Bill > SB362

This bill aims to enhance transparency and prevent deceptive marketing practices in commercial financing for small businesses by establishing new rules for how financial providers communicate their financing costs. The legislation prohibits providers from using terms like "interest" or "rate" in ways that could mislead potential recipients, and requires providers to state the Annual Percentage Rate (APR) when offering specific financing terms during an application process. The bill builds upon a 2018 California law that first required commercial financing providers to disclose the annualized cost of financing, and seeks to address confusing marketing tactics such as describing credit prices using non-annual rates or using terms like "simple interest" or "factor rate" that might obscure the true cost of financing. The bill also modifies enforcement mechanisms, stipulating that violations will be treated as breaches under either the California Financing Law or the California Consumer Financial Protection Law, depending on the specific transaction. Additionally, the legislation clarifies that using "interest" or "rate" is not considered deceptive if the metric is an annual interest rate expressed as a margin over an index rate. By implementing these provisions, the bill aims to help small businesses more accurately evaluate financing offers and make more informed financial decisions.

Budget and Finance, Business and Industry, Justice

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260SB362