Senator Grayson advocates for SB 362 while addressing opposition concerns

The California Assembly Banking and Finance Committee made significant strides in supporting small businesses during its recent meeting on July 7, 2025, particularly with the advancement of SB 362. The bill, aimed at regulating revenue-based financing, received backing from various stakeholders, including the American Fintech Council, which expressed strong support for the legislation.

However, the bill faced scrutiny regarding its communication requirements with prospective clients. Carolyn Deal Hunter, representing the Revenue Based Finance Coalition, raised concerns about a specific provision that mandates annual percentage rate (APR) disclosures during informal discussions about financing options. Hunter argued that this requirement could hinder the ability of financing providers to engage in preliminary conversations without formal documentation, complicating the negotiation process for revenue-based financing.

Mark Smith from the Secured Finance Network echoed these concerns, emphasizing the need for further dialogue to refine the language in the bill. He noted that while the bill is modeled after New York law, it does not align perfectly and suggested that California should adopt a more tailored approach.

Senator Grayson, the bill's author, acknowledged the feedback and expressed his commitment to working collaboratively with stakeholders to address their concerns. He highlighted the importance of the bill for small businesses, particularly in the current economic climate, and urged committee members to support it.

The committee ultimately voted in favor of SB 362, sending it to the Judiciary Committee for further consideration. This decision marks a crucial step in enhancing the regulatory framework for revenue-based financing, aiming to protect small businesses while fostering a more transparent financing environment.