California Senate Bill SB362

California 2025-2026 Regular Session

• Introduced: 2/13/25
• Refer: 2/26/25
• Refer: 3/17/25
• Report Pass: 4/3/25
• Refer: 4/3/25
• Refer: 4/9/25
• Report Pass: 4/23/25
• Refer: 4/23/25
• Report Pass: 5/23/25
• Engrossed: 6/2/25
• Refer: 6/9/25
• Report Pass: 7/8/25
• Refer: 7/8/25
• Refer: 7/10/25
• Report Pass: 7/16/25
• Refer: 7/16/25
• Report Pass: 8/20/25
• Enrolled: 9/8/25
• Chaptered: 10/6/25
• Passed: 10/6/25

Caption

An act to amend, renumber, and add Section 22806 of, to add Section 22807 to, and to repeal Section 22805 of, the Financial Code, relating to commercial financing.

Impact

The legislation will significantly alter the landscape for commercial financing by expanding the scope of what constitutes a violation under existing laws. It repeals previous provisions that limited disclosures, thereby enabling the Department of Financial Protection and Innovation greater authority to enforce compliance among lenders. Notably, violations of these disclosure provisions will now be treated as criminal offenses under the California Financing Law (CFL) as well as the California Consumer Financial Protection Law when applicable. This is expected to bolster accountability among financing firms and ensure that borrowers receive more accurate and comprehensible information about financing costs.

Summary

Senate Bill No. 362, initiated by Senator Grayson, aims to enhance transparency in the commercial financing sector by amending existing regulations pertaining to disclosures required from providers of commercial financing. The bill introduces stricter provisions against the deceptive use of terms like 'interest' or 'rate' by financing providers, mandating them to present the annual percentage rate (APR) clearly during financial transactions. This move is seen as a vital step in protecting small businesses from misleading marketing practices that may obscure the true cost of financing products.

Sentiment

Overall, the sentiment around SB 362 has been positive among consumer advocacy groups and small business owners, who view it as a necessary regulatory measure to eliminate deceptive lending practices. Conversely, some critics in the financial services industry have expressed concerns about the bill's potential impact on lending practices, arguing that such regulations may lead to increased operational costs, which could be passed on to borrowers in the form of higher rates.

Contention

The discussions regarding SB 362 have highlighted the ongoing balancing act between consumer protection and the operational freedoms of financing firms. While supporters laud the bill for its potential to enhance market transparency, opponents caution that overly stringent regulations could stifle competition and access to credit for small businesses. The bill ultimately seeks to provide clarity in the financial products available to small businesses, ensuring that they can make informed decisions without falling prey to deceptive marketing techniques.