In continuing its proactive approach towards enhancing regulation in the commercial finance arena, California has recently passed a new law that brings changes to the existing fee structure. On October 13, 2023, Governor Gavin Newsom signed Senate Bill 666 into law. This enactment is set to disallow commercial financing providers from levying specific fees on “small businesses” for financing.
This legislative move signals California’s initiative to reduce financial pressures on small businesses, thereby fostering a more conducive environment for their growth. The law is due to come into effect from the start of the new year, January 1, 2024.
The legal professionals should take note of this new legislation because it can potentially alter the fundamentals of commercial financing contracts, necessitating a review or revision of current contracts or methodologies.
As always, various interpretations of new laws like these will emerge as organizations and their legal teams rush to comprehend and adapt to the legislation’s specifics. There would be outreach programs launched by the state bodies for clarification and assistance for those affected. Early understanding and preparation for such legislative changes can avert potential legal complications.
Although the primary impact of this law is on the financial institutions that provide commercial financing, it could also lead to a ripple effect across various business sectors that rely heavily on these financing options.
While it’s clear that the new law aims to provide respite to small businesses, the precise definition of “small businesses” as referenced in the legislation is yet to be clarified.
The analysis and summary of this news have been made based on the limited available information on JDSupra. More details on the specifics and implications of the Senate Bill 666 would surface as the date of its enforcement nears.