Commercial financing.

Section 22100.6 (the licensing requirement for commercial financing providers and brokers) had a drafting error showing 'January July 1, 2028' in two places. The enrolled version corrects this to 'July 1, 2028,' confirming that the prohibition on operating without a license takes effect on July 1, 2028, not January 1, 2028.

The bill was converted from amended Senate format to enrolled format: amendment history dates removed, 'Passed the Assembly August 20, 2026' and 'Passed the Senate August 19, 2026' added, Governor's receipt block added, line-number annotations removed throughout, and page numbering adjusted.

The date by which commercial financing providers and brokers must obtain a license (and the operative date of Section 22100.6) was changed from January 1, 2028 to July 1, 2028, giving businesses an additional six months to secure licensure before the prohibition takes effect.

The amendment to Section 22163 of the Financial Code was dropped from the bill. That provision would have authorized the commissioner to require that rates of charge, if stated by a licensee, be stated fully and clearly to prevent misunderstanding by prospective borrowers, recipients, or property owners. The existing law already contains a similar requirement, so the amendment may have been deemed redundant.

The bill now amends, renumbers, and adds Section 22807 of the Financial Code, introducing a new provision not present in the prior version.

Sections 22152, 22154, and 22155 were removed from the list of sections being amended, narrowing the bill's reach into those specific provisions.

The legislative counsel's digest was updated to state that the commissioner may require rates of charge be stated clearly to prevent misunderstanding by 'prospective borrowers or recipients' rather than 'prospective borrowers or property owners,' broadening the class of protected parties for rate disclosure requirements.

All amendments to Section 94918.5 of the Education Code and Sections 90000, 90002, 90003, and 90005 of the Financial Code (CCFPL provisions) were removed. The bill no longer expands CCFPL purposes to protect small businesses or requires registration with the commissioner under the CCFPL framework.

New Section 22002 creates a class of exempt persons under Article XV, Section 1 of the California Constitution, including any person licensed under Division 9. It also preserves existing exemptions for personal property brokers, consumer finance lenders, and commercial finance lenders formerly regulated under their respective laws.

The state-mandated local program designation was changed from 'no' to 'yes,' indicating the bill now triggers state reimbursement obligations to local agencies and school districts.

New subdivision (b) to Section 22100.6 provides a transition period: a person may continue operating as a commercial financing provider or broker if they submit a complete license application on or before January 1, 2028 and are awaiting approval or denial.

All operative dates for the new commercial financing provisions were changed from January 1, 2019 to January 1, 2028.

The regulatory framework for commercial financing shifted from the CCFPL (Sections 90000-90009) to the California Financing Law (Division 9, Sections 22001+). All CCFPL amendments (Sections 90000, 90002, 90003, 90005, 90004.1, 90009.1) were removed and replaced with amendments to CFL sections (22001, 22007, 22010, 22101-22169, 22700, 22701, 22712, 22714) plus a new Chapter 3.1 (Section 22655+) in Division 9.

The amendment to Education Code Section 94918.5, which addressed the relationship between the bureau's administration of private postsecondary institutions and DFPI jurisdiction over covered persons, was removed from the bill entirely.

Section 22001(8) adds a new purpose to the CFL: 'To protect small businesses against unfair practices by some commercial financing providers, having due regard for the interest of legitimate and scrupulous commercial financing providers.' This replaces the CCFPL purpose expansion that was in the Assembly version.

A new Chapter 3.1 (commencing with Section 22655) is added to Division 9 of the Financial Code, which would contain the substantive definitions and regulations for commercial financing transactions including accounts receivable purchases, factoring, asset-based lending, commercial loans, commercial open-end credit plans, and lease financing intended primarily for non-personal use.

New Section 22100.6 requires a person to obtain a license (not merely register) from the commissioner before engaging in the business of a commercial financing provider or commercial financing broker, effective January 1, 2028. This is a higher regulatory bar than the Assembly version's registration requirement under CCFPL Section 90004.1.

Conforming changes throughout Division 9 add 'commercial financing provider' and 'commercial financing broker' as license types alongside existing 'finance lender' and 'broker' categories, including in application procedures (22101), criminal history checks (22101.5), branch office licensing (22102), fees of $100 investigation plus $200 application (22103), minimum net worth of $25,000 (22104), investigations (22105), license content (22106), annual assessments with $250 minimum per location (22107), denial grounds (22109), and surety bonds of $25,000 (22112).

New Sections 22021 and 22022 define 'recipient' and 'commercial financing'/'commercial financing provider' by reference to new Section 22655 (Chapter 3.1 of Division 9). The CCFPL definitions in former Section 90005 were removed.

The 'state-mandated local program' field in the bill's header changed from 'no' to 'no yes,' which appears to be a drafting error or indicates the answer may have changed to 'yes.'

Removed the provision in Section 90002(b)(2) stating that 'Nothing in this subdivision shall be deemed to prevent the commissioner from using the authority provided by this division to enforce Section 90003.' This means persons acting under DFPI-issued licenses (escrow agents, finance lenders, broker-dealers, mortgage lenders, check sellers, capital access companies, and financial institutions) are now fully exempt from Section 90003's prohibition on unfair, deceptive, or abusive practices, rather than being subject to it despite the general exemption.

Added paragraph (2) to the definition of 'commercial financing transaction' in Section 90005(f), excluding transactions where the recipient is a dealer (as defined in Vehicle Code Section 285), an affiliate of the dealer, a vehicle rental company, or an affiliate of the company, when the transaction is pursuant to a specific commercial financing offer or commercial open-end credit plan of at least $50,000. This narrows the scope of regulated commercial financing by carving out larger dealer and fleet transactions.

Restructured Section 90002(b) from a two-paragraph format with lettered subparagraphs (A)-(G) to a flat numbered list (1)-(7), and corrected a garbled definition where 'Department' and 'California resident' were merged together in the original text.

Updated cross-references throughout from 'subdivision (f) of Section 90005' to simply 'Section 90005' to reflect the reorganized definitions section, and corrected 'Covid-19' to 'COVID-19' in the legislative findings.