The California Financing Law, § 22000 et seq. (CFL) regulates finance lenders and brokers in the consumer and commercial loan business. The CFL defines a finance lender “any person who is engaged in the business of making consumer loans or making commercial loans.” A finance lenders license provides the licensee with an exemption from the usury provision of the California Constitution. Once licensed, Department of Business Oversight (DBO) licensees must meet regular requirements under the California Financing Law.

The California Financial Code (FC) requires the following information to be provided to the DBO.

FC 22104 Net Worth Requirements

FC 22153 Reporting Requirements

FC 22159 Surety Bond Requirements

FC 22112 Annual Assessment

Net Worth Requirements

The requirements related to net worth are not based on a licensee’s net worth as of a specific date but must be continuous.

  • Each licensee is required to maintain a net worth of at least $25,000.
  • A licensed finance lender and broker that makes residential mortgage loans and employs one or more mortgage loan originators must maintain a minimum net worth of at least $250,000.
  • If a licensed finance broker arranges but does not make residential mortgage loans and employs one or more mortgage loan originators, it must maintain a minimum net worth of at least $50,000.

Reporting Requirements

Regardless of whether a licensee has conducted business during the preceding year, it is still required to file an annual report by March 15th of each year. Failure on the part of the licensee to file the report will result in the summary revocation of the license.

Also, note that the DBO must receive notification of a licensee’s change in address at least ten (10) days prior to the transition to a new location. Any failure to meet this requirement may subject the licensee to a civil penalty of up to $500.

Surety Bond Requirements

Each licensee must maintain a surety bond in a minimum amount of $25,000. Thus, surety bonding requirements for CFLL licensees who do not originate residential mortgage loans is $25,000.

By rule, the commissioner may require a higher bond amount for a licensee who employs one or more mortgage loan originators and who makes or arranges residential mortgage loans. This higher bond requirement is typically based on the dollar amount of residential mortgage loans originated by the licensee and any mortgage loan originators employed by the same licensee.

Both CFLL lender and broker licensees who originate residential mortgage loans must maintain a surety bond that applies to the conduct of their employees who are mortgage loan originators. The bond amount is based on the licensee’s amount of loan origination activities. More specifically, the bond amounts are based on the aggregate dollar amount of residential mortgage loans originated by the licensee in the preceding calendar year. The bond amounts are as follows:

Aggregate Amount of Loans                        Surety Bond Amount

0 – $1,000,000                                                    $ 25,000

$1,000,001 – $50,000,000                             $ 50,000

$50,000,001 – $500,000,000                        $100,000

Over $500,000,001                                           $200,000

Annual Assessment

For annual assessments, the DBO notifies each licensee of the amount assessed and levied against it on or before September 30th. This amount must be paid by October 31st. The minimum assessed each year is $250 per licensed location. Any failure to pay the annual assessment will result in a licensee losing its license.

The attorneys at Glass & Goldberg in California provide high quality, cost-effective legal services, and advice for clients in all aspects of commercial compliance, business litigation, and transactional law. Call us at (818) 888-2220, send an email inquiry to or visit us online at to learn more about the firm and to sign up for future newsletters.

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