On October 7, California Governor Gavin Newsom signed Senate Bill 33 (SB 33) into law. This legislation, among other mandates, extends a requirement for covered providers offering commercial loans to continue disclosing the total cost of financing, expressed as an annualized rate, indefinitely. Cited from an informative article by Orrick, Herrington & Sutcliffe LLP, the existing law necessitated this disclosure only until January 1, 2024.
Under the details of SB 33, the financing disclosure obligation is no longer temporary but is now a fixed requirement for commercial loans providers in the state. The implementation of this law indicates a continued emphasis on lending transparency, aiming to equip borrowers with comprehensive insight into terms of their prospective loans.
While the extended disclosure requirement could result in an increased administrative burden for lenders, it would essentially improve transparency in commercial lending transactions. As for borrowers, it proactively assists them in making more informed financial decisions.
This significant regulatory development underscores the shifting landscape of commercial lending laws, serving as a stark reminder for legal professionals in the field to stay abreast of these changes. This also signifies a play safe move for large corporations and law firms that engage in commercial lending operations in California, urging them to review their existing loan agreements to ensure their compliance with the updated mandates of SB 33.