Commercial Lending in California – A Brief Note on the Laws

Are you purchasing a new property or planning to refinance your existing property in California? And you are looking for commercial lending? Then you must be aware of the new laws that have been adopted by the state to make commercial financing transactions safe for all.

Commercial lending in California is changing with time. The stakes on commercial lending compliance duties in California has again been raised. A new law has recently been adopted by the Golden State that requires non-bank lenders and intermediaries to offer special disclosures to commercial loan borrowers for certain types of commercial finance arrangements.

The new California commercial lending laws are applied to commercial financing of $500,000 or less made to a borrower who plans to use it for purposes other than personal and household purposes. The commercial financing here includes asset-based lending transactions, commercial loans, lease financing transactions, commercial open-end credit plans, factoring, and accounts receivable purchase transactions. However, the commercial loan excludes loans with an amount of less than $5,000, and the lease financing applies only if the lease includes a purchase option, which creates a security interest under the California Law.

Several transactions are there that are exempted from the law that includes a commercial financing transaction that is secured by real property and a transaction in which the recipient is a dealer or an affiliate of a dealer or a vehicle rental company.

According to the California commercial lending laws, there are certain types of lenders and intermediaries who qualify to lend money. The law is applied to lenders who extend the precise proposal of commercial financing covered under the law. Also, an intermediary can be a provider as per the law. The law states that any non-depository organization that enters into a written agreement with any depository organization like a bank for arranging commercial financing extension by the depository organization to a borrower of the offer through an online lending platform can be an authorized lender.

Also, some lenders and providers are exempted from the law. Such lenders include a depository organization authorized to transact business in California, a lender delimited under the Federal Farm Credit Act, any person who have not made more than one commercial financial transaction in California in one year period and a person who has made five or fewer commercial financing transactions in California in 12-month period specifically the sellers of goods and services that occasionally finance customers.

With the laws getting stricter day by day, commercial lending in California is getting safer for both the lender as well as the borrower.

Conclusion:

All California Lending specializes in commercial lending in California. If you are looking for a trustworthy lender then you can rely upon them.