Commercial financing: disclosures.

Senator Grayson's commercial financing disclosure legislation establishes new requirements for how lenders communicate costs and interest rates to California business borrowers. The measure requires commercial financing providers to use standardized terminology when presenting rates and costs, mandating the term "annual percentage rate" or "APR" when discussing financing charges with potential customers.

The bill creates an annual review process for lenders that base their cost estimates on projected sales volumes. These providers must report data comparing their estimated versus actual annual percentage rates to the Commissioner of Financial Protection and Innovation. The Commissioner can require lenders to switch to historical sales data for their calculations if the differences between estimated and actual rates exceed acceptable thresholds.

Under the legislation's enforcement framework, violations by California Financing Law licensees constitute breaches of that law when related to transactions it covers. For transactions outside the California Financing Law's scope, violations are treated as unfair or deceptive practices under the California Consumer Financial Protection Law. The measure also removes providers' liability protections when actual APRs differ from estimates, even if those estimates followed regulatory guidance or interpretations.