SB 1235 is in full swing—and if your broker still dodges the question about APR, they’re either lying or think you’re gullible.
The Game: You Ask for the APR. They Dodge.
You ask, “What’s the APR?”
They:
- Do the funky broker dance,
- Say “That doesn’t apply here,”
- Or reassure you with, “Trust me, it’s a good deal.”
Sorry—California doesn’t let them get away with that anymore.
Thanks to SB 1235, fully enforced since December 2022, lenders and brokers are required by law to disclose the truth. That means:
✅ Total cost of the deal
✅ Annualized rate (yes, APR, even if they’d rather you didn’t see it)
✅ Actual cash you receive
✅ Repayment schedule
✅ Whether your broker is getting paid to shove this offer in front of you
Why It Actually Matters
Before this law, brokers could call it a “$100K loan” while quietly handing you $85K, charging you $135K, and pocketing $15K on the backend—without ever using the words “APR” or “commission.”
Now? That’s illegal in California.
Legal observers at Goodwin confirmed that the law imposes strict formatting, delivery, and signature requirements for disclosure documents. And as the National Law Review explained, the courts have upheld the rules against constitutional challenges from industry players desperate to keep business owners in the dark.
Does It Apply to You?
- Any non-bank lender or broker offering commercial financing to a California business
- Even if they’re based out-of-state
- Covers most deals under $500,000
Banks, of course, got a hall pass. But fintech lenders, MCA shops, and their favorite middlemen? They’re squarely in the crosshairs.
What If They Flout It?
California’s Department of Financial Protection and Innovation (DFPI) has already taken action. When SALT Lending tried to operate without a license—and without playing by the rules—they got shut down.
If your broker never gave you a disclosure before signing, and it happened after December 2022? That’s a violation. You’ve got rights—and possibly a legal leg to stand on.
Expecting the Usual Broker Dodges?
You’ll still hear:
- “This isn’t technically a loan.”
- “It’s a merchant cash advance, so it doesn’t count.”
- “APR doesn’t apply to short-term deals.”
Wrong. California doesn’t care what they call it—if it quacks like financing and drains your bank account like financing, it gets regulated like financing.
Bottom Line
If your broker didn’t give you a clear, signed disclosure before you signed anything—and you’re in California—they’re either:
- Breaking the law, or
- Avoiding California because it’s hard to run a scam when the lights are on
Either way? Run, don’t walk.
Coming Up Next:
California Banned These Broker Junk Fees — Here’s What That Means for You
Because apparently, it used to be legal to charge business owners just to make a payment.