On February 18, 2026, California lawmakers introduced Assembly Bill (“AB”) 2116, a proposal that would significantly expand the scope of the California Consumer Financial Protection Law (“CCFPL”) to cover commercial financing and extend unfair, deceptive, and abusive acts and practices (“UDAAP”) protections to small businesses.
The bill would amend the stated purposes of the CCFPL to expressly include protecting small businesses from abusive financial practices, reflecting a legislative determination that small businesses are often similarly situated to consumers in terms of sophistication and bargaining power. In doing so, AB 2116 signals a continued expansion of California’s state-level UDAAP framework beyond traditional consumer-facing products.
Most notably, AB 2116 would require persons offering or providing “commercial financing products” to register with the California Department of Financial Protection and Innovation (“DFPI”), with a prohibition on operating without registration commencing January 1, 2028.
Broader Implications for the Industry
If enacted, AB 2116 would represent another meaningful step in California’s ongoing effort to expand state-level oversight of financial products and services. The proposal reflects a broader policy trend: states increasingly are using their own UDAAP and “mini-CFPB” statutes to regulate financial services markets, particularly where federal regulatory priorities appear uncertain or subject to change.
By expressly extending protections to small businesses and commercial financing transactions, California would further blur the traditional line between consumer and commercial regulation. For lenders, brokers, fintech platforms, and other providers of small-business financing, the bill would introduce additional registration, disclosure, and conduct obligations—along with the attendant enforcement risk under the CCFPL’s UDAAP authority.
More broadly, AB 2116 underscores that state regulators continue to view unfair and abusive practices in financial markets as a priority area for enforcement. Even in the face of evolving federal regulatory direction, states such as California are moving to strengthen and expand their own statutory frameworks. Financial institutions and service providers operating in multiple jurisdictions should anticipate continued state-level expansion of UDAAP protections and ensure that compliance programs account not only for consumer-facing products, but also for commercial financing and small-business offerings.