Will California's De Minimis Exemption Return?
In this early January post, I noted the passing of one of the de minimis exemptions under the California Financing Law. This exemption was available to any person who makes no more than one loan in a 12-month period if that loan is a commercial loan as defined in Financial Code Section 22502. I am pleased to report that the legislature may soon reinstate the exemption by enacting SB 577 ( Limón). The bill was amended in the Assembly last month to add an urgency clause so that it could take effect immediately rather than on January 1, 2023. The urgency clause does come with a price tag, however. Urgency measures must be passed by a 2/3 vote in each house of the legislature.
Here is some background on the bill from the analysis prepared for the Assembly Banking and Finance Committee hearing on January 6, 2022:
As originally introduced in 2020, this bill would have removed the existing January 1, 2022 sunset date for CFL exemption described in Comment #2, thereby making the exemption permanent. This exemption is widely understood to have worked as intended. However, the author did not proceed with the bill because of the impact of the COVID-19 pandemic on the legislative process. The exemption has now expired and the committee has received feedback that this is hindering certain complicated commercial financial transactions.
As proposed to be amended, this bill reinstates the exemption without a sunset, which mirrors what the bill would have done if it had been signed into law in 2020, and adds an urgency clause to allow the bill’s provisions to take effect immediately.
So far, the bill has engendered no registered opposition and is now before the Assembly Committee on Appropriations.
P.S. - If you are curious as to why de minimis is correct and de minimus is not, see this post.