California bars unfair, deceptive practices in small business lending

I was quoted in a recent article by American Banker about the final rule from California Department of Financial Protection and Innovation , which provides protections from unfair, deceptive, and abusive practices (UDAAP) to small business borrowers from nonbank lenders.

The rule has been years in the making, and prohibits lenders from engaging in practices that take "unreasonable advantage" of small farmers, non-profits, business owners. The rules defines a practice as deceptive if it "misleads or is likely to mislead" small business owners, and it's abusive if it "materially interferes with the ability" of a small business owner's ability to understand the loan terms.

It's the latest example of how California continues to lead the way in small business borrower protections and innovation. Small Business Majority is working closely with Heidi Pickman of CAMEO and Louis Caditz-Peck to pass SB 33 by Senator Steven M. Glazer to continue to require that lenders disclose APR for all small business financing products.