California 2023-2024 Regular Session

California Senate Bill SB1521 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	Senate Bill No. ~~1521 CHAPTER 194~~ An act to amend Section 1799.302 of the Civil Code, relating to finance. ~~[ Approved by Governor August 19, 2024. Filed with Secretary of State August 19, 2024. ]~~ LEGISLATIVE COUNSEL'S DIGESTSB 1521, Committee on Banking and Financial Institutions. Commercial financing transactions: fees.Existing law prohibits a covered entity, as defined, from charging certain fees in connection with a commercial financing transaction with a small business or small business owner, including a fee for monitoring the small business collateral, unless the underlying commercial financing transaction is delinquent for more than 60 days.This bill would additionally provide that the above-described prohibition does not apply if the commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged or if the fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as specified.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 1799.302 of the Civil Code is amended to read:1799.302. A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:(a) A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferors account.(b) A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.(c) A fee in addition to an 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.(d) (1) A fee for monitoring the small business collateral.(2) Paragraph (1) does not apply if any of the following are true:(A) The commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged.(B) The fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as described in Section 943 of Subchapter 3 of Chapter 3 of Title 10 of the California Code of Regulations.(C) The commercial financing transaction is delinquent for more than 60 days.(e) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business assets that exceeds 150 percent of the cost of the filing or termination.
	1	+	Enrolled August 09, 2024 Passed IN Senate May 09, 2024 Passed IN Assembly August 08, 2024 CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Senate Bill No. 1521Introduced by Committee on Banking and Financial Institutions (Senators Limn (Chair), Bradford, Caballero, Min, Nguyen, Niello, and Portantino)March 11, 2024 An act to amend Section 1799.302 of the Civil Code, relating to finance.LEGISLATIVE COUNSEL'S DIGESTSB 1521, Committee on Banking and Financial Institutions. Commercial financing transactions: fees.Existing law prohibits a covered entity, as defined, from charging certain fees in connection with a commercial financing transaction with a small business or small business owner, including a fee for monitoring the small business collateral, unless the underlying commercial financing transaction is delinquent for more than 60 days.This bill would additionally provide that the above-described prohibition does not apply if the commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged or if the fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as specified.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 1799.302 of the Civil Code is amended to read:1799.302. A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:(a) A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferors account.(b) A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.(c) A fee in addition to an 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.(d) (1) A fee for monitoring the small business collateral.(2) Paragraph (1) does not apply if any of the following are true:(A) The commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged.(B) The fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as described in Section 943 of Subchapter 3 of Chapter 3 of Title 10 of the California Code of Regulations.(C) The commercial financing transaction is delinquent for more than 60 days.(e) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business assets that exceeds 150 percent of the cost of the filing or termination.
2	2
3		-	Senate Bill No. ~~1521 CHAPTER 194~~ An act to amend Section 1799.302 of the Civil Code, relating to finance. ~~[ Approved by Governor August 19, 2024. Filed with Secretary of State August 19, 2024. ]~~ LEGISLATIVE COUNSEL'S DIGESTSB 1521, Committee on Banking and Financial Institutions. Commercial financing transactions: fees.Existing law prohibits a covered entity, as defined, from charging certain fees in connection with a commercial financing transaction with a small business or small business owner, including a fee for monitoring the small business collateral, unless the underlying commercial financing transaction is delinquent for more than 60 days.This bill would additionally provide that the above-described prohibition does not apply if the commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged or if the fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as specified.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
	3	+	Enrolled August 09, 2024 Passed IN Senate May 09, 2024 Passed IN Assembly August 08, 2024 CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Senate Bill No. 1521Introduced by Committee on Banking and Financial Institutions (Senators Limn (Chair), Bradford, Caballero, Min, Nguyen, Niello, and Portantino)March 11, 2024 An act to amend Section 1799.302 of the Civil Code, relating to finance.LEGISLATIVE COUNSEL'S DIGESTSB 1521, Committee on Banking and Financial Institutions. Commercial financing transactions: fees.Existing law prohibits a covered entity, as defined, from charging certain fees in connection with a commercial financing transaction with a small business or small business owner, including a fee for monitoring the small business collateral, unless the underlying commercial financing transaction is delinquent for more than 60 days.This bill would additionally provide that the above-described prohibition does not apply if the commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged or if the fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as specified.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
4	4
5		-	Senate ~~Bill No.~~ ~~1521 CHAPTER 194~~
	5	+	Enrolled August 09, 2024 Passed IN Senate May 09, 2024 Passed IN Assembly August 08, 2024
6	6
7		-	Senate Bill No. 1521
	7	+	Enrolled August 09, 2024
	8	+	Passed IN Senate May 09, 2024
	9	+	Passed IN Assembly August 08, 2024
8	10
9		-	CHAPTER 194
	11	+	CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION
	12	+
	13	+	Senate Bill
	14	+
	15	+	No. 1521
	16	+
	17	+	Introduced by Committee on Banking and Financial Institutions (Senators Limn (Chair), Bradford, Caballero, Min, Nguyen, Niello, and Portantino)March 11, 2024
	18	+
	19	+	Introduced by Committee on Banking and Financial Institutions (Senators Limn (Chair), Bradford, Caballero, Min, Nguyen, Niello, and Portantino)
	20	+	March 11, 2024
10	21
11	22		An act to amend Section 1799.302 of the Civil Code, relating to finance.
12		-
13		-	[ Approved by Governor August 19, 2024. Filed with Secretary of State August 19, 2024. ]
14	23
15	24		LEGISLATIVE COUNSEL'S DIGEST
16	25
17	26		## LEGISLATIVE COUNSEL'S DIGEST
18	27
19	28		SB 1521, Committee on Banking and Financial Institutions. Commercial financing transactions: fees.
20	29
21	30		Existing law prohibits a covered entity, as defined, from charging certain fees in connection with a commercial financing transaction with a small business or small business owner, including a fee for monitoring the small business collateral, unless the underlying commercial financing transaction is delinquent for more than 60 days.This bill would additionally provide that the above-described prohibition does not apply if the commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged or if the fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as specified.
22	31
23	32		Existing law prohibits a covered entity, as defined, from charging certain fees in connection with a commercial financing transaction with a small business or small business owner, including a fee for monitoring the small business collateral, unless the underlying commercial financing transaction is delinquent for more than 60 days.
24	33
25	34		This bill would additionally provide that the above-described prohibition does not apply if the commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged or if the fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as specified.
26	35
27	36		## Digest Key
28	37
29	38		## Bill Text
30	39
31	40		The people of the State of California do enact as follows:SECTION 1. Section 1799.302 of the Civil Code is amended to read:1799.302. A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:(a) A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferors account.(b) A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.(c) A fee in addition to an 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.(d) (1) A fee for monitoring the small business collateral.(2) Paragraph (1) does not apply if any of the following are true:(A) The commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged.(B) The fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as described in Section 943 of Subchapter 3 of Chapter 3 of Title 10 of the California Code of Regulations.(C) The commercial financing transaction is delinquent for more than 60 days.(e) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business assets that exceeds 150 percent of the cost of the filing or termination.
32	41
33	42		The people of the State of California do enact as follows:
34	43
35	44		## The people of the State of California do enact as follows:
36	45
37	46		SECTION 1. Section 1799.302 of the Civil Code is amended to read:1799.302. A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:(a) A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferors account.(b) A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.(c) A fee in addition to an 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.(d) (1) A fee for monitoring the small business collateral.(2) Paragraph (1) does not apply if any of the following are true:(A) The commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged.(B) The fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as described in Section 943 of Subchapter 3 of Chapter 3 of Title 10 of the California Code of Regulations.(C) The commercial financing transaction is delinquent for more than 60 days.(e) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business assets that exceeds 150 percent of the cost of the filing or termination.
38	47
39	48		SECTION 1. Section 1799.302 of the Civil Code is amended to read:
40	49
41	50		### SECTION 1.
42	51
43	52		1799.302. A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:(a) A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferors account.(b) A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.(c) A fee in addition to an 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.(d) (1) A fee for monitoring the small business collateral.(2) Paragraph (1) does not apply if any of the following are true:(A) The commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged.(B) The fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as described in Section 943 of Subchapter 3 of Chapter 3 of Title 10 of the California Code of Regulations.(C) The commercial financing transaction is delinquent for more than 60 days.(e) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business assets that exceeds 150 percent of the cost of the filing or termination.
44	53
45	54		1799.302. A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:(a) A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferors account.(b) A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.(c) A fee in addition to an 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.(d) (1) A fee for monitoring the small business collateral.(2) Paragraph (1) does not apply if any of the following are true:(A) The commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged.(B) The fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as described in Section 943 of Subchapter 3 of Chapter 3 of Title 10 of the California Code of Regulations.(C) The commercial financing transaction is delinquent for more than 60 days.(e) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business assets that exceeds 150 percent of the cost of the filing or termination.
46	55
47	56		1799.302. A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:(a) A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferors account.(b) A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.(c) A fee in addition to an 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.(d) (1) A fee for monitoring the small business collateral.(2) Paragraph (1) does not apply if any of the following are true:(A) The commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged.(B) The fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as described in Section 943 of Subchapter 3 of Chapter 3 of Title 10 of the California Code of Regulations.(C) The commercial financing transaction is delinquent for more than 60 days.(e) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business assets that exceeds 150 percent of the cost of the filing or termination.
48	57
49	58
50	59
51	60		1799.302. A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:
52	61
53	62		(a) A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferors account.
54	63
55	64		(b) A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.
56	65
57	66		(c) A fee in addition to an 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.
58	67
59	68		(d) (1) A fee for monitoring the small business collateral.
60	69
61	70		(2) Paragraph (1) does not apply if any of the following are true:
62	71
63	72		(A) The commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged.
64	73
65	74		(B) The fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as described in Section 943 of Subchapter 3 of Chapter 3 of Title 10 of the California Code of Regulations.
66	75
67	76		(C) The commercial financing transaction is delinquent for more than 60 days.
68	77
69	78		(e) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business assets that exceeds 150 percent of the cost of the filing or termination.