California's Commercial Financing Disclosure Law, Explained

Signed in 2018 and operative once DFPI regulations took effect in December 2022, SB 1235 requires providers of commercial financing at or under $500,000 to deliver standardized disclosures at the time an offer is extended.

California was first, and its format became the template other states adapted.

Total amount of funds provided, total dollar cost of financing, term or estimated term, method and frequency of payments, an estimated annualized percentage rate, and prepayment policy including whether any portion of the charge is unearned on early payoff.

For sales-based financing, the estimated APR uses projected sales, which is why the number is labeled an estimate.

You are entitled to see the cost of the offer on one page before you sign. Use it to compare offers on identical fields rather than on daily payment.

Brokers arranging California financing are also within scope, which is what makes markup visible on the sheet.