Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The alternative disclosures to a
recipient under section
916 shall be made using an example
transaction and in accordance with the formatting requirements of section
916. The example transaction shall
be based on the proposed agreement governing the actual transaction between the
provider and recipient with the following parameters, as applicable:
(1) For asset-based lending transactions
where the finance charge, annual percentage rate, or term varies based upon the
type of advance received, where the provider offers the recipient an agreement
that describes the general terms and conditions of the commercial financing
transactions that will occur under the agreement, and where the financer
provides disclosures based upon an example of a transaction that could occur
under the agreement under section
22803 of the code, the provider
shall give the recipient a separate disclosure for each type of
advance.
(2) If the agreement
between a financer and recipient permits an advance of funds to the recipient
up to and including an approved credit limit, the example transaction used in
making the disclosures shall assume:
(A) The
recipient borrows up to the approved credit limit at origination;
(B) The recipient maintains a balance equal
to the approved credit limit by reborrowing up to the approved credit limit for
a time equal to the draw period or one year, whichever is less; and
(C) At the end of the time specified under
subdivision (a)(2)(B), the financer is repaid according to the terms specified
in the contract.
(3) If
the agreement between a provider and recipient does not specify an approved
credit limit, the example transaction used in making the disclosures shall
assume:
(A) The recipient has drawn
$10,000;
(B) The recipient
maintains a balance equal to $10,000 by reborrowing up to the approved credit
limit for a time equal to the draw period or one year, whichever is less;
and
(C) At the end of the time
specified under subdivision (a)(3)(B), the financer is repaid according to the
terms specified in the contract.
1. New section
filed 6-9-2022; operative 12-9-2022 pursuant to Government Code section
11343.4(b)(2)
(Register 2022, No. 23). Transmission deadline specified in Government Code
section
11346.4(b)
extended 60 calendar days pursuant to Executive Order N-40-20 and an additional
60 calendar days pursuant to Executive Order N-71-20. Filing deadline specified
in Government Code section
11349.3(a)
extended 60 calendar days pursuant to Executive Order N-40-20 and an additional
60 calendar days pursuant to Executive Order N-71-20.
Note: Authority cited: Sections
321 and
22804,
Financial Code. Reference: Sections
22800,
22802,
22803 and
22804,
Financial Code.
