Ken Greene, Attorney at the Law Office of Kenneth Charles Green in South California, shares his latest article in Monitor Daily.
California’s new licensing law gives commercial finance companies until 2028 to prepare, but the real risk is unenforceable contracts, not just missing licenses.
On Sept. 30, Gov. Gavin Newsom signed Assembly Bill 2116 into law, in essentially the form discussed in my two previous articles, California AB 2116: No CFL License, No Collection? and California AB 2116: Can a Bank Buy an Unenforceable Loan? California will now require even more companies that provide or broker commercial financing to obtain licenses from the Department of Financial Protection and Innovation.
The good news is that the industry has time to prepare. The bad news is that it may need every minute.
AB 2116 covers commercial financing offers of $500,000 or less made to a qualifying small business or small-business owner. “Small business” generally means a for-profit business with annual gross receipts of no more than $16 million, subject to future adjustments.
Covered transactions include commercial loans, factoring, accounts-receivable purchases, sales-based financing, asset-based lending, open-end credit and “lease financing.” The latter generally refers to leases that create security interests under the Commercial Code. A conventional true lease should not become regulated merely because someone calls it equipment financing. As always, however, labels are no substitute for substance.
This article was originally published by Monitor Daily on September 30, 2026.