California Senator Dave Min has authored an unfortunately numbered bill, SB 666, that would prohibit a "covered entity" from charging the following fees to a small business in connection with a commercial financing transaction:
A "covered entity" is defined as either a "provider" or a "broker", as defined in the bill. The restrictions would not apply to a provider that is a depository institution or a lender regulated under the federal Farm Credit Act of 1971 (12 U.S.C. Sec. 2001 et seq.). It also would not apply to a commercial financing transaction secured by real property, a person who makes no more than one commercial financing transaction in California in a 12-month period, or a person who makes five or fewer commercial financing transactions in California in a 12-month period that are incidental to the business of that person.
The bill defines a "small business" as an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and that, together with affiliates, has 100 or fewer employees and average annual gross receipts of $15,000,000 or less over the previous three years. This leaves much to the imagination. For example, what is the meaning of business' "field of operation" and how is a a provider to know what constitutes dominance. The bill includes many other defined terms but hanc marginis exiguitas non caperet.
If enacted, any application to existing contracts might face a challenge under the prohibition of state laws impairing the obligation of contracts. U.S. Const., art. I, § 10 & Cal. Const., art. I, § 9.