Small Business Truth-in-Lending Protections

Working Solutions is proud to support our partners at the Responsible Business Lending Coalition in advancing implementation of CA SB 1235, the nation’s first small business truth-in-lending protections bill, which will ensure a fairer marketplace for California’s small businesses.

Below is a brief summary of our recommendations for the updated rule:

• Disclosure must enable comparison between financing options: Clarify that, in instances where multiple financing options are being presented, the full disclosure will be made available on all options to aid comparison between them, rather than only on the single option the applicant chooses to move forward with.

• Prevent misleading “gaming” of APR estimations: Ensure that merchant cash advance companies’ flexibility in estimating terms for disclosure is paired with sufficient accountability by requiring reporting to DFPI that compares any estimated terms disclosed vs. the actual terms determined retrospectively.

• Formatting requirements should permit additional flexibility: Ensure there is sufficient flexibility for disclosures to appear effectively on mobile devices, and address unforeseen formatting challenges.

Learn more here.