not only to the capital. If you are the one putting numbers in front of a merchant, assume it reaches you.
- SB 362 tightened how the words “interest” and “rate” may be used, which changes how a factor can be described on a call as much as in a document.
- A merchant here has an annualised number in writing before they sign. Quoting a factor rate on the phone and letting the APR arrive as a surprise at signing is a bad sequence in every state and a specifically bad one in this one.
- CCPA deletion requests are a real operational obligation on a CRM full of merchant contact data, not a theoretical one.
Questions.
Yes. Commercial Financing Disclosure Law (SB 1235), with DFPI regulations. Threshold: Transactions of $500,000 or less. In force: Regulations took effect 9 December 2022. Must contain: Amount financed, total dollar cost, term, payment amount and frequency, prepayment policy, and an estimated annualised rate.
A California Financing Law licence is required to broker commercial loans, and the Department of Financial Protection and Innovation reads its jurisdiction broadly. Advances structured as purchases of receivables sit in genuinely contested territory, which is why a large number of California brokers hold a CFL licence regardless of how their paper is drafted.
No FTSA-style telephone solicitation act, so the federal TCPA is the operative calling rule. What California does have is the strongest privacy regime in the country: since January 2023 the CCPA as amended by the CPRA reaches business contact data, which means a merchant can ask what you hold on them and ask you to delete it.
Yes. Every exclusive lead clears the same 8 minimums wherever the merchant is, and exclusive leads can be filtered by state.
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