Federal Court Upholds California Small Business Disclosure Loan Law

Monday December 4th, Judge R. Gary Klausner granted California’s Department of Financial Protection and Innovation’s Motion for Summary Judgment in a lawsuit challenging the DPFI’s small business financing disclosure regulations.

SB 1235 (Glazer) requires lenders to disclose key metrics to small businesses to  including the amount of funding provided, APR , finance charge, and payment amounts. 

Judge Klausner’s order concluded that the disclosures required under the Department’s regulations were lawful under the First Amendment and were not preempted by federal law.

Says California DFPI Commissioner Clothilde Hewlett:

“Judge Klausner’s order represents a significant victory for small business owners and consumer protection in the State of California. SB 1235, and the accompanying DFPI regulations, ensure that more than four million California small businesses have protections like those enjoyed by consumers under the Truth in Lending Act for more than 50 years.”