California is widening its lending license. The Legislature passed AB 2116, which expands the California Financing Law (CFL) to cover "commercial financing" providers and brokers, including factoring and other non-loan products. It was presented to Governor Newsom on 27 August 2026, and the licensing requirement takes effect on 1 July 2028 (Manatt). Industry reports indicate the Governor signed it; confirm before publishing.
What AB 2116 does
- New license categories. A person may not engage in business as a commercial financing provider or commercial financing broker without a CFL license (LegiScan).
- Broad product scope. Commercial financing includes accounts receivable purchases (including factoring), asset-based lending, commercial loans, commercial open-end credit and lease financing.
- Broker definition. The bill defines commercial financing brokers broadly, including people who participate in negotiations or make certain referrals (Hudson Cook).
- Enforceability. Agreements may be unenforceable if licensing requirements are not met.
What about real estate-secured loans?
A California Senate Judiciary Committee analysis lists commercial financing secured by real property among the bill's exclusions (Senate Judiciary). If the enacted text keeps that exclusion, real estate lenders would continue under California's existing rules: a CFL license or a licensed real estate broker (Volume 1, Articles 2 and 3). Verify the final text.
Why it matters to CBPLA members
Many mortgage brokers also arrange unsecured business loans, lines of credit or equipment financing for their clients. If you do this for California businesses, AB 2116 may require a license by mid-2028, even if your mortgage work stays exempt.
What to do
- Confirm the Governor's final action and read the enacted exemptions
- List any non-real-estate commercial financing you arrange for California businesses
- Plan a CFL application well before 1 July 2028
This content is general information for industry professionals and is not legal, tax or financial advice. Laws change and apply differently to each transaction; obtain advice from qualified counsel in each relevant jurisdiction. Legal counsel to the Cross-Border Private Lenders Association: Jasmine Daya & Co. Questions: info@cbpla.com