Commercial financing

The law extends state oversight and small-business protections to financing offers of $500,000 or less, including factoring, asset-based lending, commercial loans, credit plans, and lease financing.

What the law does ​

• Requires commercial financing providers and brokers to be licensed by the Commissioner of Financial Protection and Innovation beginning July 1, 2028, subject to listed exemptions.
• Makes commercial financing agreements entered after January 1, 2028 unenforceable unless the provider is licensed or has a complete license application pending.
• Bars providers and brokers from taking a confession of judgment or power of attorney before a recipient defaults.
• Prohibits unfair, deceptive, abusive, fraudulent, or materially misleading practices and contract terms that restrict recipients from sharing information about their financing.
• Requires brokers to post their prior-year average and maximum annual percentage rates online and providers to annually report transaction volumes, amounts, and disclosed APR data beginning in 2029.
• Authorizes the commissioner to examine records, enforce violations, order restitution or other relief, and suspend or revoke licenses, including for repeated failure to consider a recipient’s ability to repay.

Who it affects ​

• Small businesses and owners receiving commercial-financing offers of $500,000 or less.
• Commercial financing providers and brokers, including businesses offering or arranging factoring, asset-based lending, commercial credit, and lease financing.
• The Department of Financial Protection and Innovation and its Commissioner of Financial Protection and Innovation.

Context ​

Federal-bank lenders, real-property-secured financing, and specified vehicle-dealer and infrequent transactions are exempt.