CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 825Introduced by Senator LimnFebruary 21, 2025 An act to amend Section 22304.5 of the Financial Code, relating to finance. LEGISLATIVE COUNSEL'S DIGESTSB 825, as introduced, Limn. Consumer loans.Existing law, the California Financing Law, generally provides for the licensure and regulation of finance lenders and brokers. A willful violation of the law is a crime, except as specified. Existing law imposes various requirements on finance lenders making loans with a bona fide principal amount of at least $2,500 but less than $10,000. Existing law requires a finance lender to, prior to disbursement, offer the borrower either a credit education program or seminar that has been previously reviewed and approved by the commissioner, or a credit education program or seminar provided by an independent third party that has been previously reviewed and approved by the commissioner.This bill would recast those provisions to specify that in either case, whether provided directly or by a third party, the program or seminar is required to be previously reviewed and approved by the commissioner.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 22304.5 of the Financial Code is amended to read:22304.5. (a) For any loan of a bona fide principal amount of at least two thousand five hundred dollars ($2,500) but less than ten thousand dollars ($10,000), as determined in accordance with Section 22251, a finance lender may contract for or receive charges at a rate not exceeding an annual simple interest rate of 36 percent per annum plus the Federal Funds Rate.(b) As used in this section, Federal Funds Rate means the rate published by the Board of Governors of the Federal Reserve System in its Statistical Release H.15 Selected Interest Rates and in effect as of the first day of the month immediately preceding the month during which the loan is consummated. If the Federal Reserve System ceases publication of the federal funds rate, the commissioner shall designate a substantially equivalent index.(c) The following rules shall also apply to finance lenders that make loans subject to this section:(1) The finance lender shall report each borrowers payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. For purposes of this section, a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis is one that meets the definition in Section 603(p) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a(p)).(A) A finance lender that is licensed under this division prior to January 1, 2020, and that is not approved as a data furnisher prior to January 1, 2020, by at least one of the consumer reporting agencies to which reporting is required pursuant to this section, shall obtain that approval by July 1, 2020, and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after January 1, 2020.(B) A newly licensed finance lender that is not approved as a data furnisher by at least one of the consumer reporting agencies to which reporting is required pursuant to this section shall have up to one calendar year in which to obtain that approval and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after the lenders date of licensure.(2) Before disbursing loan proceeds to a borrower, the finance lender shall either offer the borrower a credit education program or seminar that has previously been reviewed and approved by the commissioner for use in complying with this section or offer the borrower a credit education program or seminar seminar, which may be provided either by the lender directly or by an independent third party, which has previously been party. In either case, the education program or seminar shall be previously reviewed and approved by the commissioner for use in complying with this section. A credit education program or seminar may be provided in writing, electronically, or orally, but, if provided orally, shall be accompanied by written or electronic materials that a prospective borrower can retain or access following the conclusion of the program or seminar.(3) To be eligible for approval by the commissioner for use in complying with this section, a credit education program or seminar shall, at a minimum, cover all of the following topics regarding credit scores and credit reports provided by consumer reporting agencies described in paragraph (1):(A) The value of establishing a credit score.(B) Ways to establish a credit score.(C) Ways to improve a credit score.(D) Factors that impact a credit score.(E) Ways to check ones credit score.(F) Ways to obtain a free copy of ones credit report.(G) Ways to dispute an error in ones credit report.(4) A credit education program or seminar offered pursuant to this section shall be offered at no cost to the borrower.(5) A borrower shall not be required to participate in a credit education program or seminar offered by a lender or independent third party.
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 825Introduced by Senator LimnFebruary 21, 2025 An act to amend Section 22304.5 of the Financial Code, relating to finance. LEGISLATIVE COUNSEL'S DIGESTSB 825, as introduced, Limn. Consumer loans.Existing law, the California Financing Law, generally provides for the licensure and regulation of finance lenders and brokers. A willful violation of the law is a crime, except as specified. Existing law imposes various requirements on finance lenders making loans with a bona fide principal amount of at least $2,500 but less than $10,000. Existing law requires a finance lender to, prior to disbursement, offer the borrower either a credit education program or seminar that has been previously reviewed and approved by the commissioner, or a credit education program or seminar provided by an independent third party that has been previously reviewed and approved by the commissioner.This bill would recast those provisions to specify that in either case, whether provided directly or by a third party, the program or seminar is required to be previously reviewed and approved by the commissioner.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION
Senate Bill
No. 825
Introduced by Senator LimnFebruary 21, 2025
Introduced by Senator Limn
February 21, 2025
An act to amend Section 22304.5 of the Financial Code, relating to finance.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
SB 825, as introduced, Limn. Consumer loans.
Existing law, the California Financing Law, generally provides for the licensure and regulation of finance lenders and brokers. A willful violation of the law is a crime, except as specified. Existing law imposes various requirements on finance lenders making loans with a bona fide principal amount of at least $2,500 but less than $10,000. Existing law requires a finance lender to, prior to disbursement, offer the borrower either a credit education program or seminar that has been previously reviewed and approved by the commissioner, or a credit education program or seminar provided by an independent third party that has been previously reviewed and approved by the commissioner.This bill would recast those provisions to specify that in either case, whether provided directly or by a third party, the program or seminar is required to be previously reviewed and approved by the commissioner.
Existing law, the California Financing Law, generally provides for the licensure and regulation of finance lenders and brokers. A willful violation of the law is a crime, except as specified. Existing law imposes various requirements on finance lenders making loans with a bona fide principal amount of at least $2,500 but less than $10,000.
Existing law requires a finance lender to, prior to disbursement, offer the borrower either a credit education program or seminar that has been previously reviewed and approved by the commissioner, or a credit education program or seminar provided by an independent third party that has been previously reviewed and approved by the commissioner.
This bill would recast those provisions to specify that in either case, whether provided directly or by a third party, the program or seminar is required to be previously reviewed and approved by the commissioner.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Section 22304.5 of the Financial Code is amended to read:22304.5. (a) For any loan of a bona fide principal amount of at least two thousand five hundred dollars ($2,500) but less than ten thousand dollars ($10,000), as determined in accordance with Section 22251, a finance lender may contract for or receive charges at a rate not exceeding an annual simple interest rate of 36 percent per annum plus the Federal Funds Rate.(b) As used in this section, Federal Funds Rate means the rate published by the Board of Governors of the Federal Reserve System in its Statistical Release H.15 Selected Interest Rates and in effect as of the first day of the month immediately preceding the month during which the loan is consummated. If the Federal Reserve System ceases publication of the federal funds rate, the commissioner shall designate a substantially equivalent index.(c) The following rules shall also apply to finance lenders that make loans subject to this section:(1) The finance lender shall report each borrowers payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. For purposes of this section, a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis is one that meets the definition in Section 603(p) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a(p)).(A) A finance lender that is licensed under this division prior to January 1, 2020, and that is not approved as a data furnisher prior to January 1, 2020, by at least one of the consumer reporting agencies to which reporting is required pursuant to this section, shall obtain that approval by July 1, 2020, and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after January 1, 2020.(B) A newly licensed finance lender that is not approved as a data furnisher by at least one of the consumer reporting agencies to which reporting is required pursuant to this section shall have up to one calendar year in which to obtain that approval and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after the lenders date of licensure.(2) Before disbursing loan proceeds to a borrower, the finance lender shall either offer the borrower a credit education program or seminar that has previously been reviewed and approved by the commissioner for use in complying with this section or offer the borrower a credit education program or seminar seminar, which may be provided either by the lender directly or by an independent third party, which has previously been party. In either case, the education program or seminar shall be previously reviewed and approved by the commissioner for use in complying with this section. A credit education program or seminar may be provided in writing, electronically, or orally, but, if provided orally, shall be accompanied by written or electronic materials that a prospective borrower can retain or access following the conclusion of the program or seminar.(3) To be eligible for approval by the commissioner for use in complying with this section, a credit education program or seminar shall, at a minimum, cover all of the following topics regarding credit scores and credit reports provided by consumer reporting agencies described in paragraph (1):(A) The value of establishing a credit score.(B) Ways to establish a credit score.(C) Ways to improve a credit score.(D) Factors that impact a credit score.(E) Ways to check ones credit score.(F) Ways to obtain a free copy of ones credit report.(G) Ways to dispute an error in ones credit report.(4) A credit education program or seminar offered pursuant to this section shall be offered at no cost to the borrower.(5) A borrower shall not be required to participate in a credit education program or seminar offered by a lender or independent third party.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Section 22304.5 of the Financial Code is amended to read:22304.5. (a) For any loan of a bona fide principal amount of at least two thousand five hundred dollars ($2,500) but less than ten thousand dollars ($10,000), as determined in accordance with Section 22251, a finance lender may contract for or receive charges at a rate not exceeding an annual simple interest rate of 36 percent per annum plus the Federal Funds Rate.(b) As used in this section, Federal Funds Rate means the rate published by the Board of Governors of the Federal Reserve System in its Statistical Release H.15 Selected Interest Rates and in effect as of the first day of the month immediately preceding the month during which the loan is consummated. If the Federal Reserve System ceases publication of the federal funds rate, the commissioner shall designate a substantially equivalent index.(c) The following rules shall also apply to finance lenders that make loans subject to this section:(1) The finance lender shall report each borrowers payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. For purposes of this section, a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis is one that meets the definition in Section 603(p) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a(p)).(A) A finance lender that is licensed under this division prior to January 1, 2020, and that is not approved as a data furnisher prior to January 1, 2020, by at least one of the consumer reporting agencies to which reporting is required pursuant to this section, shall obtain that approval by July 1, 2020, and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after January 1, 2020.(B) A newly licensed finance lender that is not approved as a data furnisher by at least one of the consumer reporting agencies to which reporting is required pursuant to this section shall have up to one calendar year in which to obtain that approval and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after the lenders date of licensure.(2) Before disbursing loan proceeds to a borrower, the finance lender shall either offer the borrower a credit education program or seminar that has previously been reviewed and approved by the commissioner for use in complying with this section or offer the borrower a credit education program or seminar seminar, which may be provided either by the lender directly or by an independent third party, which has previously been party. In either case, the education program or seminar shall be previously reviewed and approved by the commissioner for use in complying with this section. A credit education program or seminar may be provided in writing, electronically, or orally, but, if provided orally, shall be accompanied by written or electronic materials that a prospective borrower can retain or access following the conclusion of the program or seminar.(3) To be eligible for approval by the commissioner for use in complying with this section, a credit education program or seminar shall, at a minimum, cover all of the following topics regarding credit scores and credit reports provided by consumer reporting agencies described in paragraph (1):(A) The value of establishing a credit score.(B) Ways to establish a credit score.(C) Ways to improve a credit score.(D) Factors that impact a credit score.(E) Ways to check ones credit score.(F) Ways to obtain a free copy of ones credit report.(G) Ways to dispute an error in ones credit report.(4) A credit education program or seminar offered pursuant to this section shall be offered at no cost to the borrower.(5) A borrower shall not be required to participate in a credit education program or seminar offered by a lender or independent third party.
SECTION 1. Section 22304.5 of the Financial Code is amended to read:
### SECTION 1.
22304.5. (a) For any loan of a bona fide principal amount of at least two thousand five hundred dollars ($2,500) but less than ten thousand dollars ($10,000), as determined in accordance with Section 22251, a finance lender may contract for or receive charges at a rate not exceeding an annual simple interest rate of 36 percent per annum plus the Federal Funds Rate.(b) As used in this section, Federal Funds Rate means the rate published by the Board of Governors of the Federal Reserve System in its Statistical Release H.15 Selected Interest Rates and in effect as of the first day of the month immediately preceding the month during which the loan is consummated. If the Federal Reserve System ceases publication of the federal funds rate, the commissioner shall designate a substantially equivalent index.(c) The following rules shall also apply to finance lenders that make loans subject to this section:(1) The finance lender shall report each borrowers payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. For purposes of this section, a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis is one that meets the definition in Section 603(p) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a(p)).(A) A finance lender that is licensed under this division prior to January 1, 2020, and that is not approved as a data furnisher prior to January 1, 2020, by at least one of the consumer reporting agencies to which reporting is required pursuant to this section, shall obtain that approval by July 1, 2020, and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after January 1, 2020.(B) A newly licensed finance lender that is not approved as a data furnisher by at least one of the consumer reporting agencies to which reporting is required pursuant to this section shall have up to one calendar year in which to obtain that approval and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after the lenders date of licensure.(2) Before disbursing loan proceeds to a borrower, the finance lender shall either offer the borrower a credit education program or seminar that has previously been reviewed and approved by the commissioner for use in complying with this section or offer the borrower a credit education program or seminar seminar, which may be provided either by the lender directly or by an independent third party, which has previously been party. In either case, the education program or seminar shall be previously reviewed and approved by the commissioner for use in complying with this section. A credit education program or seminar may be provided in writing, electronically, or orally, but, if provided orally, shall be accompanied by written or electronic materials that a prospective borrower can retain or access following the conclusion of the program or seminar.(3) To be eligible for approval by the commissioner for use in complying with this section, a credit education program or seminar shall, at a minimum, cover all of the following topics regarding credit scores and credit reports provided by consumer reporting agencies described in paragraph (1):(A) The value of establishing a credit score.(B) Ways to establish a credit score.(C) Ways to improve a credit score.(D) Factors that impact a credit score.(E) Ways to check ones credit score.(F) Ways to obtain a free copy of ones credit report.(G) Ways to dispute an error in ones credit report.(4) A credit education program or seminar offered pursuant to this section shall be offered at no cost to the borrower.(5) A borrower shall not be required to participate in a credit education program or seminar offered by a lender or independent third party.
22304.5. (a) For any loan of a bona fide principal amount of at least two thousand five hundred dollars ($2,500) but less than ten thousand dollars ($10,000), as determined in accordance with Section 22251, a finance lender may contract for or receive charges at a rate not exceeding an annual simple interest rate of 36 percent per annum plus the Federal Funds Rate.(b) As used in this section, Federal Funds Rate means the rate published by the Board of Governors of the Federal Reserve System in its Statistical Release H.15 Selected Interest Rates and in effect as of the first day of the month immediately preceding the month during which the loan is consummated. If the Federal Reserve System ceases publication of the federal funds rate, the commissioner shall designate a substantially equivalent index.(c) The following rules shall also apply to finance lenders that make loans subject to this section:(1) The finance lender shall report each borrowers payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. For purposes of this section, a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis is one that meets the definition in Section 603(p) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a(p)).(A) A finance lender that is licensed under this division prior to January 1, 2020, and that is not approved as a data furnisher prior to January 1, 2020, by at least one of the consumer reporting agencies to which reporting is required pursuant to this section, shall obtain that approval by July 1, 2020, and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after January 1, 2020.(B) A newly licensed finance lender that is not approved as a data furnisher by at least one of the consumer reporting agencies to which reporting is required pursuant to this section shall have up to one calendar year in which to obtain that approval and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after the lenders date of licensure.(2) Before disbursing loan proceeds to a borrower, the finance lender shall either offer the borrower a credit education program or seminar that has previously been reviewed and approved by the commissioner for use in complying with this section or offer the borrower a credit education program or seminar seminar, which may be provided either by the lender directly or by an independent third party, which has previously been party. In either case, the education program or seminar shall be previously reviewed and approved by the commissioner for use in complying with this section. A credit education program or seminar may be provided in writing, electronically, or orally, but, if provided orally, shall be accompanied by written or electronic materials that a prospective borrower can retain or access following the conclusion of the program or seminar.(3) To be eligible for approval by the commissioner for use in complying with this section, a credit education program or seminar shall, at a minimum, cover all of the following topics regarding credit scores and credit reports provided by consumer reporting agencies described in paragraph (1):(A) The value of establishing a credit score.(B) Ways to establish a credit score.(C) Ways to improve a credit score.(D) Factors that impact a credit score.(E) Ways to check ones credit score.(F) Ways to obtain a free copy of ones credit report.(G) Ways to dispute an error in ones credit report.(4) A credit education program or seminar offered pursuant to this section shall be offered at no cost to the borrower.(5) A borrower shall not be required to participate in a credit education program or seminar offered by a lender or independent third party.
22304.5. (a) For any loan of a bona fide principal amount of at least two thousand five hundred dollars ($2,500) but less than ten thousand dollars ($10,000), as determined in accordance with Section 22251, a finance lender may contract for or receive charges at a rate not exceeding an annual simple interest rate of 36 percent per annum plus the Federal Funds Rate.(b) As used in this section, Federal Funds Rate means the rate published by the Board of Governors of the Federal Reserve System in its Statistical Release H.15 Selected Interest Rates and in effect as of the first day of the month immediately preceding the month during which the loan is consummated. If the Federal Reserve System ceases publication of the federal funds rate, the commissioner shall designate a substantially equivalent index.(c) The following rules shall also apply to finance lenders that make loans subject to this section:(1) The finance lender shall report each borrowers payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. For purposes of this section, a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis is one that meets the definition in Section 603(p) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a(p)).(A) A finance lender that is licensed under this division prior to January 1, 2020, and that is not approved as a data furnisher prior to January 1, 2020, by at least one of the consumer reporting agencies to which reporting is required pursuant to this section, shall obtain that approval by July 1, 2020, and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after January 1, 2020.(B) A newly licensed finance lender that is not approved as a data furnisher by at least one of the consumer reporting agencies to which reporting is required pursuant to this section shall have up to one calendar year in which to obtain that approval and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after the lenders date of licensure.(2) Before disbursing loan proceeds to a borrower, the finance lender shall either offer the borrower a credit education program or seminar that has previously been reviewed and approved by the commissioner for use in complying with this section or offer the borrower a credit education program or seminar seminar, which may be provided either by the lender directly or by an independent third party, which has previously been party. In either case, the education program or seminar shall be previously reviewed and approved by the commissioner for use in complying with this section. A credit education program or seminar may be provided in writing, electronically, or orally, but, if provided orally, shall be accompanied by written or electronic materials that a prospective borrower can retain or access following the conclusion of the program or seminar.(3) To be eligible for approval by the commissioner for use in complying with this section, a credit education program or seminar shall, at a minimum, cover all of the following topics regarding credit scores and credit reports provided by consumer reporting agencies described in paragraph (1):(A) The value of establishing a credit score.(B) Ways to establish a credit score.(C) Ways to improve a credit score.(D) Factors that impact a credit score.(E) Ways to check ones credit score.(F) Ways to obtain a free copy of ones credit report.(G) Ways to dispute an error in ones credit report.(4) A credit education program or seminar offered pursuant to this section shall be offered at no cost to the borrower.(5) A borrower shall not be required to participate in a credit education program or seminar offered by a lender or independent third party.
22304.5. (a) For any loan of a bona fide principal amount of at least two thousand five hundred dollars ($2,500) but less than ten thousand dollars ($10,000), as determined in accordance with Section 22251, a finance lender may contract for or receive charges at a rate not exceeding an annual simple interest rate of 36 percent per annum plus the Federal Funds Rate.
(b) As used in this section, Federal Funds Rate means the rate published by the Board of Governors of the Federal Reserve System in its Statistical Release H.15 Selected Interest Rates and in effect as of the first day of the month immediately preceding the month during which the loan is consummated. If the Federal Reserve System ceases publication of the federal funds rate, the commissioner shall designate a substantially equivalent index.
(c) The following rules shall also apply to finance lenders that make loans subject to this section:
(1) The finance lender shall report each borrowers payment performance to at least one consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. For purposes of this section, a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis is one that meets the definition in Section 603(p) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a(p)).
(A) A finance lender that is licensed under this division prior to January 1, 2020, and that is not approved as a data furnisher prior to January 1, 2020, by at least one of the consumer reporting agencies to which reporting is required pursuant to this section, shall obtain that approval by July 1, 2020, and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after January 1, 2020.
(B) A newly licensed finance lender that is not approved as a data furnisher by at least one of the consumer reporting agencies to which reporting is required pursuant to this section shall have up to one calendar year in which to obtain that approval and, once approved, shall report borrower payment performance to that consumer reporting agency in connection with all loans originated under this section on and after the lenders date of licensure.
(2) Before disbursing loan proceeds to a borrower, the finance lender shall either offer the borrower a credit education program or seminar that has previously been reviewed and approved by the commissioner for use in complying with this section or offer the borrower a credit education program or seminar seminar, which may be provided either by the lender directly or by an independent third party, which has previously been party. In either case, the education program or seminar shall be previously reviewed and approved by the commissioner for use in complying with this section. A credit education program or seminar may be provided in writing, electronically, or orally, but, if provided orally, shall be accompanied by written or electronic materials that a prospective borrower can retain or access following the conclusion of the program or seminar.
(3) To be eligible for approval by the commissioner for use in complying with this section, a credit education program or seminar shall, at a minimum, cover all of the following topics regarding credit scores and credit reports provided by consumer reporting agencies described in paragraph (1):
(A) The value of establishing a credit score.
(B) Ways to establish a credit score.
(C) Ways to improve a credit score.
(D) Factors that impact a credit score.
(E) Ways to check ones credit score.
(F) Ways to obtain a free copy of ones credit report.
(G) Ways to dispute an error in ones credit report.
(4) A credit education program or seminar offered pursuant to this section shall be offered at no cost to the borrower.
(5) A borrower shall not be required to participate in a credit education program or seminar offered by a lender or independent third party.