About the Affordable Credit-Building Opportunities Pilot Program

Senate Bill 1146 (Chap. 640, Stats. 2010) was signed into law on September 30, 2010 and is operative January 1, 2011. The bill created a small loan program, the Pilot Program for Affordable Credit-Building Opportunities, under the California Finance Lenders Law. The purpose of the pilot program is to increase the availability of credit-building opportunities and to expand financial education to individuals, particularly unbanked or under-banked people. 

Lending under the pilot program is limited to unsecured loans with a minimum principal of $250 and a minimum repayment term of not less than 90 days, and no loan may be $2,500 or more.  Lenders are permitted to use the services of “finders” in reaching prospective borrowers.  The pilot program is effective January 1, 2011, until January 1, 2015.

Finance lenders who are license under the California Finance Lenders Law and approved by the Commissioner of Business Oversight to participate in the program may charge specified alternative interest rates and charges, including an administrative fee and delinquency fees, on loans of at least $250 and less than $2,500, subject to certain requirements. Licensees participating in the program are also permitted to use the services of a “finder” as defined in Section 22353(b) of the Financial Code.

In 2011, the Commissioner of Corporations adopted Sections 1580 through 1596 of Title 10 of the California Code of Regulations, which implement the Pilot Program for Affordable Credit-Building Opportunities (SB 1146, Chap. 640, Stats 2010) under the California Finance Lenders Law.  This regulatory action was filed with the Secretary of State on November 21, 2011 and became effective on December 21, 2011.