California’s SB 666, recently introduced by Senator Dave Min, changes the landscape of commercial financing transactions with small businesses in the state. While aimed at protecting small businesses, it’s essential to consider the potential implications for Asset-Based Lenders operating here.

Unfortunately, the senate bill has passed and as of January 1st, 2024 will be included in Title 1.9.

Key Points to Note:

Fee Structure Challenges

SB 666 – Title 1.9 restricts certain fees, including automated clearinghouse transfer debits and fees lacking clear corresponding services. This may affect revenue models for finance companies.

Compliance Complexity

The bill introduces new regulations and definitions, adding to the compliance burden for finance companies and potentially increasing costs.

Risk Assessment Constraints

Limitations on fees for risk assessment could impact the ability to assess and price risks associated with small business financing accurately.

Impact on Small Businesses

While designed to protect small businesses, the bill might inadvertently limit their access to financing options due to fee restrictions.

Legal Challenges

SB 666 – Title 1.9 allows for statutory damages and attorney’s fees, potentially leading to legal challenges for finance companies.

Adjusting Business Models

Finance companies may need to adapt their business models and fee structures to ensure compliance with the bill.

It’s crucial for Asset-Based Lenders in California to closely monitor SB 666 – Title 1.9’s implementation, assess its impact on operations, and stay informed about the evolving regulatory landscape.