Licensing Requirements

"Finance lender” includes any person who is engaged in the business of making consumer loans or making commercial loans. (West's Ann.Cal.Fin.Code § 22009) “Commercial loan” means a loan of a principal amount of five thousand dollars ($5,000) or more, or any loan under an open-end credit program, whether secured by either real or personal property, or both, or unsecured, the proceeds of which are intended by the borrower for use primarily for other than personal, family, or household purposes. (West's Ann.Cal.Fin.Code § 22502) No person shall engage in the business of a finance lender or broker without obtaining a license. (West's Ann.Cal.Fin.Code § 22100)

There are several possible consequences for failure to comply, including:

1. Cease and desist orders
2. Injunctions and civil penalties.
3. Suspension or revocation of the license.
4. Fine of not more than $10,000.00 and imprisonment in a county jail for not more than one year

State-licensed commercial lenders may only pay referral fees for commercial loans to unlicensed persons (including brokers and dealers) under very limited circumstances. (Fin. C. §§22602-22604)