California’s legislative session sparks progress for small businesses

From expanded protections for lending practices to enhanced transparency requirements for commercial real estate rental agreements, California's recently concluded legislative session was largely positive for small businesses – particularly in light of the state’s ongoing budgetary challenges.

Some of the biggest wins in 2024 for small businesses include:

• SB 1103 will keep small businesses in their local communities by providing them with expanded commercial tenant protections. Entrepreneurs will now be free from unexpected rent increases, unclear lease terms and hidden fees. Additionally, SB 1103 expands existing translation requirements so that all small business owners can fully access their lease terms in their primary language.

• SB 1286 expands California’s Rosenthal Fair Debt Collection Practices Act (FDCPA) to protect small business owners when taking out a personal loan in their own name for the business, and when a person cosigns a loan taken out in the business’s name. Entrepreneurs need to safely access the capital needed to start or grow their small businesses, and this new law will help provide small business owners seeking capital with the same protection from predatory behavior in debt collection that they would have as consumers obtaining personal loans.
• SB 1061 prohibits reporting medical debt to consumer credit reporting agencies. This will lift the credit scores of entrepreneurs with medical debt, making it easier for them to access capital for their businesses.

However, there’s still work to do to build on the progress California has made in uplifting the small business community. We plan to come back to the table to remove barriers to accessing responsible capital and improve access to quality healthcare for our state’s job creators.

Small business owners need money to start and grow their businesses. Unfortunately, Small Business Majority’s research found that accessing capital through traditional banks is difficult for a majority of entrepreneurs. Due to systemic barriers, many are forced to turn to alternative lenders that operate with little oversight and provide loans with extremely high interest rates. One proposal that did not pass, SB 1482, would have required commercial finance providers and brokers to register with the Department of Financial Protection and Innovation to increase transparency. It would have also protected small businesses by closing loopholes that allow confessions of judgment which deny borrowers all legal defense if they default and confidentiality clauses in commercial financing where small business owners sign away their rights to due process either unknowingly or under coercion.

Another major challenge for small business owners left unaddressed in 2024 is healthcare affordability. Over 90% of American hospital markets are highly consolidated, which stifles competition and contributes to rising healthcare costs for small businesses and their employees. AB 3129 would have authorized the state attorney general to approve a change of control between a private equity group and a healthcare facility to ensure that it wouldn’t have an anticompetitive effect leading to higher costs for lower quality care. The attorney general’s review would have ensured that patients were prioritized over private equity’s profit margins. Unfortunately, Gov. Newsom vetoed this bill, leaving California’s healthcare system vulnerable to increasing consolidation.

The progress in this legislative session will help California’s entrepreneurs access capital and brick-and-mortar small businesses obtain fair and transparent leases. We hope that 2025 brings continued progress to protect small businesses from financial exploitation and to help lower healthcare costs for entrepreneurs and their employees.

Bianca Blomquist is Small Business Majority’s California Director. Small Business Majority is a national small business organization that empowers America's diverse entrepreneurs to build a thriving and equitable economy