California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 3 - Commercial Financing Disclosures › Section 917 - Disclosure Formatting and Contents for All Other Transactions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Disclosures for
				commercial financing that does not meet the definition of a closed-end
				transaction, sales-based financing, commercial open-end credit plan, factoring
				transaction, lease financing, or asset-based lending transaction shall comply
				with the following formatting requirements.
(1) The provider shall present the required
				disclosures in a table consisting of eight rows and three columns.
(2) The first 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,
				the following in the order listed and in one paragraph:
(i) "This is how much 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 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 shall 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 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.
(3) The second row of the table shall include
				only the following information:
(A) In the
				first column: "Annual Percentage Rate (APR)".
(B) In the second column, the annual
				percentage rate calculated in accordance with section
				940.
(C) In the third column, the following in
				order:
(i) "APR is the cost of your financing
				expressed as a yearly rate. APR incorporates the amount and timing of the
				funding you receive, and payments paid by you or on your behalf to [financer].
				APR is not an interest rate."
(ii)
				A short explanation of any assumptions made by the provider to calculate
				APR.
(4) The
				third row of the table shall include only the following information:
(A) In the first column: "Finance
				Charge".
(B) In the second column,
				the finance charge calculated in accordance with section
				943.
(C) In the third column, the provider's
				calculation of the finance charge, with the amount and description of each
				expense that is included in the finance charge.
(5) The fourth row of the table shall include
				only the following information:
(A) In the
				first column:
(i) If, assuming the recipient
				makes minimum required payments under the contract, it is possible to calculate
				with certainty the total payments the recipient will make during the contract's
				term: "Total Payment Amount".
(ii)
				If, assuming the recipient makes minimum required payments under the contract,
				it is not possible to calculate with certainty the total payments the recipient
				will make during the contract's term: "Total Estimated Payment
				Amount".
(B) In the
				second column, the total dollar amount of payments or total dollar amount of
				estimated payments the recipient will make during the term of the contract if
				the recipient makes minimum required payments.
(C) In the third column:
(i) If, assuming the recipient makes minimum
				required payments under the contract, it is possible to calculate with
				certainty the total dollar amount of payments the recipient will make during
				the term of the contract: "This is the total dollar amount of payments you will
				make during the term of the contract."
(ii) If, assuming the recipient makes minimum
				required payments under the contract, it is not possible to calculate with
				certainty the total dollar amount of payments the recipient will make during
				the term of the contract: "This is our estimate of the total dollar amount of
				payments you will make during the term of the
				contract."
(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 shall contain the following information in order:
(i) The amount of each periodic payment,
				followed by a forward slash (/) and the frequency of each periodic payment. If
				the provider anticipates that the periodic payment amount will vary over the
				term of the transaction, the provider shall list all periodic payment amounts
				and the time periods when those payments apply. For example:
Months 1-2:
$20/day
Months 3-7:
$40/day
(ii) The date and amount of any irregular
				payments listed in chronological order.
(7) The sixth 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.
(8) In the first column, the seventh and
				eighth rows shall be combined and shall include the following language:
				"Prepayment".
(9) In the seventh
				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]."
(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."
(10) In the
				eighth 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."
(11) If the contract provides for periodic
				payments that are not monthly, the provider shall insert one additional row
				below the third row, and the additional row shall include only the following
				information:
(A) In the first column:
				"Monthly Cost".
(B) In the second
				column, the monthly cost that the recipient will pay over the term of the
				transaction. If the provider anticipates that the estimated monthly cost will
				vary over the term of the transaction, the provider shall list the estimated
				monthly costs and the time periods when those estimates apply. For example:
Months 1-2:
$600/month
Months 3-6:
$1200/month
Month 7:
$1000/month
(C) In the third column, a short explanation
				of how the provider calculated the monthly cost. For example: "Although you do
				not make payments on a monthly basis, this is our calculation of your average
				monthly cost based upon the payment amounts disclosed
				below."
(12) If the
				contract provides for multiple payment options, the provider shall insert one
				additional row above the first row, and in that row, all three columns shall be
				combined, resulting in a single cell. In that cell, the provider shall include
				a short explanation of how the provider has based the disclosure on the minimum
				payment permitted under the contract.