For many years, the numerous financial disclosure requirements imposed upon consumer lenders, at both the State and Federal level, have not crossed over to commercial lending. This could change if California Senate Bill 1235 becomes law.
The measure was first proposed by Senator Steve Glazer, and it calls for “providers” of “commercial financing” to provide numerous disclosures about the terms of the proposed financing, While certain of the proposals may create greater clarity around the structure and cost of financing, it could also be a game-changer for commercial lenders and how they structure and document their transactions. The proposed law would be the first of its kind and could conceivably spark a change in the way online lenders operate throughout the country when working with small businesses.
The bill is expected to face its fair share of resistance as it works its way through the California state Assembly. Those in the commercial lending industry stand opposed to it for a variety of reasons, and there are also many politicians who aren’t sure if it’s the best way to deal with commercial lender disclosure requirements. If the proposed Bill makes it through the Assembly and becomes law, it could serve as a blueprint for other states. Commercial lenders would have to revamp their processes and documentation specific to California commercial financing arrangements in order to comply with the numerous disclosure requirements contemplated in the Bill.
The world of commercial lending is changing rapidly. Portfolio Financial Servicing Company is always keeping a close eye on it and providing financial services that aim to keep the economy strong. Contact us today to learn how we can improve your financial future.