California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 3 - Commercial Financing Disclosures › Section 916 - General Asset-Based Lending Transaction Disclosure Formatting and Contents

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				Disclosures for asset-based lending transactions, provided in accordance with
				section 22803 of the code and section
				950, shall comply with the
				following formatting requirements.
(1) The
				provider shall present the required disclosures in a table consisting of nine
				rows and three columns.
(2) All
				three columns of the first row of the table shall be combined, and within the
				cell created, the provider shall provide an explanation, in italics, of all
				assumptions used to calculate the disclosures, and a notice, if applicable,
				that actual costs may differ substantially from those disclosed. For example:
				"The calculations below assume you draw [amount calculated in accordance with
				section 950] at origination, you maintain
				an outstanding balance of that amount for [length of draw period or "one year",
				whichever is less], and that the amount owed us is paid off thereafter
				according to the terms of the contract. Actual costs may differ
				substantially."
(3) The second row
				of the table shall include only the following information:
(A) In the first column: "Funding
				Provided".
(B) In the second
				column, the amount financed.
(C) In
				the third column, in the order listed and in the same paragraph:
(i) "This is the maximum amount of funding
				[name of financer] will provide."
(ii) If the amount financed is greater than
				the recipient funds: "Due to deductions or payments to others, the total funds
				that will be provided to you directly if you request the maximum amount is
				[recipient funds]. For more information on what amounts will be deducted,
				please review the attached document "Itemization of Amount
				Financed.""
(iii) If any portion of
				the amount financed will be used to pay down or pay off other amounts owed by
				the recipient that may change over time, and the amounts owed are known to the
				provider, the provider may include a short explanation that the amount paid
				directly to the recipient may change if the amount owed for the recipient's
				other obligations changes.
(iv) If,
				as a condition of the financing, a recipient's amounts owed to third parties
				must be paid down or paid off using funds from the amount financed, and an
				amount owed is not known to the provider, the provider shall also include a
				short explanation that the amount paid directly to the recipient may change
				based upon the required disbursements to satisfy other
				obligations.
(4) The third row of the table shall include
				only the following information:
(A) In the
				first column: "Estimated Annual Percentage Rate (APR)".
(B) In the second column, the annual
				percentage rate calculated in accordance with section
				940 of these rules.
(C) In the third column in the order listed:
(i) "APR is the estimated cost of your
				financing expressed as a yearly rate. APR incorporates the amount and timing of
				the funding you receive, fees you pay, and the payments we collect. APR is not
				an interest rate."
(ii) A short
				explanation of the applicable interest rate or rates for the transaction, if
				applicable.
(5)
				The fourth row of the table shall include only the following information:
(A) In the first column: "Estimated Finance
				Charge".
(B) In the second column,
				the finance charge calculated in accordance with section
				943 of these rules.
(C) In the third column:
(i) "This is the dollar cost of your
				financing."
(ii) If the contract
				provides for an adjustable interest rate or rates that are not predetermined by
				the contract: "The interest rate under your contract will adjust over time, so
				your actual finance charge may vary."
(6) The fifth row of the table shall include
				only the following information:
(A) In the
				first column: "Payment".
(B) The
				second and third columns shall be combined, and in the resulting cell, the
				provider shall provide a short explanation of how balances on the account are
				repaid.
(7) The sixth row
				of the table shall include only the following information:
(A) In the first column: "Draw
				Period".
(B) In the second column,
				the draw period for the transaction.
(C) In the third column, a short explanation
				of the draw period for the transaction.
(8) The seventh row of the table shall
				include no information in the third column, and the remaining columns shall
				include only the following information:
(A) In
				the first column: "Term".
(B) In
				the second column, the term of the transaction.
(9) In the first column, the eighth and ninth
				rows shall be combined and shall include the following language:
				"Prepayment".
(10) In the eighth
				row, the second and third columns shall be combined and shall include only:
(A) If, at any time during the term of the
				transaction, prepayment of the outstanding balance due will require the
				recipient to pay finance charges other than interest accrued since the
				recipient's last payment, the following statement: "If you pay off the
				financing faster than required, you still must pay all or a portion of the
				finance charge, up to $[maximum non-interest finance charge] based upon our
				estimates."
(B) In all other cases,
				the following statement: "If you pay off the financing faster than required,
				you will not be required to pay any portion of the finance charge other than
				unpaid interest accrued."
(11) In the ninth row, the second and third
				columns shall be combined and shall include:
(A) If, at any time during the term of the
				transaction, prepayment of the outstanding balance due will require the
				recipient to pay additional fees and charges not included in the finance
				charge, the following statement: "If you pay off the financing faster than
				required, you must pay additional fees of [amount and description of
				fees]."
(B) In all other cases, the
				following statement: "If you pay off the financing faster than required, you
				will not be required to pay additional fees."