February 2020: Financial Disclosure & Licensing Bills Affecting Industry
By Michele Ocejo
California Financial Disclosures, CA 1235, Sponsored by Senator Steve Glazer
In July 2018, SFNet informed members about proposed legislation pending before the California legislature imposing new and potentially challenging disclosure requirements on certain commercial financing transactions in California. Despite months of lobbying against the bill by SFNet and other interested parties, Governor Brown signed the bill into law on September 30, 2018.
Since then, SFNet, with the help of our California legislative advocate, general counsel and volunteers, has been working with the CA Department of Business Oversight as they draft legislation. SFNet has reviewed the initial regulations, which can be viewed at: https://dbo.ca.gov/regulations-legislation-opinions-releases/.
We are awaiting the next draft of regulations. For the full text of the Bill: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB1235
New Jersey Confession of Judgment Bill, NJ3581 Sponsored by Senator Troy Singleton
This bill would prohibit providers from extending business financing to a concern in this State that contains a judgment by confession. Provides that no judgment may be entered on warrant of attorney in any action on a bond or other instrument for the payment of money, except on motion after notice to the defendant served in lieu of summons in accordance with applicable court rules or by registered or certified mail. Defines “judgment by confession” as a written agreement that accepts liability and specifies damages in cases in which a concern is in violation of a business financing agreement. For full text of bill: https://www.njleg.state.nj.us/2018/Bills/S4000/3617_I1.HTM
Action: SFNet held productive conversations with Senator Singleton. At press time, the bill had passed and was awaiting Governor Murphy’s signature. SFNet will continue to work with our lobbyist in order to achieve the best possible outcome for SFNet members.
New Jersey Financial Disclosures Bill NJ2262, Sponsored by Troy Singleton in the Senate and Clinton Calabrese in the Assembly.
Similar to CA 1235, this bill requires certain disclosures by providers of small business financing $500,000 and below. For full text go to: https://www.njleg.state.nj.us/2018/Bills/S2500/2262_I1.HTM
Action: SFNet staff and members, along with our lobbyist, have had numerous conversations with Senator Singleton and Assemblyman Calabrese. SFNet was successful in getting certain key requested amendments, but not all. We are awaiting the next round of amendments from Assemblyman Calabrese.
New Jersey Licensing Bill, NJ S3617, Sponsored by Senator Nellie Pou
This bill requires licensing for certain non-bank lenders and certain brokers that make or arrange alternative small business loans as well as certain disclosures. See full text here: https://www.njleg.state.nj.us/2018/Bills/S4000/3617_I1.PDF
Action: SFNet submitted an initial comment letter in May. As of this writing, the Senator’s staff informed SFNet that they would be rewriting the bill. SFNet will arrange to meet with the Senator after the next version is published.
New York State Licensing Bill, S6688, Sponsored by James Sanders
This bill would require the licensing by the Superintendent of Banking of the New York State Banking Department of persons or entities engaged in the business of making or soliciting commercial financing products to businesses located in New York State. The bill applies to loans or lines of credit of $500,000 and below. The full text of the bill can be found here: https://www.nysenate.gov/legislation/bills/2019/s6688
New York Financial Disclosures Bill, NY S5470, Sponsored by Senator Kevin Thomas
Similar to both the California and New Jersey bills, this bill seeks to amend the New York state financial services law to provide that, immediately prior to entering into various types of commercial lending transactions, the potential lender must prepare and send in writing to the potential borrower various financial disclosures. The full text can be found here: https://www.nysenate.gov/legislation/bills/2019/s5470
Action: SFNet has engaged a legislative advocate in NY to work on achieving the best possible outcome for SFNet members. We will provide further updates as they occur. Any member who wishes to become involved in SFNet’s efforts with regard to this proposed legislation should contact Michele Ocejo at: firstname.lastname@example.org.