California SB 362: Boards, bureaus, and commissions.

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 Bill Text - SB-362 Commercial financing: disclosures.

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 |Add To My Favorites |Track Bill | Version: 10/06/25 - Chaptered
 09/10/25 - Enrolled
 08/28/25 - Amended Assembly
 07/10/25 - Amended Assembly
 05/23/25 - Amended Senate
 03/17/25 - Amended Senate
 02/13/25 - Introduced

 SB-362 Commercial financing: disclosures.(2025-2026)

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 Date Published: 10/07/2025 09:00 PM

SB362:v93#DOCUMENTBill Start

 Senate Bill

 No. 362

 CHAPTER 352

An act to amend, renumber, and add Section 22806 of, to add Section 22807 to, and to repeal Section 22805 of, the Financial Code, relating to commercial financing.

 [
 Approved by

 Governor
 October 06, 2025.

 Filed with

 Secretary of State
 October 06, 2025.
 ]

LEGISLATIVE COUNSEL'S DIGEST

SB 362, Grayson.
 Commercial financing: disclosures.

Existing law requires a provider of commercial financing to disclose certain information, as specified. Existing law provides that a provider of commercial financing licensed under the California Financing Law (CFL) is subject to examination and enforcement by the Commissioner of Financial Protection and Innovation under the CFL for any violation of those disclosure provisions, as specified. Certain violations of the CFL are a crime.

This bill would prohibit a provider of commercial financing from using the term “interest” or “rate” in a deceptive way that could reasonably result in the recipient being misled and would require those
 providers to use the term “annual percentage rate” or the acronym “APR” in specified circumstances. The bill would repeal the provision subjecting those providers to the CFL described above and would instead provide that a violation of the disclosure provisions described above and the provisions of the bill is a violation of the CFL if the violation relates to a commercial financing transaction subject to the CFL, or a violation of the California Consumer Financial Protection Law if the violation relates to a commercial financing transaction that is not subject to the CFL. By expanding the scope of a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts
 for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Digest Key

 Vote:
 MAJORITY 
 Appropriation:
 NO 
 Fiscal Committee:
 YES 
 Local Program:
 YES 

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 The Legislature finds and declares all of the following:

(a) Markets serve an important social function in allocating finite resources across the economy. Efficient resource allocation relies on market participants acting on information that accurately reflects the costs and benefits of their decisions.

(b) Some markets for commercial financing products offered to small businesses allocate capital inefficiently due to a lack of transparency related to the costs of financing.

(c) In 2018, California enacted a first-in-the-nation requirement for commercial financing providers to disclose the annualized cost of financing to applicants, which is implemented as a requirement to disclose the annualized percentage rate (APR) of specific financing offers.

(d) The one-time disclosure of APR can help small businesses evaluate offers and shop around for the best deal, but deceptive, unscrupulous, or confusing marketing tactics can interfere with the small business owner’s understanding of the costs of an offer.

(e) Examples of confusing representations related to the cost of financing include all of the following:

(1) Describing the price of credit as “simple interest” when referring to a nonannual rate as opposed to a noncompounding
 annual rate that a reasonable person would understand “simple interest” to mean.

(2) Describing the price of credit as an “interest rate” when describing a daily, weekly, or monthly rate and not an annual rate.

(3) Describing the price of credit as “X% fee rate” or “Y% factor rate,” particularly when those “rates” diverge materially from the APR.

(f) In order to strengthen the effect of existing law, this act seeks to provide further clarity to market participants and to the Department of Financial Protection and Innovation (DFPI) related to deceptive marketing