CALIFORNIA CODE OF REGULATIONS TITLE 10, CHAPTER 3

STATE OF CALIFORNIA

DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION

CALIFORNIA CODE OF REGULATIONS

TITLE 10, CHAPTER 3

The Department of Financial Protection and Innovation hereby adopts the following new provisions to

be added to Title 10, Chapter 3 of the California Code of Regulations:

Subchapter 3. Commercial Financing Disclosures.

§ 900. Definitions.

(a) The following terms used in this subchapter shall have the following meanings:

(1) “Amount financed” means:

(A) With respect to sales-based financing, the amount of funds to be provided by

the financer to the recipient or on the recipient’s behalf, minus any prepaid

finance charge.

(B) With respect to a closed-end transaction, the principal amount, plus any other

amounts that are financed by the financer and are not part of the finance

charge, minus any prepaid finance charge.

minus any prepaid finance charge.

(D) With respect to a factoring transaction disclosure made pursuant to section

22802 of the code, the original advance amount, minus any prepaid finance

charge.

(E) With respect to a factoring transaction disclosure made pursuant to section

22803 of the code, the approved advance limit, minus any prepaid finance

charge.

(F) With respect to asset-based lending disclosures made pursuant to section

22803 of the code and section 950, the amount described in section 950,

subdivision (a)(2)(A) or (a)(3)(A), minus any prepaid finance charge.

(G) With respect to a lease transaction:

(i) If the financer does not select, manufacture, or supply the goods to be

leased, the net cost to the financer to acquire the property to be leased,

including any related costs and charges financed as a part of such

transaction, which may include, without limitation, installation charges,

delivery costs, software license fees, sales and use taxes, and similar

charges, minus any prepaid finance charge.

(ii) If the financer selects, manufactures or supplies the goods to be leased,

the price that the financer would sell the goods in a cash transaction,

including any related costs and charges financed as a part of such

transaction, which may include, without limitation, installation charges,

delivery costs, software license fees, sales and use taxes, and similar

charges, minus any prepaid finance charge and any down payment or

other deposit to be paid by the recipient.

(2) “Approved advance limit” means the maximum advance that a financer may provide to

a recipient or on the recipient’s behalf in exchange for assignment of outstanding,

unpaid legally enforceable claims under the factoring agreement, not including any

previous distributions advanced to a recipient or on the recipient’s behalf under the

factoring agreement, to the extent those distributions have been repaid. The approved

advance limit does not include reserve amounts or any other amount not advanced to

the recipient at the time of assignment. If the factoring agreement provides for the

financer to pay different maximum advances for different types of legally enforceable

claims, “approved advance limit” means the total maximum advance that a financer

may provide to a recipient or on a recipient’s behalf in exchange for assignment of the

different types of legally enforceable claims, not including any previous distributions

advanced to a recipient or on the recipient’s behalf under the agreement, to the extent

those distributions have been repaid.

(3) “Approved credit limit” means the maximum advance that a financer may provide to a

recipient or on the recipient’s behalf under the commercial open-ended credit plan

agreement or asset-based lending transaction agreement, not including any previous

distributions advanced to a recipient or on a recipient’s behalf under the agreement, to

the extent those distributions have been repaid. Where the commercial open-ended

credit plan agreement or asset-based lending transaction agreement requires the

financer to pay different maximum advances for different categories of advance (such as

advances secured by inventory, accounts receivable, or others), “approved credit limit”

means the total maximum advance that a financer may provide to a recipient or on a

recipient’s behalf for all categories of advance, not including any previous distributions

advanced to a recipient or on the recipient’s behalf under the agreement, to the extent

those distributions have been repaid.

(4) “Asset-based lending transaction” as set forth in section 22800, subdivision (c) of the

code only includes transactions that are loans under California law.

(A) “Forwarding payments,” as it pertains to the definition of “Asset-based lending

transaction” set forth in section 22800, subdivision (c) of the code, includes:

(i) Arrangements in which a recipient and the financer create an

account in which third party obligors deposit payments;

(ii) Arrangements in which a recipient repays advances with the

proceeds the recipient collects from the sale or disposition of

goods or services financed with such advances; or

(iii) Arrangements in which the recipient directs third party obligors

to make payments directly to the financer.

(5) “At the time of extending a specific commercial financing offer” under section 22802 of

the code means:

(A) Any time a specific commercial financing offer is quoted to a recipient.

However, if a provider simultaneously presents multiple, distinct specific

commercial financing offers to the recipient and allows the recipient to select

from among those options, then “at time of extending a specific commercial

financing offer” occurs at the time that the recipient selects an option.

(B) Any time when the terms of a consummated commercial financing contract

are amended, supplemented, or changed, prior to the recipient agreeing to

the changes, if the resulting changes to the contract would result in an

increase to the annual percentage rate, regardless of whether those terms

were previously disclosed to the recipient. This subparagraph does not apply

to changes made to resolve a recipient’s default on a financing contract.

commercial financing offer is quoted to a recipient in connection with each

draw on an open-end credit plan if:

(i) draws occur at the time that a recipient purchases products or services

from a retailer or supplier;

(ii) the rate or price varies based upon the retailer or supplier the recipient

selects, or the products or services the recipient purchases; and

(iii) the provider chooses to provide disclosures under section 910 in

connection with each draw pursuant to this subparagraph rather than a

disclosure under section 911.

(6) “Average monthly cost” means the average total amount paid by the recipient (periodic

and irregular payments) over the term of the contract, divided by the number of months

in the term of the contract. To calculate the number of months in the contract term, a

provider may divide the number of days in the contract term by 30.4.

(7) “Benchmark rate” means a rate index (such as, but not limited to, the Secured Overnight

Financing Rate (SOFR), Prime Rate, Wall Street Journal (WSJ) Prime Rate, or 1-, 3-, or 5-

year Treasury Constant Maturity), based upon general market conditions, that is

commonly used to calculate the interest rate in adjustable-rate transactions in the

credit industry.

(8) “Broker” means any person other than a financer, recipient, or recipient’s agent, who,

for compensation, does any of the following: participates in any financing negotiation;

counsels or advises the recipient about financing options; participates in the preparation

of any financing documents, including financing applications; contacts the financer on

behalf of the recipient other than to refer the recipient; gathers financing application

documentation or delivers the documentation to the financer; communicates financing

decisions or inquiries from the financer to the recipient; or obtains the recipient’s

signature on financing documents.

(9) “Closed-end transaction” means a transaction in which credit is extended only once over

a specific term (including contracts that include an option in which the recipient may

extend the term), and is repaid:

(A) in regular predetermined payments of a specified amount over a

fixed period of time; or

(B) in the case of sales-based financing, in payments calculated as a

percentage of sales or income, but with a minimum required

payment or payments such that the recipient is eventually required to

repay the amount advanced regardless of the sales or income the

recipient collects.

(10) “Code” means the California Financial Code.

(11) “Draw period” means the length of time during which a recipient may make

draws under an open-ended credit plan or general factoring or asset-based

lending agreement.

(12) “Estimated monthly cost” means the estimated average total amount paid by the

recipient (periodic and irregular payments) over the estimated term of the contract,

divided by the number of months in the estimated term of the contract. To calculate the

number of months in the estimated term, a provider may divide the number of days in

the estimated contract term by 30.4.

(13) “Finance charge” means the amount of any and all costs of the financing, represented

as a dollar amount, as more specifically described in section 943.

(14) “Financer” means the person who provides or will provide the commercial financing to

the recipient or any nondepository institution which enters into a written agreement

with a depository institution to arrange for the extension of commercial financing by the

depository institution to a recipient via an online lending platform administered by the

nondepository institution.

(15) “Initial interest rate” means, in a credit transaction with an interest rate that changes

over time and that cannot be calculated in advance for the entire term of the

transaction, the rate that would be in effect at the time a disclosure is made, assuming

the recipient accepted the financing offer.

(16) “Interest rate” means the periodic rate at which interest accrues on the outstanding

principal balance and (if interest is compounded) on accrued but unpaid interest in a

commercial financing.

(17) “Irregular payment” means any payment made to the financer that is not a periodic

payment.

(18) “Margin” means, in a commercial financing with an adjustable interest rate, the

adjustment amount added to or subtracted from the benchmark rate used to calculate

the interest rate.

(19) “Maximum non-interest finance charge” means:

(A) For all commercial financing except factoring, the maximum amount of the

finance charge other than interest accrued that a recipient may be required

to pay if the recipient chooses to prepay the outstanding balance due under

a commercial financing agreement.

(B) For factoring, the maximum amount of the finance charge, other than

interest accrued since the time the financer purchased the legally

enforceable claim, that the recipient may be required to pay if the recipient

repurchases the account receivable before the account receivable is due for

payment by the account debtor.

(20) “Particular payment channel or mechanism” means, with respect to sales-based

financing, the payment channel(s) or mechanism(s) that will be used to determine the

amount of a recipient’s payment or a true-up. This may include, for example, income

flowing through a deposit account or accounts, or payments received through a

recipient’s payment processor.

(21) “Periodic payment” means any payment made to the financer at regular intervals.

(22) The phrase “person who is presented [with] a specific commercial financing offer” in the

definition of “recipient” set forth under section 22800, subdivision (n), of the code

means the expected primary borrower on a commercial loan, open-ended credit plan,

or asset-based lending transaction, seller in accounts receivable purchase transactions

(including factoring), and lessee in lease financing transactions.

(23) “Prepaid finance charge” means any finance charge paid separately to the financer in

cash, check or electronic funds transfer before or at consummation of a transaction, or

withheld from the proceeds of the financing at any time.

(24) “Provider” means the definition set forth in section 22800, subdivision (m), of the code

with the following clarifications:

(A) A provider includes a financer when the financer communicates a specific

commercial financing offer either directly to a recipient, or a recipient’s agent

or broker with the expectation that the information will be shared with a

recipient.

(B) The phrase “administered by” excludes arrangements where a nondepository

institution provides technology or support services for a depository

institution’s commercial financing program, provided that the nondepository

institution has no interest, or arrangement or agreement to purchase any

interest in the commercial financing extended by the depository institution in

connection with such program, and the commercial financing program is not

branded with a trademark owned by the nondepository institution.

(25) “Reasonably anticipated true-up” means any true-up that the financing provider has a

reasonable basis to expect will be made during the term of the contract, accounting for

past performance of similar contracts (both those made to the recipient and other

similar recipients) and the policies and procedures of the financer.

(26) “Recipient funds” means the net amount to be given directly to the recipient in the form

of cash, check, or electronic funds transfer to an account the recipient controls.

Recipient funds excludes, without limitation, funds paid to third parties (including

brokers).

Recipient funds also excludes any part of the amount financed used to pay off

or pay down other amounts owed by the recipient, if known by the provider at the time

the disclosure is provided. For the purposes of calculating recipient funds, where part of

the amount financed will be used to pay off other amounts owed by the recipient that

may change over time, a provider may assume that the amounts due under the

recipient’s other obligations are the amounts due at the time the disclosure is provided.

(27) “Retrospective annual percentage rate” is the actual annual percentage rate,

determined after the specific financing contract has been fully repaid to the financer,

when the dates and amounts of all payments and fees are known.

(28) “Sales-based financing” means a commercial financing transaction that is repaid by a

recipient to the financer as a percentage of sales or income, in which the payment

amount increases and decreases according to the volume of sales made or income

received by the recipient. Sales-based financing also includes commercial financing

transactions with a true-up mechanism.

(29) “Specific commercial financing offer” means a written communication to a recipient,

based upon information from, or about, the recipient, of (i) a periodic payment amount,

irregular payment amount, or financing amount, and (ii) any rate, price, or cost of

financing (including, without limitation, any total repayment amount), in connection

with a commercial financing. Information “about the recipient” includes information

about the recipient that informs the provider’s quote to the recipient, such as the

recipient’s financial or credit information, but not the recipient’s name, address, or

general interest in financing.

(30) “Specified payment amount” means the periodic pre-set amount stated in the contract

described in subdivision (a)(34)(A) of this section.

(31) “Split rate” means, with respect to sales-based financing, the percentage used by the

financer to calculate the payment amounts to be paid to the financer or to calculate

true-ups.

(32) Subject to the rules with respect to term specified in sections 922 through 931, 940,

and 942, as applicable, “term” means:

(A) With respect to factoring disclosures made pursuant to section 22802,

subdivision (b)(3) of the code, the length of time between when the recipient

receives payment from the financer for the legally enforceable claim and the

date the legally enforceable claim becomes due and payable.

(B) With respect to factoring disclosures made pursuant to section 22803,

subdivision (a)(3) of the code, a sample term reasonably expected to be within

the range of the terms expected to be used during the life of the master

agreement.

the contracted length of time necessary for the recipient to fulfill its obligations

under the financing agreement with respect to a particular loan advance.

(D) With respect to asset-based lending disclosures made in accordance with

section 22803 of the code and section 950, the length of time necessary for the

recipient to fulfill its obligations under the financing contract given the

assumptions specified by section 950, subdivisions (a)(2) and (a)(3).

(E) With respect to all other commercial financing, the length of time that it is

anticipated will be necessary for the recipient to fulfill its obligations under a

financing agreement.

(33) “True-up” means any payment made to a recipient, any charge assessed to a recipient,

and any adjustment to recipient’s periodic payments pursuant to a true-up mechanism.

(34) “True-up mechanism” means, with respect to sales-based financing, a contractual

arrangement with all the following elements:

(A) The financer receives periodic payments based upon a pre-set amount (or

amounts) stated in the contract.

(B) The contract allows the recipient to request, or the financer to initiate,

adjustments to the payment amount, credits to the recipient, or charges to the

recipient after execution of the contract, so that the total amount paid by the

recipient more closely reflects a split rate listed in the contract.

(35) With respect to factoring transactions:

(A) “Account debtor” means the debtor with the primary obligation to pay the

legally enforceable claim assigned by the recipient.

(B) “Purchase price” means the amount that the financer agrees to pay the

recipient for assignment of a legally enforceable claim.

transaction plus the difference between the face value of a legally enforceable

claim and the purchase price that the financer agrees to pay the recipient for

assignment of that legally enforceable claim.

(D) “Original advance amount” means the amount that a financer issues to a

recipient or on the recipient’s behalf upon receipt of a legally enforceable claim

for payment.

(E) “Reserve amount” means, in a reserve factoring transaction, the difference

between the purchase price for a legally enforceable claim and the original

advance amount, that is held in reserve to secure the financer in the event of

non-payment of the legally enforceable claim, or to secure the financer in the

event of nonpayment of other legally enforceable claims assigned or to be

assigned by the recipient to the financer.

(F) “Reserve factoring transaction” means a factoring transaction where, upon

receipt of a legally enforceable claim for payment, a financer pays an original

advance amount to the recipient that is less than the purchase price and holds

the difference between the original advance amount and the purchase price to

secure the financer against deficiencies on amounts paid by the account debtor

on the legally enforceable claim or other legally enforceable claims assigned or

to be assigned by the recipient to the financer.

(b) Unless otherwise stated, all references to “average” within these regulations refer to the

arithmetic mean.

meanings ascribed to them in that section.

Note: Authority cited: Sections 321 and 22804, Financial Code. Reference: Sections 22800, 22801,

22802, 22803 and 22804, Financial Code.

§ 901. General Requirements.

(a) Disclosures provided in accordance with sections 22800 through 22804 of the code shall comply with

the following requirements.

(1) At the top of the disclosure, centered on the page or other display medium, the provider shall

print “OFFER SUMMARY —” in bold font, followed by a one- to five-word description of the type

of product offered (e.g., “Merchant Cash Advance”) which may include the financer’s branding

terminology.

(2) For any disclosure required to comply with section 920, subdivision (a), at the bottom of the

disclosure, below any other information required by this subchapter, the provider shall print the

following statement: “Applicable law requires this information to be provided to you to help you

make an informed decision. By signing below, you are confirming that you received this

information.” Below the statement, the provider shall include a space for the recipient to sign

the form labeled “Recipient Signature” and a space for the recipient to write the date of their

signature, labeled “Date.”

(3) For any disclosure other than a disclosure required to comply with section 920, subdivision (a),

at the bottom of the disclosure, below any other information required by this subchapter, the

provider shall include the following statement: “Applicable law requires this information to be

provided to you to help you make an informed decision.”

(4) If the term or estimated term of a transaction is:

(A) One year or less, the term or estimated term shall be disclosed in days;

(B) Greater than one year, the term or estimated term shall be disclosed in units of years

and months, with any remaining days expressed as a portion of a month to the nearest

two decimal points.

(5) The annual percentage rate shall be expressed to the nearest ten basis points. For example:

“10.45%.”

(6) The disclosures shall be presented to the recipient as a separate document from any other

contract, agreement, or other disclosure document provided to the recipient, but may be mailed

or transmitted in a package that contains other documents.

(7) Fonts

(A) The provider may present the required disclosure in fonts and colors that are clear,

complete, conspicuous, easy to compare with other disclosures, and consistent with

the requirements of this subchapter. A provider shall not use colors and fonts that

make any enumerated terms required by section 22802, subdivision (b), of the code

more clear or conspicuous than any other term required by that subdivision.

(B) A provider shall use fonts for the disclosures substantially similar in size to:

(i) Times New Roman 12- to 14-point font, for information appearing in the first

and second columns where those columns are not combined with other

columns.

(ii) Times New Roman 10- to 12-point font, for information appearing in the third

column, information appearing in cells where the second and third columns are

combined, and information appearing in cells where the first, second, and third

columns are combined.

(iii) Times New Roman 16-point font for the content required by subdivision (a)(1)

of this section.

size to Times New Roman 16-point font for “OFFER SUMMARY –” and content

appearing in the first and second columns of the disclosure where those columns are

not combined with other columns.

(D) A provider may deviate from the font requirements described in subdivisions (a)(7)(B)

and (C) if the provider makes a good faith determination that deviating from the

standards is necessary:

(i) To comply with the Americans with Disabilities Act (42 U.S.C. § 12101 et seq.);

(ii) For clarity based upon the medium (e.g., mobile device) in which the disclosure

will be presented.

(8) A provider shall ensure that the width of the columns in the required disclosure is such that the

disclosure does not unnecessarily extend onto multiple pages. A provider that formats the

columns in the required disclosure such that the ratio between the first, second and third

columns is 3:3:7 complies with the requirements of this subdivision.

(9) Where a provider is required or permitted to provide a “short explanation” under this

subchapter, the provider shall provide an explanation of not more than 60 words.

(10) Each of the cells in the required disclosures shall be outlined.

(11) If disclosures are provided to a recipient electronically, the provider shall include a method for

the recipient to submit an electronic signature that complies with Civil Code section 1633.2,

subdivision (h), and automatic date stamp to comply with subdivision (a)(2) of this section and

provide the recipient with the ability to receive a copy of the disclosure in a format that the

recipient may keep. A format the recipient may keep includes hard copy disclosures, and

electronic documents containing the required disclosures that the customer can save

indefinitely for future reference.

(12) Except with respect to sales-based financing, if a provider must make estimates or assumptions

to provide any disclosure required by this chapter, the provider shall:

(A) Base those estimates or assumptions on the best information reasonably available to

the provider at the time of the disclosure;

(B) State clearly that any disclosure based upon an estimate or assumption is an estimate

by adding the word “estimate” to the descriptive language of any required disclosure

under this chapter; and

explanation or description associated with the disclosure.

(13) When making the disclosures required by this subchapter, for transactions where the applicable

interest rate adjusts over time and the interest rate applicable for the entire term of the

transaction cannot be calculated in advance, the provider shall assume that the applicable

interest rate is the initial interest rate for any period when the interest rate cannot be calculated

in advance.

(14) Numerical values, including but not limited to percentages, dates, and dollar amounts, shall be

expressed numerically, such as “23” and not alphabetically, such as “twenty-three.”

(15) If a provider issues a disclosure where the amount financed includes funds used to pay down or

pay off other amounts owed by the recipient that may change over time, and the amount due in

connection with those amounts owed changes prior to consummation of the agreement

between the financer and the recipient, the provider need not provide a new disclosure to the

recipient solely because the amount due in connection with those amounts owed has changed.

(16) A provider may disregard the effects of the following in making calculations and disclosures:

(A) That payments must be collected in whole cents.

(B) That dates of scheduled payments and advances may be changed because the

scheduled date is not a business day.

(D) The occurrence of leap years.

(17) Notwithstanding subparagraph (a)(16)(A), any dollar amount disclosed to a recipient shall

not be disclosed using fractions of a cent (ex. $4.025 or $4.02 and ½ cents).

Note: Authority cited: Sections 321 and 22804, Financial Code. Reference: Sections 22800, 22801,

22802, 22803 and 22804, Financial Code.

§ 910 Closed-End Transaction Disclosure Formatting and Contents.

(a) Disclosures for closed-end transactions provided in accordance with section 22802 of the code, and

open-end credit plans described in section 900, subdivision (a)(5)(C), shall comply with the following

requirements unless the closed-end transaction meets the definition of sales-based financing.

(1) The provider shall present the 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.

(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 also 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.

(3) The second row of the table shall include only the following information.

(A) In the first column:

(i) If the contract provides for a fixed interest rate or rates that are predetermined

by the contract, or no interest rate: “Annual Percentage Rate (APR)”.

(ii) If the contract provides for an adjustable interest rate or rates that are not

predetermined by the contract: “Estimated Annual Percentage Rate (APR)”.

(B) In the second column, the annual percentage rate calculated in accordance with

section 940.

(i) The following language, if the contract provides for a single, fixed interest rate:

“APR is the cost of your financing expressed as a yearly rate. APR includes the

amount and timing of the funding you receive, interest and fees you pay and the

payments you make.

Your APR is not an interest rate. Your interest rate is [interest rate]. Your APR

may be higher than your interest rate because APR incorporates interest costs

and other finance charges.”

(ii) The following language, if the contract provides for a multiple pre-determined

interest rates that change over time:

“APR is the cost of your financing expressed as a yearly rate. APR includes the

amount and timing of the funding you receive, interest and fees you pay and the

payments you make.

Your APR is not an interest rate. Your initial interest rate is [initial interest rate].

Your APR may be higher than your interest rate because APR incorporates

interest costs and other finance charges.”

(iii) The following language, if the contract provides for an adjustable interest rate

or rates that are not predetermined by the contract.

“APR is the cost of your financing expressed as a yearly rate. APR includes the

amount and timing of the funding you receive, interest and fees you pay and the

payments you make.

APR is not an interest rate. Your initial interest rate is [initial interest rate].

Although your interest rate will adjust over time, for the purposes of calculating

this APR estimate, we have used the initial interest rate for future periods

where the interest rate is not preset by the contract. Your APR may be higher

than your interest rate because APR incorporates interest costs and other

finance charges.”

(iv) The following language if no part of the finance charge is based upon an interest

rate:

“APR is the cost of your financing expressed as a yearly rate. APR includes the

amount and timing of the funding you receive, fees you pay and the payments

you make.

Your APR is not an interest rate. The cost of this financing is based upon fees

charged rather than interest that accrues over time.”

(4) The third row of the table shall include only the following information.

(A) In the first column:

(i) If the contract provides for a fixed interest rate or rates that are predetermined

by the contract, or no part of the finance charge is based upon an interest rate:

“Finance Charge”.

(ii) If the contract provides for an adjustable interest rate or rates that are not

predetermined by the contract: “Estimated Finance Charge”.

(B) In the second column, the total finance charge, calculated in accordance with section

943.

(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.”

(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: “Estimated Total Payment

Amount”.

(B) In the second column, the total dollar amount of payments or total estimated dollar

amount of payments the recipient will make during the term of the contract if the

recipient makes minimum required payments.

(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:

(i) If the periodic payments will not vary over the term of the transaction or the

periodic payments during the term of the transaction will vary and it is possible

to calculate the payment amounts in advance: “Payment”.

(ii) If the periodic payment amounts will vary over the term of the transaction and

it is not possible to calculate the payment amounts in advance (e.g. due to an

adjustable interest rate using a benchmark rate and a margin): “Initial

Payment”.

(B) If periodic payments during the term of the transaction will not vary:

(i) In the second column, the amount of each periodic payment followed by a

forward slash (/) and the frequency of each periodic payment (e.g., month, day,

or other period) followed by the date and amount of any irregular payments

listed in chronological order.

(ii) In the third column, a short explanation of the payment frequency and any

irregular payments. The provider may also include a short explanation

describing when each periodic payment will become due.

calculate the payment amounts in advance, the second and third columns in the fourth

row shall be combined and the provider shall list the periodic payment amounts and

when each amount will become due followed by the date and amount of any irregular

payments in listed chronological order. For example:

Months 1-12: $600/month

Months 13-24: $1200/month

Maintenance Fee Due 2/1/2021: $500.

Maintenance Fee Due 8/1/2022: $300.

Payments 1-23: $600/month

Payment 24: $2000.

Maintenance Fee Due 2/1/2021: $500.

Maintenance Fee Due 8/1/2022: $300.

(D) If periodic payments during the term of the transaction vary and it is not possible to

calculate all payment amounts in advance:

(i) In the second column, the initial periodic payment amount followed by a

forward slash (/) and the frequency of each periodic payment followed by the

date, followed by the date and amount of any irregular payments listed in

chronological order.

(ii) In the third column: “This is your initial periodic payment. Your periodic

payment may adjust over time.”

(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 eight rows shall be combined and shall include only the

following language: “Prepayment”.

(9) In the seventh row, the second and third columns shall be combined and 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 charges other than interest accrued since

the recipient’s last payment, the following statement: “If you pay off the financing

early, you will still need to pay all or a portion of the finance charge, up to $[maximum

non-interest finance charge].”

(B) In all other cases, “If you pay off the financing early, you will not need to pay any

portion of the finance charge other than unpaid interest accrued (if applicable).”

(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 additional fees and charges not included

in the finance charge, the following statement: “If you pay off the financing early you

must also pay the following additional fees:” followed by the amounts and descriptions

of each additional fee and charge.

(B) In all other cases, the following statement: “If you pay off the financing early you will

not pay additional fees.”

(11) If the contract provides for periodic payments that are not monthly, the provider shall insert

one additional row below the fourth row, and the additional row shall include only the following

information:

(A) In the first column: “Average Monthly Cost”.

(B) In the second column, the average monthly cost that the recipient will pay over the

term of the transaction.

our calculation of your average monthly cost for comparison purposes.”

(12) If the contract provides for multiple payment options, then 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 the following: “This financing has

multiple payment options. This disclosure assumes you will make the minimum payments

permitted under the contract.”

Note: Authority cited: Sections 321 and 22804, Financial Code. Reference: Sections 22800, 22802 and

22804, Financial Code.

§ 911. Commercial Open-End Credit Plan Disclosure Formatting and Contents.

(a) Disclosures for commercial open-end credit plans provided in accordance with section 22802 of

the code, except open-end credit plans described in section 900, subdivision (a)(5)(C), shall

comply with the following requirements.

(1) The provider shall present the disclosures in a table consisting of ten rows and three

columns.

(2) In the first row, the first, second and third columns shall be combined, and the

resulting cell shall have only the following language, in italics:

(A) If the contract allows only for a single payment option: “The calculations below

are based on an initial draw of your full Approved Credit Limit of [approved

credit limit] and assume that you will pay off the draw entirely according to the

agreed payment schedule, that you miss no payments, and that you do not re-

draw on this line. Actual costs may differ substantially.”

(B) If the contract allows for multiple payment options: “The calculations below are

based on an initial draw of your full Approved Credit Limit of [approved credit

limit] and assume that you will choose to make minimum payments, that you

miss no payments, and that you do not re-draw on this line. Actual costs may

differ substantially.”

short explanation that amounts borrowed are payable on demand and that the

estimate assumes a term of one year.

(D) If an alternate maturity date is stated in the legal obligation between the

parties, then the provider shall include a short explanation that the disclosure is

based upon that maturity date.

(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.

(i) “This is the maximum amount of funding [name of financer] may

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 shall

also 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 the following information:

(A) In the first column:

(i) If the contract provides for a fixed interest rate or rates that are

predetermined by the contract: “Annual Percentage Rate (APR)”.

(ii) If the contract provides for an adjustable interest rate and it is not

possible to calculate the interest rates throughout the term of the

transaction in advance: “Initial Annual Percentage Rate (APR)”.

(B) In the second column, the provider’s calculation of the annual percentage rate

calculated in accordance with section 940.

(i) If the contract provides for a single, fixed interest rate:

“APR is the cost of your financing expressed as a yearly rate. APR

includes the amount and timing of the funding you receive, interest and

fees you pay and the payments you make.

APR is not an interest rate. Your interest rate is [interest rate]. Your APR

may be higher than your interest rate because APR incorporates interest

costs and other finance charges.”

(ii) If the contract provides for multiple pre-determined interest rates that

change over time:

“APR is the cost of your financing expressed as a yearly rate. APR

includes the amount and timing of the funding you receive, interest and

fees you pay and the payments you make.

Your APR is not an interest rate. Your initial interest rate is [initial interest

rate]. Your APR may be higher than your interest rate because APR

incorporates interest costs and other finance charges.”

(iii) If the contract provides for an adjustable interest rate and it is not

possible to calculate the interest rates throughout the term of the

transaction in advance:

“APR is the cost of your financing expressed as a yearly rate. APR

includes the amount and timing of the funding you receive, interest and

fees you pay and the payments you make.

APR is not an interest rate. Your initial interest rate is [initial interest

rate]. Although your interest rate will adjust over time, for the purposes

of calculating this APR estimate, we have used the initial interest rate for

future periods where the interest rate is not preset by the contract. Your

APR may be higher than your interest rate because APR incorporates

interest costs and other finance charges.”

(iv) If no part of the finance charge is based upon an interest rate:

“APR is the cost of your financing expressed as a yearly rate. APR

includes the amount and timing of the funding you receive, fees you pay

and the payments you make.

APR is not an interest rate. The cost of this financing is based upon fees

charged rather than interest that accrues over time.”

(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 total finance charge calculated in accordance with

section 943.

(i) “This is the dollar cost of our financing based upon the assumptions

described at the top of this disclosure.”

(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: “Estimated Total Payments”.

(B) In the second column, the total estimated payments the recipient will make

during the term of the contract if the recipient makes minimum required

payments.

during the term of the contract based upon the assumptions described at the

top of this disclosure.”

(7) The sixth row of the table shall include only the following information:

(A) In the first column: “Estimated Payment”.

(B) If periodic payments during the term of the transaction will not vary over the

term of the transaction:

(i) In the second column, the amount of the periodic payment followed by

a forward slash (/) and the frequency of each periodic payment followed

by the date and amount of any irregular payments listed in

chronological order.

(ii) In the third column, a short explanation of when each payment will

become due.

calculate the payment amounts in advance, the second and third columns in the

fifth row shall be combined and the provider shall list the periodic payment and

when each amount will become due followed by the date and amount of any

irregular payments listed chronological order and any assumptions made when

calculating the payment amounts. For example:

Months 1-12: $600/month

Months 13-24: $1200/month

Maintenance Fee Due 2/1/2021: $500.

Maintenance Fee Due 8/1/2022: $300.

(D) If periodic payments during the term of the transaction vary and it is not

possible to calculate all payment amounts in advance because the transaction

has an adjustable interest rate that cannot be calculated in advance:

(i) In the second column, a periodic payment amount calculated using the

initial interest rate followed by the date and amount of any reasonably

anticipated irregular payments listed in chronological order.

(ii) In the third column, a short explanation that the periodic payment

amount disclosed is based upon the initial interest rate, and that the

actual rate may change over time. The provider may also include a short

explanation describing when the payment will adjust and how it will be

calculated.

(E) If periodic payments of principal during the term of the transaction do not vary

but periodic payments of interest during the term of the transaction vary, and it

is not possible to calculate all interest payment amounts in advance because the

transaction has an adjustable interest rate that cannot be calculated in advance:

(i) In the second column, the phrase “Initial Interest Payment:”

followed by an interest payment amount calculated using the initial

interest rate, followed by a forward slash (/) and the frequency of each

periodic interest payment.

(ii) In the second column, beneath the disclosure required by subdivision

(a)(7)(E)(i), the phrase “Principal Payment Amount:” followed by the

amount of each periodic principal payment, followed by a forward slash

(/) and the frequency of each periodic principal payment.

(iii) In the third column, a short explanation that the Initial Interest Payment

Amount disclosed is based upon the initial interest rate, and that the

actual rate may change over time.

(iv) In the third column, beneath the statement explaining the Initial

Interest Payment Amount and at the same height as the disclosure

required under subdivision (a)(7)(E)(ii), a short explanation of the

principal payment amount and frequency.

(8) The seventh 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.

(9) The eighth 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.

(10) In the first column, the ninth and tenth rows shall be combined and shall include only

the following language: “Prepayment”.

(11) In the ninth 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 early you will need pay all or portion of

the finance charge, up to $[maximum non-interest finance charge].”

(B) In all other cases, “If you pay off the financing early, you will not need to pay

any portion of the finance charge other than unpaid interest accrued (if

applicable).”

(12) In the tenth 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 additional fees and

charges not included in the finance charge, the following statement: “If you pay

off the financing early you must also pay the following additional fees:” followed

by the amounts and descriptions of the additional fees and charges.

(B) In all other cases, the following statement: “If you pay off the financing early

you will not pay additional fees.”

(13) If the contract provides for periodic payments that are not monthly, the provider shall

insert one additional row below the fifth row, and the additional row shall include only

the following information:

(A) In the first column: “Average Monthly Cost”.

(B) In the second column, the average monthly cost that the recipient will pay over

the term of the transaction.

this is our calculation of your average monthly cost for comparison purposes.”

Note: Authority cited: Sections 321 and 22804, Financial Code. Reference: Sections 22800, 22802, 22803

and 22804, Financial Code.

§ 912. Factoring Disclosure Formatting and Contents.

(a) Disclosures for factoring transactions provided in accordance with section 22802 of the code

shall comply with the following requirements.

(1) The provider shall present the required disclosures in a table consisting of six 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.

(i) “This is how much [name of financer] will pay when you assign [description

of legally enforceable claim, e.g., “the invoice”] to [name of financer].”

(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 also 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.

(3) The second 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 estimated annual percentage rate calculated in

accordance with sections 940 and 941.

(i) “APR is the estimated cost of your financing expressed as a yearly rate. APR

includes the amount and timing of the funding you receive, fees you pay, and

payments made to [name of financer].”

(ii) A short explanation of the assumptions relating to payment timing that the

provider used to calculate the estimate. For example: “This estimate assumes

the account debtor will pay the invoice on the invoice due date.”

(iii) If no part of the finance charge is based upon an interest rate, in addition to the

language required by subdivision (a)(3)(C)(i): “APR it is not an interest rate and

the amount of the factoring fee we charge is not based upon an interest rate.”

(4) The third row of the table shall include the following information:

(A) In the first column: “Finance Charge”.

(B) In the second column, the total finance charge calculated in accordance with

section 943.

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: “Payment”.

(B) In the second column: “NA” or “N/A” or “Not applicable”.

ordinarily required to make payments under the contract. For example: “You are

selling an invoice to us, so you will not be required to make any payments to us

unless your customer fails to pay the invoice and we find that you breached your

warranty to us by failing to deliver the invoiced goods to your customer.”

(6) The fifth row of the table shall include only the following information:

(A) In the first column: “Estimated Term”.

(B) In the second column, the term of the transaction.

term. For example: “The invoice is due for payment 30 days from today, so we

have estimated a term of 1 month. The invoice may be paid sooner or later than

the due date.”

(7) The sixth row of the table shall include only the following information:

(A) In the first column: “Repurchase Costs”.

(B) The second and third columns shall be combined, and:

(i) If the recipient is permitted to repurchase the legally enforceable claim for

payment before the legally enforceable claim is due and payable, the

resulting combined cell shall be divided vertically into two cells by a

horizontal line, and:

a. If at any time during the term of the transaction, repurchase of the

legally enforceable claim will result in the recipient paying finance

charges other than interest since the advance was made, the top

cell shall include the following statement: “If you repurchase the

[description of legally enforceable claim] before the due date you

still must pay all or a portion of the finance charge, which could be

as high as $[maximum non-interest finance charge].”

b. In all other cases, the top cell shall include the following statement,

“If you repurchase the [description of legally enforceable claim]

before the due date you will not pay any portion of the finance

charge other than unpaid interest accrued since disbursement.”

c. If, at any time during the term of the transaction, repurchase of the

legally enforceable claim will require the recipient to pay additional

fees and charges not included in the finance charge, the bottom cell

shall include the following statement: “If you repurchase the

[description of legally enforceable claim] before the due date, you

must pay additional fees and charges that are not part of the

finance charge, including [amount and description of fees].”

d. In all other cases, the bottom cell shall state: “If you repurchase the

[description of legally enforceable claim] before the due date, you

will not be required to pay any additional fees and charges.”

(ii) If the recipient is not permitted to repurchase the legally enforceable claim

for payment before the legally enforceable claim is due and payable, the

resulting cell shall include the following statements:

a. “You are not permitted to pay the amount due on the [description

of legally enforceable claim] before your customer’s due date.”

b. If applicable: “The finance charge will not decrease if your customer

pays the [description of legally enforceable claim] before the due

date.”

Note: Authority cited: Sections 321 and 22804, Financial Code. Reference: Sections 22800, 22802, 22803

and 22804, Financial Code.

§ 913. Factoring Disclosure Formatting and Contents for Example Transactions

(a) Disclosures for factoring transactions provided in accordance with section 22803 of the code

shall comply with the following requirements.

(1) The provider shall present the required disclosures in a table consisting of seven 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 include only the following language, in italics:

(A) If the finance charge, annual percentage rate and term do not vary for different

classes of legally enforceable claim: “The calculations below are based upon a

hypothetical [description of legally enforceable claims to be assigned, e.g.

“Invoice”] of [value calculated in accordance with section 951], assigned to [insert

name of financer] with a due date [term] from the date of assignment. Actual costs

may differ substantially.”

(B) If the finance charge, annual percentage rate or term will vary for different classes

of legally enforceable claims with different characteristics, the following in the

order listed:

(i) “The calculations below are based upon a hypothetical [description of

legally enforceable claims to be assigned, e.g., “invoice”] of [insert value

calculated in accordance with section 951], assigned to [name of financer]

with a due date [term] from the date of assignment.”

(ii) A short explanation of the class of the legally enforceable claim for which

the disclosure applies. For example: “These calculations further assume

that the account debtor on the invoice is [name of account debtor].”

(iii) “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.

(i) “This is how much [name of financer] will pay when you assign [description

of legally enforceable claim, e.g. “the invoice”] to [name of financer].”