Governor Brown signed into law SB 1235, a bill requiring consumer-like disclosures to be made on certain commercial finance products, including small business loans and merchant cash advances, among other things.  Contrary to reports in certain press outlets, the law will not take effect by a date certain.  Rather, the California Department of Business Oversight (“DBO”) is now required to adopt regulations addressing details such as calculation methods and the time, manner, and format of the new disclosures.  The DBO also may specify the date by which finance companies are required to comply.

We understand that the DBO is unlikely to act until the new Commissioner takes office, so compliance with the new law probably will not be required until well into 2019, if not 2020.  That said, it will be critical for the industry to engage with the DBO regarding the forthcoming regulations and when compliance with them will be required.