SACRAMENTO – On April 15, 2025, the United States Court of Appeals for the Ninth Circuit ruled in favor of the Department of Financial Protection and Innovation (DFPI) and its common-sense regulations providing protections for small businesses. In its decision, the Ninth Circuit affirmed the Central District Court of California’s order upholding the Department’s actions in the case of Small Business Finance Association (SBFA) v. DFPI.
In bringing the case, SBFA sought to invalidate the DFPI’s recently adopted commercial financing disclosure regulations related to the implementation of Senate Bill 1235 (Glazer), which requires providers to disclose key metrics to California small businesses to help them understand potential financing options, including the amount of funding provided, Annual Percentage Rate (APR), finance charge, and payment amounts.
After the District Court found that the Department’s regulations were lawful under the First Amendment and not preempted by federal law, SBFA appealed the District court’s order with the Ninth Circuit Court of Appeals, reasserting claims that the disclosures violated the First Amendment. In response, the Ninth Circuit held that the Department’s regulations are lawful under the First Amendment, concluding that SBFA failed “to put forth evidence that would support a reasonable inference that the compelled disclosures are not purely factual or contain controversial information.”
Statement from DFPI Commissioner KC Mohseni
“This ruling is a victory for California’s small businesses seeking capital to run their businesses. Small businesses form the backbone of California’s economy and will be able to use the disclosures from financing companies, including those providing alternative forms of financing, to compare costs and identify the type of financing that provides the best value for their business needs.”
About DFPI
The California Department of Financial Protection and Innovation (DFPI) protects consumers, regulates financial services, and fosters responsible innovation. The DFPI protects consumers by establishing and enforcing financial regulations that promote transparency and accountability. We empower all Californians to access a fair and equitable financial marketplace through education and preventing potential risks, fraud, and abuse. Learn more at dfpi.ca.gov.