Bill Text: CA SB666 | 2023-2024 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Small business: commercial financing transactions.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2023-10-13 - Chaptered by Secretary of State. Chapter 881, Statutes of 2023. [SB666 Detail]
Download: California-2023-SB666-Amended.html
NOYES
Local Program:
NOYES
SECTION 1.
Bill Title: Small business: commercial financing transactions.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2023-10-13 - Chaptered by Secretary of State. Chapter 881, Statutes of 2023. [SB666 Detail]
Download: California-2023-SB666-Amended.html
|
Amended
IN
Senate
March 21, 2023 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Senate Bill
No. 666
| Introduced by Senator Min |
February 16, 2023 |
An act to add Section 22601.1 to the Financial Code, relating to small business.
LEGISLATIVE COUNSEL'S DIGEST
SB 666, as amended, Min.
Small business. business: loan fees.
Existing law, the California Financing Law (CFL), prohibits a person from engaging in the business of a finance lender or broker without obtaining a license from the Commissioner of Financial Protection and Innovation. The CFL generally regulates commercial loans made by licensees. A willful violation of the CFL is a crime, except as specified. The law defines various terms for these purposes.
This bill would prohibit a licensee from charging specified fees in connection with a financing transaction with a small business, including, among others, a fee for accepting or processing a payment required by the terms of the financing contract as an automated
clearinghouse transfer debit, a fee for providing a small business with documentation prepared by the licensee that contains a statement of the amount due to satisfy the remaining debt, as specified, and a fee in addition to a loan origination fee that does not have a clear corresponding service provided for the fee, as specified. The bill would define various terms for these purposes. Because a willful violation of these provisions would be a crime, the 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.
Existing law establishes the California Infrastructure and Economic Development Bank within the Governor’s Office of Business and Economic Development and requires the bank, among other things, to administer the California Small Business Finance Center that administers programs to assist businesses seeking new capital resources, including, but not limited to, the Small Business Loan Guarantee Program.
This bill would state the intent of the Legislature to enact legislation that would expand the access to capital for California’s small businesses.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 22601.1 is added to the Financial Code, to read:22601.1.
(a) For purposes of this section, the following definitions apply:(1) “Automated clearinghouse” means any federal reserve bank, or an organization established in agreement with the National Automated Clearing House Association, that operates as a clearinghouse for transmitting or receiving entries between banks or bank accounts and authorizes an electronic transfer of funds between these banks or bank accounts.
(2) “Small business” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and that, together with affiliates, has
100 or fewer employees and average annual gross receipts of fifteen million dollars ($15,000,000) or less over the previous three years.
(b) A licensee shall not charge any of the following in connection with a financing transaction with a small business:
(1) A fee for accepting or processing a payment required by the terms of the financing contract as an automated clearinghouse transfer debit.
(2) A fee for providing a small business with documentation prepared by the licensee that contains a statement of the amount due to satisfy the remaining debt, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.
(3) A fee in addition to a loan origination fee that
does not have a clear corresponding service provided for the fee, including, but not limited to, a risk assessment, due diligence, or platform fee.
(4) A fee for monitoring the small business’s collateral, unless the underlying loan is delinquent for more than 90 days.
(5) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business’s assets that exceeds 150 percent of the cost of the filing or termination.
SEC. 2.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.It is the intent of the Legislature to enact legislation that would expand the access to capital for California’s small businesses.
