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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10629
Experience:  30 years of corporate, litigation and international law
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CALIFORNIA, SOME CLIENTS NEED SHORT TERM PERSONAL LOANS

Customer Question

I AM IN CALIFORNIA, SOME CLIENTS NEED SHORT TERM PERSONAL LOANS WHICH I DRAW UP A PROMISSORY NOTE AND HAVE THEM SIGN THAT AND THE AMORTIZATION SCHEDULE. I CHARGE 17 TO 22% INTEREST ANNUALLY. IF THEY SECURE THEIR CAR I TAKE NAME AS LIEN HOLDER AND AM NAMED
AS INSURED. SOMEONE TOLD ME I NEED A LICENSE...DO I NEED A LICENSE. IT IS UNDER 50K THAT I LOANED TO DATE
Submitted: 1 year ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 1 year ago.

Hello, my name is ***** ***** I will try to help you. Please remember I just report or interpret the law, so the outcome may not be what you hoped for.

Finance Code Section 22009 defines finance lender as follows" "includes any person who is engaged in the business of making consumer loans or making commercial loans. The business of making consumer loans or commercial loans may include lending money and taking, in the name of the lender, or in any other name, in whole or in part, as security for a loan, any contract or obligation involving the forfeiture of rights in or to personal property, the use and possession of which property is retained by other than the mortgagee or lender, or any lien on, assignment of, or power of attorney relative to wages, salary, earnings, income, or commission."

Finance Code section 22100 requires every finance lender to be licensed.

There is an exemption if the loan is a commercial loan and there are 5 or fewer in any 12 month period. Section 22050(e).

A commercial loan is defined as follows (22502) 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. For purposes of determining whether a loan is a commercial loan, the lender may rely on any written statement of intended purposes signed by the borrower. The statement may be a separate statement signed by the borrower or may be contained in a loan application or other document signed by the borrower. The lender shall not be required to ascertain that the proceeds of the loan are used in accordance with the statement of intended purposes.

I do not know if you qualify for the exemption for commercial loans. If you do not you are required to be licensed to do the type of financing you are doing.

If I have answered all your questions, please positively rate my answer as that is how I receive credit. If you have more questions, please let me know. If the answer was especially helpful you can provide a bonus.

Customer: replied 1 year ago.
THANK YOU AS MENTIONED THESE ARE NOT COMMERCIAL LOANS BUT PERSONAL LOANS, I DO LESS THAN 5 PER YEAR AND LESS THAN 20K. MAYBE I SHOULD GET A LICENSE TO HELP SOME OF THESE PEOPLE WHO HAVE HORRIBLE CREDIT. I DON'T PLAN ON FUNDING ANYMORE LOANS. PERSONAL. WELL WHAT IS A COMMERCIAL LOAN IS THAT A LOAN BACKED BY AN AUTO PINK SLIP? I GUESS THAT IS WHERE WE NEED TO START
Expert:  Richard - Bizlaw replied 1 year ago.

What you are doing does not qualify as a commercial loan. Commercial loans are for business loans, you are making personal loans. The question is whether you are in the business of making these types of personal loans. If you are not going to do more I would not worry about the license. If these are accommodation loans for clients you may be exempt from the licensing requirement but I would need to know more and that would be a separate question.

If I have answered all your questions, please rate my answer great service as that is how I get credit.