KLS Keeping Law Simple Legislation in plain English

Straight-ahead summaries built from the official bill text. We keep the source links front and center and leave the decision up to you.

Back to California

AB-2116 • 2026

California Consumer Financial Protection Law: commercial financing.

California Consumer Financial Protection Law: commercial financing.

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor
Schiavo
Last action
2026-04-23
Official status
From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (April 23). Re-referred to Com. on APPR.
Effective date
Not listed

Plain English Breakdown

The official summary does not provide specific details on enforcement mechanisms or penalties for non-compliance with the new rules.

California Law to Protect Small Businesses from Bad Financial Practices

This law expands the California Consumer Financial Protection Law (CCFPL) to include protections for small businesses by requiring registration and adherence to rules for companies offering commercial financing products.

What This Bill Does

  • Expands the CCFPL to protect small businesses from abusive financial practices.
  • Requires the Department of Financial Protection and Innovation to create rules for registering companies that provide commercial financing products.
  • Prohibits anyone from offering or providing commercial financing without first registering with the Commissioner starting January 1, 2028.
  • Imposes duties on commercial financing providers and brokers, including prohibiting them from taking a confession of judgment before a default occurs.

Who It Names or Affects

  • Small businesses that receive commercial financing products
  • Companies offering or providing commercial financing products

Terms To Know

Commercial Financing Products
Financial services and products designed for small businesses, like loans and credit lines.
Confession of Judgment
A legal document that allows a lender to get a court judgment without going through the usual process if a borrower defaults on a loan.

Limits and Unknowns

  • The law does not specify what happens if someone violates these new rules.
  • It is unclear how many small businesses will be affected by this change.

Bill History

  1. 2026-04-23 California Legislative Information

    From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (April 23). Re-referred to Com. on APPR.

  2. 2026-04-20 California Legislative Information

    Re-referred to Com. on B. & F.

  3. 2026-04-16 California Legislative Information

    From committee chair, with author's amendments: Amend, and re-refer to Com. on B. & F. Read second time and amended.

  4. 2026-03-09 California Legislative Information

    Referred to Com. on B. & F.

  5. 2026-02-19 California Legislative Information

    From printer. May be heard in committee March 21.

  6. 2026-02-18 California Legislative Information

    Read first time. To print.

Official Summary Text

AB 2116, as amended, Schiavo.
California Consumer Financial Protection Law: commercial financing.
Existing law, the California Consumer Financial Protection Law (CCFPL), establishes certain consumer protections relating to consumer financial products, practices, and services, including, among others, making it unlawful for covered persons or service providers, as defined, to, among other acts, engage in unlawful, unfair, deceptive, or abusive acts or practices with respect to consumer financial products or services. Existing law establishes that the purpose of the CCFPL is to promote consumer welfare, fair competition, and wealth creation in this state by promoting, among other things, nondiscriminatory access to consumer financial products and services that are understandable and not unfair, deceptive, or abusive. Existing law authorizes the Department of Financial Protection and Innovation, under the direction of the Commissioner of Financial Protection and Innovation, to
prescribe rules regarding registration requirements applicable to a covered person in the business of offering or providing a consumer financial product or service, as defined, and rules requiring the payment of registration fees.
This bill would expand the purposes of the CCFPL to include the protection of small businesses from abusive financial practices, as specified. The bill would require the department to prescribe rules regarding registration requirements applicable to covered persons seeking to offer or provide commercial financing products, as defined and specified. The bill would, commencing January 1, 2028, prohibit a person from engaging in the business of offering to provide or providing commercial financing products without first registering with the commissioner, as specified. The bill would impose various duties on commercial financing providers and brokers, including, among other things, prohibiting the taking of a confession of judgment or power of
attorney at any time before a default, as specified. The bill would make various conforming changes.

Current Bill Text

Read the full stored bill text 
Download Bill PDF