Commercial financing in California is subject to disclosure requirements that don't exist in every state, and the rules work differently depending on the size of the deal and who's actually extending the credit. Here's the general shape of it — this is background information, not legal advice, and the specifics of any individual deal should be confirmed with the provider and, where it matters to you, your own counsel.
What's covered
California's commercial financing disclosure regime, administered by the state's Department of Financial Protection and Innovation (DFPI), applies to commercial financing offers of $500,000 or less. It is not limited to any one product type — it isn't a sales-based-financing-only rule the way some other states' laws are.
Who's exempt
Depository institutions (banks and credit unions) are exempt from this particular disclosure regime. That matters because it means the rule's practical reach is concentrated on non-bank commercial finance providers and brokers — the category most independent lenders, factoring companies, and specialty finance providers fall into.
What the rule actually requires
At a high level, the obligation runs to the provider — the company actually extending the financing — to deliver a written disclosure covering the terms of the offer before the transaction is completed. Where a broker is involved in the transaction, the provider is responsible for ensuring that disclosure is actually delivered to the borrower, and broker compensation connected to the transaction is required to be disclosed as well.
Why this matters if you're shopping for financing under $500K in California
- If you're offered commercial financing at or under this threshold from a non-bank provider, you should receive a written disclosure of the offer's terms before you're expected to sign anything.
- If a broker is involved, ask who's compensating them and how — that's information the rule is specifically designed to surface, not something you should have to guess at.
- If your deal is with a bank or credit union, or the amount is above the threshold, this particular disclosure regime doesn't apply the same way — other rules may still govern the transaction.
State disclosure and broker-registration rules in this space have changed in recent years and continue to evolve; treat the above as the general shape of the rule rather than the final word on any specific transaction, and confirm current requirements with the provider or a licensed attorney if it matters to your decision.
If you're evaluating commercial financing in California and want a plain-language walkthrough of what you're being offered, get your full pre-qualification estimate and a BizyFi advisor can talk through it with you.