AB 2116: Commercial financing.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

The California Financing Law (CFL) provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Financial Protection and Innovation, including by regulating the provision of commercial loans, as defined. A willful violation of the CFL is a crime, except as specified.

This bill would, beginning January 1, 2028, generally provide for the regulation under the CFL of commercial financing, which the bill would define to mean an accounts receivable purchase transaction, including factoring, asset-based lending transaction, commercial loan, commercial open-end credit plan, or lease financing, intended by the recipient for use primarily for a purpose other than a personal, family, or household purpose, as specified. Beginning July 1, 2028, the bill would prohibit a person from engaging in the business of a commercial financing provider, as defined, or a commercial financing broker, as defined, without obtaining a license from the commissioner, except as specified. The bill would impose various duties on commercial financing providers and commercial financing brokers, including, among other things, prohibiting the taking of a confession of judgment or power of attorney at any time before a default, as specified. The bill would make various conforming changes to the CFL.

Existing law requires a provider of commercial financing to disclose certain information, as specified. Existing law deems certain violations of these provisions to be a violation of the CFL, as specified. The CFL authorizes the commissioner to require that rates of charge, if stated by a licensee, be stated fully and clearly in the manner that the commissioner deems necessary to prevent misunderstanding by prospective borrowers or property owners.

This bill would authorize the commissioner to require that rates of charge be stated fully and clearly in the manner that the commissioner deems necessary to prevent misunderstanding by prospective borrowers or recipients.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Sponsors

Sponsors by party (alphabetical): Democratic 1

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. September 30, 2026Chaptered by Secretary of State - Chapter 823, Statutes of 2026.
2. September 30, 2026Chaptered by Secretary of State - Chapter 823, Statutes of 2026.
3. September 30, 2026Approved by the Governor.
4. September 30, 2026Approved by the Governor.
5. August 27, 2026Enrolled and presented to the Governor at 4 p.m.
6. August 27, 2026Enrolled and presented to the Governor at 4 p.m.
7. August 20, 2026Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 76. Noes 0. Page 6323.).
8. August 20, 2026Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 76. Noes 0. Page 6323.).
9. August 19, 2026In Assembly. Concurrence in Senate amendments pending.
10. August 19, 2026In Assembly. Concurrence in Senate amendments pending.
11. August 19, 2026Read third time. Passed. Ordered to the Assembly. (Ayes 38. Noes 0. Page 5560.).
12. August 19, 2026Read third time. Passed. Ordered to the Assembly. (Ayes 37. Noes 0.).