Commercial financing: disclosures.

Senator Grayson's commercial financing disclosure legislation establishes new requirements for how lenders communicate interest rates and annual percentage rates (APR) to California businesses seeking financing. The bill prohibits providers from using terms like "interest" and "rate" in ways that could mislead recipients, while mandating the use of "annual percentage rate" or "APR" when discussing specific financing offers during the application process.

The legislation creates a dual enforcement framework for disclosure violations. For transactions covered by the California Financing Law (CFL), violations constitute breaches of that statute. For commercial financing outside CFL jurisdiction, violations fall under the California Consumer Financial Protection Law as unfair or deceptive practices. The bill also maintains existing protections for providers when actual APRs differ from estimated APRs disclosed according to regulatory guidance.

Providers retain the ability to reference interest rates and APRs when expressing fixed or floating rates as margins above index rates. This preserves common industry practices while implementing guardrails against potentially confusing or deceptive rate presentations. The measure repeals current CFL examination and enforcement provisions, replacing them with the new compliance framework.