[WhoisKingsley]

I can't wait to read an article with the headline "good riddance bad broker. hello _________________!"

[omegafund]

Getting licensed isn't that bad. It's $300 plus a fingerprint fee and time. I personally think it will increase business for good shops. A lot of the fly by nights won't bother.

We are looking in to getting licensed. Not sure if that is the full extent of what is required. But if 300 bucks and fingerprint any legit can do it

[Scott Williams]

The application (CFLL Application) will require finger prints, 25k surety bond, balance sheets, and other documentation.

The timing is the worst part of this. I am sure its going to take weeks (maybe months) to get applications approved and this new law starts in 3 weeks.

[AndyYSCISOdept]

Love me some Advancesmart business, just wanted to say that these guys (and gals) are doing big things and working with them is always a pleasure....now back to DF with coverage of the apocalypse

[Advance Smart]

Thank you Andy much appreciated my friend and it's good to see you as always. Scott just gave you guys the full list. It really isn't that bad. It seems that California would not have jurisdiction over an agreement that is strictly between a Non-California borrower and a Non-California broker. So I have no idea how they plan on regulating non-licensed California broker submissions to licensed lenders. That would require a lot of auditing I would imagine. Plus all the verbiage I see states the word "loan". 80% or more of what we all do is not a loan. We'll see how things go down but in the end it wouldn't be that bad.

[Christian]

So with Loan Me I would imagne you are ok, since it is only a referral, any other traditional ISO with another setup is going to be in trouble. Sean, is this now the LAW in California, or a proposal?

Not so. LoanMe will not accept referrals for CA business unless they have your CA Lenders License on file. From their email:

"In compliance with this Law, LoanMe will not be able to accept your California leads as of January 1st, 2016; without your California Finance Lenders License on file."

[Christian]

We are looking in to getting licensed. Not sure if that is the full extent of what is required. But if 300 bucks and fingerprint any legit can do it

Plus $25,000...

[brokerCompany]

Not so. LoanMe will not accept referrals for CA business unless they have your CA Lenders License on file. From their email:

"In compliance with this Law, LoanMe will not be able to accept your California leads as of January 1st, 2016; without your California Finance Lenders License on file."

That has been covered already. Surety bond for 25,000 might cost someone anywhere from $300-1200. out of pocket

[Chambo]

Thank you Andy much appreciated my friend and it's good to see you as always. Scott just gave you guys the full list. It really isn't that bad. It seems that California would not have jurisdiction over an agreement that is strictly between a Non-California borrower and a Non-California broker. So I have no idea how they plan on regulating non-licensed California broker submissions to licensed lenders. That would require a lot of auditing I would imagine. Plus all the verbiage I see states the word "loan". 80% or more of what we all do is not a loan. We'll see how things go down but in the end it wouldn't be that bad.

If the merchant is locate din California? ABSOLUTELY they have jurisdiction

[AndyYSCISOdept]

If the merchant is locate din California? ABSOLUTELY they have jurisdiction

So what you're saying is if 1 of the 3 (broker,borrower,funder) is in California then the license is required and if the broker screws around then the funder is on the hook for damages etc?

[Sean Cash]

Here is the gist of what I learned:

It has already been illegal to broker a business loan in California for years if you are not a licensed lender. That law did not apply to Merchant Cash Advances nor to lenders that partner with banks (due to charter preemptions). Those two things did not change.

This law actually softened the restrictions by making it possible for an unlicensed loan broker to receive a referral commission so long as they do not participate in the marketing, sales, negotiating or gathering of documents in any way and as long as the loan is under 36% APR.

This came about to help level the playing field for non-MCA/non-bank entities hoping to get referrals.
---
Hope that helps. I am not a lawyer so please consult with one before you broker or refer loans and/or deals in California.

[AndyYSCISOdept]

so in your non-lawyer opinion will this impact business in California in any significant way, and if so how?

[Chambo]

Here is the gist of what I learned:

It has already been illegal to broker a business loan in California for years if you are not a licensed lender. That law did not apply to Merchant Cash Advances nor to lenders that partner with banks (due to charter preemptions). Those two things did not change.

This law actually softened the restrictions by making it possible for an unlicensed loan broker to receive a referral commission so long as they do not participate in the marketing, sales, negotiating or gathering of documents in any way and as long as the loan is under 36% APR.

This came about to help level the playing field for non-MCA/non-bank entities hoping to get referrals.
---
Hope that helps. I am not a lawyer so please consult with one before you broker or refer loans and/or deals in California.

since none of these companies are offering 36% APR on their deals (36% over 6 months maybe...), and since all these brokers gather up documents and solicit signatures.....

We all fall under this category.

Guess you smaller guys better go out there and get licensed!

[omegafund]

http://leasingnews.org/archives/Nov2015/11_20.htm

"It began innocently enough. Several months ago, Dennis Brown, VP,
Government Relations, Equipment Leasing and Finance Association, who is always on the job it seems, notified us that the California legislature was considering amending the law to allow funders to pay referral fees to unlicensed brokers under certain circumstances.

In case you missed it, the California Finance Lenders Law requires lenders AND brokers making or arranging loans to in-state residents to be licensed. Licensure insulates the lender's transactions from California's usury law, which many lenders found to be a reasonable tradeoff. What has never been clear is to what extent the broker version of the license applied to loans arranged by out of state brokers and how failure to ensure that the broker had a license affects the lender or the loan itself." read more

Nice little article by This article first appeared in the November, 2015 Marks & Associates, PC Newsletter. To subscribe, visit the website: www.leaselawyer.com

[lauren2028]

I like the idea of small shops banding to gether to create one larger shop, I think the cumulative effect will be very positive.

I also agree with you making a large shop by binding small ones.

[Sean Cash]

Related:

"On Thursday, the California Department of Business Oversight, which oversees securities and lending activity in that state, sent requests to 14 companies for details about their lending practices, investors and business models, a person familiar with the inquiry said."

"The information will be used to help determine whether these firms and others are operating with appropriate licensing and supervision under California law and whether changes to state securities and lending rules are needed, said an official with the Department of Business Oversight."

Source: http://www.wsj.com/articles/californ...s_markets_main

[FUNd]

California is long known for reaching into pockets for money from the corporations that are good enough to operate in this state and create jobs. This is more about taxes, fines, and fees then it is about regulation.

[AndyYSCISOdept]

Im pretty sure that I had said a while back that any changes to "licensing/Regulation" were mostly a veiled attempt at a government sanctioned shake-down of our industry.

[FUNd]

Yes you did Andy.

[Funder Mark]

I wonder if there will ever be a point where regulations become too much in Cali, and as a result their entire credit system dries up?
(In the name of fairness of course)

[FUNd]

You mean the way the job market has dried up? Toyota just left, along with many other major corporations in the last decade. All that's left are scams and small businesses that operate at huge margins. The rest have been crushed under the weight of the bureaucracy here.

[AndyYSCISOdept]

Its funny you mention that because my Dads entire family is in California and all they talk about at Thanksgiving every year is how bad the job market etc. has become. My cousin who got her degree from UCSB this past spring is asking me for a job....that's an expensive degree to end up working for your cousin.

[mcg168]

Imagine the fall out if our industry was forced to stop lending in California. I mean it would be a hit to the lenders obviously, but it would be MASSIVE to small business. If they are going to regulate, there has to be some alternative. I'm afraid these politicians see things in black and white, and think everyone can simply walk into a local bank.

[Chambo]

Its funny you mention that because my Dads entire family is in California and all they talk about at Thanksgiving every year is how bad the job market etc. has become. My cousin who got her degree from UCSB this past spring is asking me for a job....that's an expensive degree to end up working for your cousin.

Considering how much you pay folks? Sounds like a win

[Chambo]

I wonder if there will ever be a point where regulations become too much in Cali, and as a result their entire credit system dries up?
(In the name of fairness of course)

you mean the way half the funds out there do NOT do business in California currently? Or have major restrictions?