California signs law increasing oversight of predatory commercial lending
What happened
Gavin Newsom signed Assembly Bill 2116, known as the Protect Small Businesses from Predatory Lending Act, on October 15, 2026. The law expands state oversight of commercial financing providers and brokers in California. It specifically targets financing products like merchant cash advances that carry high costs and restrictive contract terms.
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Why it matters
The legislation aims to increase transparency and accountability among commercial lenders. The law was informed by an analysis from the Consumer Financial Protection Bureau, which noted that merchant cash advances can carry an average annual interest rate of 94%.
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Who's involved
- Gavin NewsomSigned the legislation expanding state oversight of commercial financing.
- Consumer Financial Protection BureauProvided an analysis cited in the legislative discussion regarding high interest rates.
- State of CaliforniaThe government of the state where the new commercial financing oversight was implemented.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- State of CaliforniaSpeculative
Small businesses in California might face changes in the cost or availability of financing due to increased state oversight.
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The entities involved
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Gavin Newsom
40th governor of California since 2019
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Consumer Financial Protection Bureau
agency of the United States government responsible for consumer protection in the financial sector
Related events
- Gavin Newsom signed legislation mandating utility review on October 10, 2026.
- An office associated with Gavin Newsom is currently under federal financial investigation.
- Karen Bass urged Governor Gavin Newsom to sign a new tax credit bill.
- Gavin Newsom vetoed a similar measure proposed by California lawmakers due to investigation concerns.
- Governor Gavin Newsom signed California Senate Bill 951 on October 16, 2026.