On July 26, 2019, the California Department of Business
Oversight (DBO) issued a draft regulation and draft disclosures to implement the state's
first-of-its-kind commercial financing disclosure law enacted last
year. With this draft regulation, the DBO wades into uncharted
waters in implementing the first law requiring disclosures of key
terms in connection with certain commercial financings by
non-banks.
BACKGROUND
As discussed in our previous
Client Alert, in September 2018, California enacted SB 1235
(the Act), which requires consumer-style disclosures for commercial
financing. The goal of the Act is to provide recipients more
information about the actual costs and terms of financing
agreements, as well as help them comparison shop for financing. The
Act provides a general framework for the disclosures, but directs
the DBO to promulgate implementing regulations with the details.
The Act's disclosure requirements will not become effective
until the DBO has
