California Senate Bill 1235 was the first state-level commercial financing disclosure law in the United States. Signed in 2018, regulations finalized in 2022, enforcement began in earnest 2023. By 2026, it's settled law — and every MCA funder operating in California knows the rules.
Coverage
Covers commercial financing transactions of $500,000 or less to recipients located in California. Applies to MCA, factoring, accounts receivable purchases, asset-based lending, commercial open-end credit, and traditional commercial loans. Banks and certain depository institutions are exempt.
What must be disclosed
Standardized disclosure at the time of offer extension, including:
- ▸Total amount of financing
- ▸Total dollar cost of financing
- ▸Term
- ▸Method, frequency, and amount of payments
- ▸Prepayment policy
- ▸Annualized rate (APR)
How it differs from New York
California's threshold is lower ($500K vs NY's $2.5M). The required disclosure fields are similar but use slightly different format requirements. California's APR methodology for MCA was the subject of significant industry pushback during rulemaking; the final regulations adopted a methodology that many funders consider more reasonable than NY's.
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