Federal Reserve Bank and others have found that many small business owners do not understand the true costs of the financing they obtain for their businesses. Others are young people or early retirees with no background in finance. Today’s small business owners are often immigrant entrepreneurs struggling to get their enterprises off the ground with little knowledge of the finance industry. Increasingly, however, that is no longer true. Even the owners of the smallest companies were left to fend for themselves on the theory that they were sophisticated merchants who understood the world of finance. Until now, state and federal Truth in Lending laws have applied only to consumer finance. It will make California a leader in placing the interests of small business owners on par with the big players in the financial industry.” “This law offers a modest measure – disclosure - to help level the playing field for small business owners. “I applaud this new online lending industry because it is bringing capital to people who need it badly. The bill was aimed at solving a growing problem in the rapidly evolving small business finance market, where fast-moving online lenders are replacing traditional banks in a largely unregulated world of loans and more innovative financing options.
Steve Glazer, D-Orinda, will require lenders and other finance companies to provide clear and consistent disclosures to small business owners when they offer them financing and when they close a deal. SACRAMENTO – California will become the first state in the nation to give small business owners the same protections that Truth in Lending laws have given consumer borrowers for more than half a century, under legislation signed Sunday by Gov.