Governor Signs Min’s Bill to Protect Small Businesses From Predatory Debt Collection

(SACRAMENTO, CA) – Senator Dave Min (D-Irvine) announced today that his Senate Bill (SB) 1286 was signed into law by the Governor. While California state law has long protected individuals from abusive or deceptive debt collection practices, commercial debt does not have the same protections. This gap in existing law exposes small business owners to predatory debt collection practices that include, but are not limited to, threats, false statements such as an individual who claims to be a law enforcement agent, or the addition of unauthorized interest and fees to the amount owed. SB 1286 ensures that the same protections that safeguard individuals are now applied to small business owners.

“With the Governor’s signature, running a small business just got a little bit easier in California. For too long, small business owners—minority small business owners in particular—have been unfairly targeted for taking personal loans to invest in their business. That ends today,” said State Senator Dave Min. “I am incredibly proud that SB 1286 will ease this burden on small business owners, while also holding predatory debt collectors accountable. Small businesses are the backbone of our economy, not just in Orange County but across the Golden State, and this new law will go a long way to ensure that we protect small business owners from predatory debt the same we do for every Californian.”

Small businesses owned by people of color face additional barriers in securing traditional forms of credit, such as bank loans and Small Business Administration loans. Since the 2008 financial crisis, both traditional and non-traditional lenders often require small business borrowers to personally guarantee their small business loans making them vulnerable to exploitation. However, until the passage of SB 1286, small business owners were not extended the same consumer protections against abusive debt collection that individual borrows enjoy.

# # #