In recent years, we’ve witnessed a surge in state-level commercial financing disclosure laws—each designed to bring transparency to the SME funding industry and protect small enterprises from potentially harmful practices.
But the changes aren’t stopping at new laws. Existing regulations are being updated and continue to evolve—becoming more detailed and far-reaching.
A prime example is the California Consumer Financial Protection Law (CCFPL).
First enacted in 2020, the CCFPL was updated in 2023 to include a new requirement for annual reporting starting in 2025.
On that note, if you’re a merchant cash advance funder doing business in California, it’s time to add reporting to your list of yearly tasks.
In this article, we’ll break down the CCFPL reporting requirements for MCA funders, who needs to comply, and how to stay on track for that March 15 deadline—starting this year.
Current California Financing Laws
In California, financing laws generally fall under the legislative umbrella of the state’s Department of Financial Protection and Innovation (DFPI).
One such law is the California Financial Disclosure Law (CFDL), which requires commercial financing providers across the state—including MCA funders—to give clear, consumer-like disclosures to small enterprises.
The CFDL is part of the California Financing Law (CFL), which is a broader regulation focused on the licensing and conduct of funders and brokers of both consumer and commercial financing.
Then, there is the California Consumer Financial Protection Law (CCFPL).
Thanks to the CCFPL, California has become the first state in the U.S. to have a financial regulator overseeing commercial financial products with consumer-like protections.
Initially passed in 2020, the DFPI later introduced new guidelines in 2023 to expand the CCFPL. Their focus is on protecting small enterprises, nonprofits, and family farms across California from unfair, deceptive, and abusive practices (UDAAP) in commercial financing.
As part of those guidelines, funders must begin submitting a CCFPL Commercial Financing Annual Report by March 15 every year—starting in 2025.
Who Must Submit a Report?
If you’re a business (aka covered provider) that provides commercial financing or financial services to small enterprises, nonprofits, or family farms in California, you’ll probably need to file a report starting this year.
The DFPI uses the term “commercial financing” to describe various financial transactions, including (but not limited to) sales-based financing like merchant cash advances.
However, there are a couple exemptions where you may not have to submit an annual report:
- If your organization made no more than one commercial financing transaction to a small enterprise, nonprofit, or family farm in the preceding calendar year.
- If, during the previous calendar year, providing commercial financing was a very small, secondary part of your business, comprising no more than five transactions.
In short, most MCA funders who service SMEs, nonprofits, and family farms in California will need to file the report every year; but there are exceptions if your financing activities are limited.
What Data Is Needed?
If you’re required to submit an annual report to the DFPI, you must include the following details about the previous calendar year:
- Basic contact information: Your name, any business names, type of business, mailing address, phone number, email, website, and a designated contact person.
- Breakdown of financing transactions: Including the total number and total dollar amount (aka amount financed), categorized by the type of financing. For sales-based financing specifically, the total dollar amount would be the sum of funds provided, minus any prepaid finance charge.
- Further breakdown of transactions and amounts: For each type of commercial financing, disclose the number of transactions with amounts financed in the following ranges: $10K or less, $10,001 to $25K, $25,001 to $50K, $50,001 to $100K, $100,001 to $250K, and $250,001 to $500K.
- Annual percentage rate: Including the minimum, maximum, average, and median APR for each type of financing and amount range mentioned above. However, if you did not provide any APR disclosures in the last calendar year, you don’t need to calculate this information—you simply need to indicate that you did not make APR disclosures.
To help you compile the information required in your CCFPL report, you can first print out a blank copy of the form. As an MCA funder, you’ll probably want to fill out the section under “Sales-Based Financing Transaction Information.”
How to File the Report
You must file your CCFPL Commercial Financing Annual Report via the DFPI Self-Service Portal by March 15, 2025 at the latest (and March 15 of every year thereafter).
If You Already Have a Self-Service Portal Account
First, you must make a formal request to DFPI to submit your report via your account.
Using the subject line “CCFPL Commercial Financing Annual Report Request,” send an email to CCFPL.Inquiries@dfpi.ca.gov along with:
- Your organization ID.
- Your legal name.
- The name and phone number of your contact person.
Then, wait for their reply for further instructions.
If You Don’t Yet Have a Self-Service Portal Account
If you need to create an account, fill out all the required DFPI information.
Here’s how to answer the following questions:
- Are you currently a covered person registered under the CCFPL with the CA DFPI? Select “No,” unless you’ve already applied for CCFPL registration through NMLS.
- Are you registering to file a Commercial Financing Annual Report? Select “Yes.”
Once you submit your registration, you will see a message on screen, confirming your sign-up.
Then, after DFPI staff approve your request (usually within five days), you will receive an email confirming your account activation.
Late Penalties
It’s critical to get your report in by the March 15 deadline—especially when you consider the potentially hefty fines for each day you’re late.
If you submit after the deadline, you’ll face a penalty of up to $100 per business day for the first five days.
After that, the penalty increases to $500 per business day—up to a grand total of $25,000.
Best Practices for Implementing Changes
We get it—dealing with new financing laws can be a challenge, especially when you’re dealing with different regulations across multiple jurisdictions.
Whether or not the CCFPL affects your merchant cash advance operations, these best practices can help you adapt to any new legislative changes—from reporting requirements to MCA disclosure laws and beyond.
Consult an Expert
Navigating government language can be tricky—especially when different official pages use conflicting terms or require a deeper understanding of legal jargon.
To ensure you’re fully compliant and informed, reach out to a legal and/or compliance professional to ensure you understand the requirements and how they apply to you as an MCA funder.
You can also contact DFPI directly at CCFPL.Inquiries@dfpi.ca.gov or (866) 275-2677 for more information about the CCFPL.
Prepare and Educate Your Staff
To remain compliant with any new reporting requirements, it’s essential that your team fully understands what’s expected of them.
Explaining not only the “how” but the “why” behind these rules will encourage your staff to embrace the changes. When your team understands the importance, they’ll be more likely to follow through—and proactive to detect any potential compliance issues.
Meanwhile, provide them with trustworthy industry-specific resources (this article is a good start!) to keep everyone aligned and informed.
Upgrade Your Internal Systems
As new legislation takes effect, it’s crucial to regularly reassess and upgrade your internal MCA funding systems.
Technology like Onyx IQ’s all-in-one funding platform can significantly ease this transition by automating routine tasks, empowering your team to focus on higher-priority matters.
Moreover, establishing a robust system for tracking and storing relevant data is essential to ensure ongoing compliance. Onyx IQ simplifies this by providing seamless tracking, auditing, and reporting capabilities—allowing your operations to stay organized and quickly adjust as new regulations come into play.
Onyx IQ: Master MCA Regulations With Ease
For MCA funders, staying ahead of the CCFPL and other new regulations can feel daunting. But it doesn’t have to be.
With the right tools, you can turn compliance challenges into growth opportunities—and continue to close deals successfully.
If you’re seeking effortless compliance, Onyx IQ is the solution you need. Built by MCA funders for MCA funders, our platform ensures your operations are always organized, compliant, and ready to adapt to new rules—giving you peace of mind to focus on growth.
Don’t let new legislation bog you down. Book an Onyx IQ demo today and discover how our platform can simplify compliance and help you drive your business forward with confidence.
