Alert

January 9, 2025

California Department of Financial Protection and Innovation Announces Commercial Financing Reporting Requirements

On December 19, 2024, the California Department of Financial Protection and Innovation released information on its mandatory APR reporting for commercial financing providers. The report covering an entity's commercial financing transactions in 2024 is due on March 15, 2025. Providers of commercial financing that make more than one commercial financing transaction to a covered entity (a small business, nonprofit, or family farm) in a 12-month period must file an annual report with the DFPI. The annual report must include:

• the financing provider's identifying and contact information, including name, any fictitious business names, entity type, mailing address, phone number, email address, website address, and designated contact person;
• the number of commercial financing transactions that the provider made that year by type (e.g., accounts receivable purchase transaction); and
• for each type of transaction, the provider must report the number of transactions grouped by the following categories of amount financed:
  • $10,000 or less;
  • over $10,000 but not over $25,000;
  • over $25,000 but not over $50,000;
  • over $50,000 but not over $100,000;
  • over $100,000 but not over $250,000;
  • over $250,000 but not over $500,000; and
  • for each category of amount financed, the minimum, maximum, average (arithmetic mean), and median annual percentage rate.

Any provider licensed under the California Financing Law must report its activities under the CFL separately, not as part of the report on commercial financing transactions. The regulations define "small business" as a for-profit entity with annual gross receipts of no more than $16 million, a dollar threshold subject to biennial adjustment. The regulations do not apply to transactions with amounts financed greater than $500,000.