What AB 2116 does
An act to amend Sections 22001, 22002, 22007, 22010, 22101, 22101.5, 22102, 22103, 22104, 22105, 22106, 22107, 22109, 22112, 22151, 22153, 22156, 22157, 22157.1, 22159, 22161, 22162, 22164, 22168, 22169, 22700, 22701, 22712, and 22714 of, to amend, renumber, and add Section 22807 of, to add Sections 22021, 22022, 22100.6, and 22167.1 to, and to add Chapter 3.1 (commencing with Section 22655) to Division 9 of, the Financial Code, relating to financial institutions.
The California Financing Law (CFL) provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Financial Protection and Innovation, including by regulating the provision of commercial loans, as defined. A willful violation of the CFL is a crime, except as specified.
This bill would, beginning January 1, 2028, generally provide for the regulation under the CFL of commercial financing, which the bill would define to mean an accounts receivable purchase transaction, including factoring, asset-based lending transaction, commercial loan, commercial open-end credit plan, or lease financing, intended by the recipient for use primarily for a purpose other than a personal, family, or household purpose, as specified. Beginning July 1, 2028, the bill would prohibit a person from engaging in the business of a commercial financing provider, as defined, or a commercial financing broker, as defined, without obtaining a license from the commissioner, except as specified. The bill would impose various duties on commercial financing providers and commercial financing brokers, including, among other things, prohibiting the taking of a confession of judgment or power of attorney at any time before a default, as specified. The bill would make various conforming changes to the CFL.
Existing law requires a provider of commercial financing to disclose certain information, as specified. Existing law deems certain violations of these provisions to be a violation of the CFL, as specified. The CFL authorizes the commissioner to require that rates of charge, if stated by a licensee, be stated fully and clearly in the manner that the commissioner deems necessary to prevent misunderstanding by prospective borrowers or property owners.
This bill would authorize the commissioner to require that rates of charge be stated fully and clearly in the manner that the commissioner deems necessary to prevent misunderstanding by prospective borrowers or recipients.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Summary from the Legislative Counsel's Digest of the enrolled text, August 24, 2026. Read the full text on leginfo.
How it got here
Assemblymember Schiavo introduced AB 2116 on February 18, 2026. The text was amended 5 times, 1 in the Assembly and 4 in the Senate, and heard in 7 committee hearings before its final floor votes.
- Assembly Floor, May 22, 2026: 73 ayes, 0 noes.
- Senate Floor, August 19, 2026: 38 ayes, 0 noes.
- Assembly Floor, August 20, 2026: 76 ayes, 0 noes.
Committee votes along the way:
- Assembly Banking and Finance, April 23, 2026: Do pass and be re-referred to the Committee on [Appropriations], 9-0.
- Assembly Appropriations, May 14, 2026: Do pass., 15-0.
- Senate Banking and Financial Institutions, June 17, 2026: Do pass as amended, but first amend, and re-refer to the Committee on [Judiciary], 6-0.
- Senate Judiciary, June 30, 2026: Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations], 13-0.
- Senate Appropriations, August 3, 2026: Placed on suspense file, 7-0.
- Senate Appropriations, August 13, 2026: Do pass as amended, 7-0.
Who supports and opposes AB 2116
The Senate Floor Analyses analysis dated August 17, 2026 lists 35 organizations in support and 2 in opposition. When Assembly Banking and Finance first listed positions on April 22, 2026, the count was 6 in support and 1 opposed. By the Senate Floor Analyses analysis of August 17, 2026 it was 35 to 2.
In support: Small Business Majority (sponsor); Responsible Business Lending Coalition (sponsor); California Low-income Consumer Coalition (sponsor); Cameo Network (sponsor); Access Plus Capital; Accessity; Asian Pacific Islander Small Business Collaborative; Asian, INC; and 27 more.
Opposed: Financial Technology Association; Revenue Based Finance Association.
Read the Senate Floor Analyses analysis.
What happens next
It reached the Governor's desk on August 27, 2026. Bills presented after the Legislature adjourned on August 31 must be signed or vetoed within thirty days.
The Governor can sign the bill, veto it, or let it become law without a signature. Until the decision, sign and veto request letters are the remaining channel, and the Department of Finance's enrolled bill report carries weight on anything with a fiscal effect. If signed, most provisions take effect January 1, and implementation moves to the agencies named in the bill.
What it means for financial services organizations
Two decisions follow from a bill at this stage. The first is whether to weigh in with the Governor's office before the thirty-day window closes. The second is how to prepare for implementation if it becomes law: which agency writes the rules, when the comment period opens, and which obligations begin January 1.
The financial services group at Capitol Axis handles that for financial services clients.
Questions about AB 2116
What does AB 2116 do?
This bill would, beginning January 1, 2028, generally provide for the regulation under the CFL of commercial financing, which the bill would define to mean an accounts receivable purchase transaction, including factoring, asset-based lending transaction, commercial loan, commercial open-end credit plan, or lease financing, intended by the recipient for use primarily for a purpose other than a personal, family, or household purpose, as specified. Beginning July 1, 2028, the bill would prohibit a person from engaging in the business of a commercial financing provider, as defined, or a commercial
Has AB 2116 passed the California Legislature?
It reached the Governor's desk on August 27, 2026. Bills presented after the Legislature adjourned on August 31 must be signed or vetoed within thirty days.
Who supports and opposes AB 2116?
The Senate Floor Analyses analysis dated August 17, 2026 lists 35 organizations in support and 2 in opposition. Supporters include Small Business Majority (sponsor); Responsible Business Lending Coalition (sponsor); California Low-income Consumer Coalition (sponsor). Opponents include Financial Technology Association; Revenue Based Finance Association.
What happens next with AB 2116?
The Governor can sign it, veto it, or let it become law without a signature. Until then, sign and veto request letters are the remaining channel, and the Department of Finance's enrolled bill report carries weight on anything with a fiscal effect.