Welp, It’s December, Are You Ready for California’s New Law?
We’re now 9 days away from the commencement of California’s Commercial Financing Disclosure Law. Despite the industry’s best efforts to spread the word about the upcoming changes, deBanked has informally queried several industry participants over the last few weeks to assess their preparedness and in the process learned that a significant percentage of funders and brokers still believe that the law is just about some kind of new form that has to be included with the contract.
This despite a widely read September 9th story that conveyed that there was much more to it than that.
Since then, however, a number of brokers in the market have been asked to resign ISO agreements or to prepare for compliance with the necessary processes governing disclosure trigger events (wait, the what now?). Brokers may also have noticed that a number of funders have also made changes to their stip requirements as they narrow down which permissible method they’ll use to calculate an estimated APR while at the same time formulating a mathematical model to be able to comply with the reasonably anticipated true-up scenario disclosures (huh?).
Some participants have heralded the law as a turning point for eliminating bad actors while later discovering only recently for the first time that the law may actually adversely impact their business as well. From there it’s like a roller coaster through the five stages of grief, in which they all do the math and realize that California is 12% of the population and can’t be written off. The acceptance phase is when they finally decide that they will figure out what form they need to include, only to find out that it really is more than just a form.
To be sure, several participants have also communicated that they’re feeling good about preparedness for compliance, so the world won’t end. It just might be tricky now for the segment of the industry that’s been putting off addressing this change to be ready in time. It’s a lot more complicated than it sounds. Are you ready?Last modified: December 1, 2022
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.