(1) “Amount financed” means:

(2) “Approved advance limit” means the maximum advance that a financer may provide to a recipient or on the recipient's behalf in exchange for assignment of outstanding, unpaid legally enforceable claims under the factoring agreement, not including any previous distributions advanced to a recipient or on the recipient's behalf under the factoring agreement, to the extent those distributions have been repaid. The approved advance limit does not include reserve amounts or any other amount not advanced to the recipient at the time of assignment. If the factoring agreement provides for the financer to pay different maximum advances for different types of legally enforceable claims, “approved advance limit” means the total maximum advance that a financer may provide to a recipient or on a recipient's behalf in exchange for assignment of the different types of legally enforceable claims, not including any previous distributions advanced to a recipient or on the recipient's behalf under the agreement, to the extent those distributions have been repaid.

(3) “Approved credit limit” means the maximum advance that a financer may provide to a recipient or on the recipient's behalf under the commercial open-ended credit plan agreement or asset-based lending transaction agreement, not including any previous distributions advanced to a recipient or on a recipient's behalf under the agreement, to the extent those distributions have been repaid. Where the commercial open-ended credit plan agreement or asset-based lending transaction agreement requires the financer to pay different maximum advances for different categories of advance (such as advances secured by inventory, accounts receivable, or others), “approved credit limit” means the total maximum advance that a financer may provide to a recipient or on a recipient's behalf for all categories of advance, not including any previous distributions advanced to a recipient or on the recipient's behalf under the agreement, to the extent those distributions have been repaid.

(4) “Asset-based lending transaction” as set forth in section 22800, subdivision (c) of the code only includes transactions that are loans under California law.

(5) “At the time of extending a specific commercial financing offer” under section 22802 of the code means:

(6) “Average monthly cost” means the average total amount paid by the recipient (periodic and irregular payments) over the term of the contract, divided by the number of months in the term of the contract. To calculate the number of months in the contract term, a provider may divide the number of days in the contract term by 30.4.

(7) “Benchmark rate” means a rate index (such as, but not limited to, the Secured Overnight Financing Rate (SOFR), Prime Rate, Wall Street Journal (WSJ) Prime Rate, or 1-, 3-, or 5-year Treasury Constant Maturity), based upon general market conditions, that is commonly used to calculate the interest rate in adjustable-rate transactions in the credit industry.

(8) “Broker” means any person other than a financer, recipient, or recipient's agent, who, for compensation, does any of the following: participates in any financing negotiation; counsels or advises the recipient about financing options; participates in the preparation of any financing documents, including financing applications; contacts the financer on behalf of the recipient other than to refer the recipient; gathers financing application documentation or delivers the documentation to the financer; communicates financing decisions or inquiries from the financer to the recipient; or obtains the recipient's signature on financing documents.

(9) “Closed-end transaction” means a transaction in which credit is extended only once over a specific term (including contracts that include an option in which the recipient may extend the term), and is repaid:

(10) “Code” means the California Financial Code.

(11) “Draw period” means the length of time during which a recipient may make draws under an open-ended credit plan or general factoring or asset-based lending agreement.

(12) “Estimated monthly cost” means the estimated average total amount paid by the recipient (periodic and irregular payments) over the estimated term of the contract, divided by the number of months in the estimated term of the contract. To calculate the number of months in the estimated term, a provider may divide the number of days in the estimated contract term by 30.4.

(13) “Finance charge” means the amount of any and all costs of the financing, represented as a dollar amount, as more specifically described in section 943.

(14) “Financer” means the person who provides or will provide the commercial financing to the recipient or any nondepository institution which enters into a written agreement with a depository institution to arrange for the extension of commercial financing by the depository institution to a recipient via an online lending platform administered by the nondepository institution.

(15) “Initial interest rate” means, in a credit transaction with an interest rate that changes over time and that cannot be calculated in advance for the entire term of the transaction, the rate that would be in effect at the time a disclosure is made, assuming the recipient accepted the financing offer.

(16) “Interest rate” means the periodic rate at which interest accrues on the outstanding principal balance and (if interest is compounded) on accrued but unpaid interest in a commercial financing.

(17) “Irregular payment” means any payment made to the financer that is not a periodic payment.

(18) “Margin” means, in a commercial financing with an adjustable interest rate, the adjustment amount added to or subtracted from the benchmark rate used to calculate the interest rate.

(19) “Maximum non-interest finance charge” means:

(20) “Particular payment channel or mechanism” means, with respect to sales-based financing, the payment channel(s) or mechanism(s) that will be used to determine the amount of a recipient's payment or a true-up. This may include, for example, income flowing through a deposit account or accounts, or payments received through a recipient's payment processor.

(21) “Periodic payment” means any payment made to the financer at regular intervals.

(22) The phrase “person who is presented [with] a specific commercial financing offer” in the definition of “recipient” set forth under section 22800, subdivision (n), of the code means the expected primary borrower on a commercial loan, open-ended credit plan, or asset-based lending transaction, seller in accounts receivable purchase transactions (including factoring), and lessee in lease financing transactions.

(23) “Prepaid finance charge” means any finance charge paid separately to the financer in cash, check or electronic funds transfer before or at consummation of a transaction, or withheld from the proceeds of the financing at any time.

(24) “Provider” means the definition set forth in section 22800, subdivision (m), of the code with the following clarifications:

(25) “Reasonably anticipated true-up” means any true-up that the financing provider has a reasonable basis to expect will be made during the term of the contract, accounting for past performance of similar contracts (both those made to the recipient and other similar recipients) and the policies and procedures of the financer.

(26) “Recipient funds” means the net amount to be given directly to the recipient in the form of cash, check, or electronic funds transfer to an account the recipient controls. Recipient funds excludes, without limitation, funds paid to third parties (including brokers). Recipient funds also excludes any part of the amount financed used to pay off or pay down other amounts owed by the recipient, if known by the provider at the time the disclosure is provided. For the purposes of calculating recipient funds, where part of the amount financed will be used to pay off other amounts owed by the recipient that may change over time, a provider may assume that the amounts due under the recipient's other obligations are the amounts due at the time the disclosure is provided.

(27) “Retrospective annual percentage rate” is the actual annual percentage rate, determined after the specific financing contract has been fully repaid to the financer, when the dates and amounts of all payments and fees are known.

(28) “Sales-based financing” means a commercial financing transaction that is repaid by a recipient to the financer as a percentage of sales or income, in which the payment amount increases and decreases according to the volume of sales made or income received by the recipient. Sales-based financing also includes commercial financing transactions with a true-up mechanism.

(29) “Specific commercial financing offer” means a written communication to a recipient, based upon information from, or about, the recipient, of (i) a periodic payment amount, irregular payment amount, or financing amount, and (ii) any rate, price, or cost of financing (including, without limitation, any total repayment amount), in connection with a commercial financing. Information “about the recipient” includes information about the recipient that informs the provider's quote to the recipient, such as the recipient's financial or credit information, but not the recipient's name, address, or general interest in financing.

(30) “Specified payment amount” means the periodic pre-set amount stated in the contract described in subdivision (a)(34)(A) of this section.

(31) “Split rate” means, with respect to sales-based financing, the percentage used by the financer to calculate the payment amounts to be paid to the financer or to calculate true-ups.

(32) Subject to the rules with respect to term specified in sections 922 through 931, 940, and 942, as applicable, “term” means:

(33) “True-up” means any payment made to a recipient, any charge assessed to a recipient, and any adjustment to recipient's periodic payments pursuant to a true-up mechanism.

(34) “True-up mechanism” means, with respect to sales-based financing, a contractual arrangement with all the following elements:

(35) With respect to factoring transactions: