As alternative business funding evolves, so do the regulatory standards that protect small business borrowers. In California and New York, two of the most influential financial markets in the U.S., recent statutory changes are reshaping how commercial financing providers must disclose pricing and cost information to business clients. CapFlow Funding Group® has updated its compliance frameworks to meet these new obligations, reinforcing its commitment to transparency, fairness, and trust in the alternative funding space.
Expanded Disclosure Requirements in California — SB 362
California continues to lead the nation in commercial financing transparency. Originally pioneering commercial financing disclosure laws in 2018, the state further expanded these rules with Senate Bill 362, which was enacted in 2025 and takes effect on January 1, 2026.
Under SB 362, providers of commercial financing offers of $500,000 or less must adhere to stricter disclosure practices. Key elements include:
- Truthful Terminology: Providers may not use terms like “interest” or “rate” in ways that could mislead a recipient. Instead, when discussing pricing or cost metrics, providers must use the term Annual Percentage Rate (APR) or the acronym “APR” to describe the cost clearly.
- APR Disclosure Throughout Process: Whenever pricing or financing amounts are communicated after a specific offer is extended during the application process, the APR must also be stated alongside those figures. This helps ensure that business owners fully understand the true cost of financing before agreeing to terms.
- Enforcement Clarity: Violations of these enhanced disclosure requirements can be enforced under the California Financing Law (CFL) or, if not covered by CFL, the California Consumer Financial Protection Law (CCFPL).
These changes are designed to eliminate ambiguity and protect California merchants from deceptive or inconsistent pricing communication practices that have historically complicated comparisons of alternative financing options.
New York’s Commercial Financing Disclosure Regime
In New York, comprehensive commercial financing disclosure rules have been in effect since August 1, 2023, following the adoption of the Commercial Finance Disclosure Law and implementing regulations by the New York State Department of Financial Services.
Under New York’s law:
- Providers (including nonbank lenders and brokers) that extend specific offers of commercial financing up to $2.5 million must deliver consumer-style disclosures to business borrowers at the time the offer is made.
- Required disclosure elements typically include the total amount financed, finance charges, APR, repayment terms, payment amounts and frequency, prepayment penalties, and other fees or charges.
- Exemptions exist for certain entities such as depository institutions and providers that make five or fewer commercial financing transactions in a 12-month period.
New York’s approach mirrors the federal Truth in Lending Act’s goals by ensuring business owners receive standardized, clear disclosures that allow them to compare offers and make informed funding decisions.
CapFlow Funding Group®: Compliance and Transparency at the Forefront
CapFlow Funding Group® has taken proactive steps to ensure compliance with both the upcoming California SB 362 requirements and existing New York commercial financing disclosure laws. By integrating rigorous disclosure processes and consistent terminology standards, CapFlow ensures that business owners receive clear, accurate, and understandable financing information at every stage of the funding process.
CapFlow’s compliance initiatives include:
- Training teams on updated terminology and disclosure triggers.
- Updating documentation and digital platforms to support APR and cost disclosures.
- Auditing materials for consistency with state regulatory expectations.
These efforts empower business owners to compare financing options with confidence and clarity.
Why This Matters for Your Business
For entrepreneurs and small business owners, transparency isn’t optional, it’s essential. Clear disclosures help you avoid unexpected costs, choose the best funding paths, and grow with confidence.
Ready for Transparent, Compliant Funding?
If you’re seeking alternative business financing that puts clarity first, CapFlow Funding Group® is ready to help. Contact us today to explore funding options that meet your needs and stay fully compliant with California and New York disclosure standards.
