California Approves Commercial Financing Disclosure Regulations
On June 9, the California Office of Administrative Law (OAL) approved the Department of Financial Protection and Innovation’s (DFPI) proposed commercial financing disclosure regulations issued pursuant to SB 1235. The regulations will become effective on December 9, 2022, and the final regulatory text can be found here.
Putting it Into Practice: Impacted companies offering should note that the final regulations do not provide a model disclosure form but provide fairly prescriptive rules regarding the content and format of the required disclosures. While similar regulations in New York are still pending (we discussed these regulations in a previous bog, here), Virginia regulation applicable to merchant cash advance companies is effective July 1, and Utah’s commercial financing disclosure regulations are effective Jan. 1, 2023. Commercial lenders and small business financers will likely need to prepare for additional disclosure laws being considered by legislatures in several other states, including in Connecticut, Maryland, Mississippi, Missouri, New Jersey, and North Carolina.