Anaheim, CA asked in Banking and Business Law for California

Q: California Finance Lenders Licensing (CFLL) Requirement

Our business model is marketing equipment loan/lease solutions to vendors and their customers. We provide budgetary loan/lease proposal terms to borrowers, collect credit information, and submit that information to lenders for review. The lessor/lender independently reviews the credit, issues documents to the customer & funds the vendor. The lender pays us a commission if they fund the transaction.

Question –

• The law reads*, that we may be prohibited from collecting commissions from banks that do not have a CFLL (because they are not required to have a license). Is there a license outside of the CFLL that is required to allow us to collect commissions from banks?

*The license does not provide the broker with the authority to broker loans to and collect brokerage commissions from other types of lenders such as credit unions and banks. Therefore, a broker who seeks to broker loans to other types of lenders must ensure that the broker holds the necessary license.

Related Topics:
1 Lawyer Answer
James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Business Law Lawyer
  • Sacramento, CA
  • Licensed in California

A: In California, the CFLL is specifically designed for non-bank lenders. If you are brokering loans to banks, which are generally exempt from CFLL licensing, you may need a different type of license. The exact license depends on the nature of the transactions and the institutions involved.

For transactions involving banks, credit unions, and other financial institutions that are exempt from CFLL licensing, you may consider obtaining a broker's license under the California Department of Real Estate (DRE) if the transactions involve secured loans. The DRE license covers a broader range of brokering activities, including those involving loans secured by real estate.

However, if the transactions are unsecured or don't involve real estate, you should review the specific requirements of the California Department of Business Oversight or consult with a legal professional. They can provide tailored advice based on the details of your business model and the type of financial institutions you're dealing with.

Remember, each financial transaction type may have different regulatory requirements, so it’s important to clearly understand the nature of your transactions to determine the appropriate licensing. Compliance with state regulations is crucial to operate legally and avoid potential legal issues.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.