# Commercial Lending Licensing Licensing solutions for companies that provide loans, lines of credit, and financing products to businesses. State regulation of commercial lending is expanding rapidly. ## Navigating Commercial Lending Regulations Commercial and business lending has historically faced less state regulation than consumer lending. However, the regulatory landscape is shifting. Multiple states have enacted or are considering new licensing and disclosure requirements for commercial lenders, particularly those serving small businesses. Merchant cash advance companies, equipment finance companies, and other commercial finance providers are increasingly subject to state oversight. Cornerstone helps commercial lenders stay ahead of these evolving requirements and obtain licenses where applicable. ## A Rapidly Shifting Regulatory Landscape For decades, commercial lending operated in a relatively unregulated environment compared to consumer lending. The prevailing assumption was that businesses, particularly their owners and managers, possessed the sophistication to evaluate credit products without the protections afforded to individual consumers. That assumption is being challenged. The growth of alternative commercial lending, including online lending platforms, merchant cash advance providers, and revenue-based financing companies, has prompted states to reconsider the regulatory framework for commercial credit. Concerns about transparency, aggressive marketing practices, and the potential for small business owners to take on unaffordable debt have driven a wave of new legislation. California, New York, Utah, Virginia, and other states have enacted or are considering commercial lending disclosure and licensing requirements. These laws generally focus on providing small business borrowers with standardized cost-of-credit disclosures similar to those required in consumer lending. Some states are going further, requiring commercial lenders to obtain specific licenses before originating business loans or advances. ## Product-Specific Regulatory Considerations Different commercial lending products may face different regulatory treatment depending on the state and the specific product structure. ## The New Disclosure Landscape for Commercial Lenders One of the most significant regulatory developments in commercial lending is the emergence of state-mandated disclosure requirements for small business financing. These disclosure laws represent a fundamental shift in how states approach commercial lending regulation. California's SB 235, New York's commercial financing disclosure law, and similar statutes in other states require commercial lenders and financing providers to disclose the total cost of financing, the annual percentage rate (or estimated APR for products without fixed payment schedules), and other key terms in a standardized format. These requirements are modeled in concept on consumer lending disclosures but adapted for commercial products. For commercial lenders operating nationally, these disclosure requirements create operational complexity. Each state may have different disclosure templates, calculation methodologies, and triggering thresholds. Lenders generally need to build systems that generate state-required disclosures for each state, and the disclosures are generally required at specific points in the origination process. Cornerstone helps commercial lenders understand their disclosure obligations and implement state-required processes. ## How Cornerstone Supports Commercial Lenders Cornerstone helps commercial lenders navigate a regulatory environment that is changing more rapidly than any other segment of the lending industry. Our team monitors legislative developments across all 50 states and maintains current knowledge of both enacted requirements and pending legislation. We work with commercial lenders of all types, including traditional business lenders, fintech lending platforms, merchant cash advance providers, and equipment finance companies. Our services include mapping which state requirements are likely to apply to your specific products (with an independent licensing attorney confirming the analysis), license applications where required, disclosure filings guidance, and ongoing monitoring of new legislation that could affect your operations. For commercial lenders that are still evaluating the regulatory landscape, Cornerstone provides strategic guidance on how to structure operations and filings programs in anticipation of continued regulatory expansion. Preparing now for requirements that are likely to come can help commercial lenders avoid the disruption of scrambling to comply after new laws take effect. ## How to get licensed 1. **Business Model Review**, We review your commercial lending products, target market, and origination channels to help assess which state licensing requirements may apply, with an independent licensing attorney confirming it. 2. **Regulatory Mapping**, We map out current and pending commercial lending regulations across your target states, including new small business disclosure laws. 3. **License Applications**, We prepare and file commercial finance, sales finance, or commercial lending license applications as required in each state. 4. **Disclosure Filings**, We help ensure your commercial lending disclosures meet state-specific requirements, including new APR and cost-of-capital disclosure mandates. ## Frequently asked questions ### Do Commercial Lenders Need State Licenses? Increasingly, yes. While commercial lending has traditionally been less regulated, many states are now enacting licensing requirements for commercial lenders, especially those serving small businesses. States like California, New York, Utah, and Virginia have already implemented commercial lending disclosure and licensing requirements. ### Are Merchant Cash Advances Considered Lending? The regulatory classification of merchant cash advances varies by state. Some states treat MCAs as commercial lending subject to licensing and disclosure requirements, while others may classify them differently. The regulatory trend is clearly toward bringing MCAs under state oversight. ### What Are Commercial Lending Disclosure Requirements? Several states now require commercial lenders to provide standardized disclosures to small business borrowers, similar to consumer lending disclosures. These may include APR calculations, total cost of financing, and prepayment penalty information. ### Do These Requirements Apply to All Business Loans? Many state commercial lending statutes include size thresholds, applying only to financing below a specified amount (commonly $500,000 or $2.5 million depending on the state). Larger commercial transactions may be exempt from disclosure and licensing requirements. ### What States Are Likely to Enact New Commercial Lending Regulations? The trend toward commercial lending regulation is accelerating. Multiple states have introduced legislation in recent sessions, and industry observers expect continued expansion of state oversight. Cornerstone monitors pending legislation across all states and can advise on likely upcoming requirements.