Newsom Signs AB 2116: California Will License Commercial Finance — Here's Who's Already on a State Registry
Quick Take: Governor Newsom signed AB 2116 on September 30, putting California on the licensing path Vermont opened in June, but at fifty times the market size and with a broader sweep: a full DFPI license for commercial financing providers and brokers across MCA, factoring, asset-based lending, and commercial loans, required by July 1, 2028.
California just became the biggest state, and the second this year, after Vermont, to move from registration to licensing for commercial finance.
AB 2116, signed today after clearing the legislature without a single no vote, pulls commercial financing into the California Financing Law. Not sales-based financing only, like Virginia or Connecticut. The definition sweeps in MCA, factoring, accounts receivable purchases, asset-based lending, commercial loans, and certain lease financing. If you fund or broker deals to California small businesses, this is your problem now. You just have some runway to deal with it.
What AB 2116 actually requires
The framework takes effect January 1, 2028, and the hard stop is July 1, 2028. After that date, operating as a commercial financing provider or broker in California without a DFPI license is prohibited. Between now and then, the DFPI writes the implementing rules, so the application mechanics are still to come.
This is licensing, not the registration filings you know from Virginia or Connecticut. Expect background checks and fingerprinting for control persons, a minimum $25,000 net worth, bonding, and ongoing DFPI supervision. Starting in 2029, licensed providers also file annual reports on volume, product types, and rates.
The provision that should get your attention is enforceability. AB 2116 ties the validity of a covered financing agreement to the provider's licensing status: fund a California merchant without a license after the deadline, and you may not be able to enforce the contract. That turns a compliance miss into a collections problem, which is a much more expensive kind of problem.
Key Terms
Sales-based financing (SBF): Financing repaid as a percentage of a business's sales or revenue, the statutory umbrella that covers MCA.
DFPI: California's Department of Financial Protection and Innovation, the regulator that will license providers and brokers under AB 2116.
Registration vs. licensing: Registration is a filing, pay the fee, you're on the list. Licensing means the state vets you first: background checks, net-worth minimums, and ongoing supervision.
CFL: The California Financing Law, the statute AB 2116 expands to cover commercial financing.
Seven states, seven different rulebooks
California joins a map that keeps filling in. Virginia and Connecticut have required SBF registration for years. Missouri registers brokers only, $10,000 bond and all. Texas registration opened under HB 700, with a hard deadline of December 31, 2026. Utah requires registration across commercial financing, factoring included. And Vermont got to licensing first: H.648, signed in June, folds sales-based financing and factoring into its lender-licensing regime effective July 1, 2027, a full year before California's deadline. We keep the complete statute-by-statute picture- what each law covers, who's exempt, and every effective date- in our Commercial Financing Regulation Tracker, so this article will stick to the part a statute can't tell you: who's actually on the lists.
Because the lists move. Virginia's roster dropped from 238 authorized registrants to 185 on September 15, when 55 companies, including names you'd recognize, let their registrations lapse rather than pay the renewal fee. Connecticut added ten registrations over the summer and now sits at 181. Missouri's broker roll stands at 75, and only three of those companies are actually based in Missouri.
Broker Move: Before you submit a deal on a merchant in a registration state, check that the funder, and you, where broker registration applies, is on the state's current roster. Virginia just proved these lists churn hard: 22% of its registrants fell off in a single renewal cycle. A funder that quietly dropped a state registration is telling you something about their appetite, their compliance shop, or both.
One database instead of seven scavenger hunts
Knowing the rules is half the job; the other half is checking the names. Virginia's list lives behind a licensee-search tool. Connecticut's is an Excel file several clicks deep on the DOB site. Utah's exists only inside NMLS, one name at a time. Missouri's takes some digging. If you've never spent an afternoon on a state regulator's website wondering whether the list you found is the current one, congratulations, and don't start.
So we built the first tool of its kind in this industry: the Commercial Finance Registration Database, live now for Funder Intel members.
Virginia (185 registrants), Connecticut (181 registrations), and Missouri (75 broker registrations) are fully searchable: legal names, every d/b/a, registration IDs, headquarters, plus a cross-state search that shows where any company is registered and where it isn't. Texas joins as OCCC registrations publish ahead of the December deadline, Utah's roster is in progress with its regulator, and California and Vermont will be tracked as their licensing programs stand up.
It's updated monthly with every change reported, and it's included with membership.
Compliance Watch: This article is information, not legal advice. AB 2116's implementing regulations haven't been written yet, scope questions, including how existing CFL licensees transition, will be settled by DFPI rulemaking between now and 2028. Registration status in any state should be verified with the regulator before you rely on it. And if you're funding Texas merchants, the OCCC registration deadline is December 31, 2026, with annual renewals each January 31, closer than it sounds.
The direction of travel hasn't changed in four years: disclosure, then registration, then licensing. Vermont took the licensing step first; California just took it at fifty times the market size. The states that copy them will copy fast, and we'll have the lists when they do.
