The best business debt settlement companies in San Francisco will look at your contracts and understand if it is a loan licensed under the California Financing Law, if it is a loan issued by a bank but sold on a financial technology website or app, or if it is a merchant cash advance. Each is settled differently. The best companies will also have experience in the San Francisco Superior Court.
Many companies offer similar products on apps, through payment processing platforms, or on online loan broker websites, and the law treats them all differently. This page explains how to figure out what you have and what to look for in a provider.
Why does your type of financing matter when choosing business debt settlement companies in San Francisco?
It matters because different products are regulated differently. For instance, Stripe offers both loans and merchant cash advances: "In the US, Stripe Capital loans are issued by Celtic Bank or Lead Bank, and YouLend provides Stripe Capital merchant cash advances." For both, a fixed percentage of your daily sales is withheld, subject to a minimum payment if sales fall short. See, Stripe Capital.
In California, any company in the business of making commercial loans must be licensed by the Department of Financial Protection and Innovation (DFPI) under the California Financing Law. See, California Financial Code Section 22100; Section 22009. Loan brokers must also be licensed. A commercial loan is a loan for a business purpose of $5,000 or more. See, Section 22502. Banks are exempt from the California Financing Law. See, Section 22050. Merchant cash advances, if written as a purchase of future receivables, do not need to be licensed, but could be re-characterized as a loan by a judge.
How can you tell whether you have a loan or a merchant cash advance?
Read your contracts to see who provided the money and whether the documents use the words "loan," "promissory note," or "interest" or if they use the words "purchase of your future receipts," "purchased amount," or "specified percentage." Then see if the company or loan broker is licensed on the DFPI website. For more information on the difference between a loan and purchase of receivables, see our web page.
Beware, companies are required to make disclosures for commercial loans and purchases of receivables of $500,000 or less under the California Financing Law. See, Section 22800. And recently, with the passage of Senate Bill 362, providers of these products must call any stated rate the "annual percentage rate." Therefore, you could have a purchase of receivables that has an annual percentage rate.
How does each product change the settlement strategy?
| Type of product | Regulated by | Leverage in negotiating a settlement |
|---|
| Commercial loan from a licensed lender | DFPI under the California Financing Law | Did the company make the required disclosures? Under SB 362, if not, it is a California Financing Law violation. Also, a standard workout, such as extending the term. |
| Commercial loan from an unlicensed lender | DFPI under the California Financing Law | Willfully making or collecting a loan without a license violates the law; the contract is void and the company cannot collect principal or charges. See, Section 22750. |
| Commercial loan from a bank | Banking regulators; exempt from the California Financing Law and the disclosure requirements. | Standard loan workout with the bank, usually through the platform. |
| Merchant cash advance | DFPI under the California Consumer Financial Protection Law | Does the contract have the right to reconcile? Can it be re-characterized? Did the company violate the prohibition against engaging in unfair or deceptive practices against small businesses with $16 million or less in gross receipts? See, 10 CCR 1061. Also, are they complying with the labels as required under SB 362? |
See our pages on statewide guarantor protections and bank accounts and on revenue-based financing.
What happens if a funder sues you in San Francisco?
The funder has to sue you. A confession of judgment cannot be entered in California superior courts on or after January 1, 2023 pursuant to CCP 1132. Some funders obtain a judgment in another state and register it in San Francisco. Once you are served with notice of entry of the judgment, you have 30 days to seek to vacate the judgment pursuant to CCP 1710.40.
Civil court cases are heard in the Civic Center Courthouse at 400 McAllister. Civil claims of $35,000 or less are limited civil cases pursuant to CCP 85. Larger claims are unlimited. Defaults go to the Default Unit and motions to the Law and Motion department.
San Francisco is one of six California trial courts with a Complex Civil Litigation program, in Departments 304 and 613. A funder's collection case is not one of the types of cases identified in Rule 3.400 as provisionally complex. A class action against a funder or broker is.
What should you ask a provider before you hire one?
- Will they identify in writing which of the four buckets your contract falls into, and the lender or purchaser of record?
- Do they check the DFPI license of the funder and the seller, and the disclosure form against SB 362?
- Who appears for you at 400 McAllister if negotiations stall?
- Do they file a motion to vacate a registered out-of-state judgment within 30 days?
- How are they paid?
The Federal Trade Commission's prohibition on debt relief companies collecting fees prior to settlement does not apply when they telemarket to a business pursuant to 16 CFR 310.6(b)(7). Their assurance they won't collect fees up front only matters if it is in the contract you sign with them.
Frequently Asked Questions
The disclosure form showed an APR. Does that make it a loan?
No. Since 2026, California law requires a disclosure form for sales-based financing to state a rate as an APR in the same manner as loans pursuant to SB 362. The words in the contract and the lender of record determine the type of contract.
Can a funder get a judgment against me in San Francisco without suing?
Not if you signed the confession of judgment on or after January 1, 2023. CCP 1132 prohibits a confession of judgment from being entered in a California superior court. The funder can still sue you or register a judgment obtained in another state.
Will my MCA case go to the Complex Civil Litigation department?
Unless you join a class action, probably not. The Complex Civil Litigation departments 304 and 613 handle cases requiring exceptional judicial management pursuant to Rule 3.400.
Is a DFPI-registered debt settlement company qualified to handle business debt?
Probably not. Only consumer debt settlement companies were required to register with DFPI as of February 15, 2025. Attorneys are exempt from registering.