Quick answer: California referral partners earn fees by introducing California businesses to commercial financing. California's SB 1235 law requires lenders to disclose costs to small businesses — this affects lenders and active brokers, but does not prohibit referral arrangements. California's commercial market spans Bay Area tech, Los Angeles hospitality and retail, Central Valley agriculture, Southern California healthcare, and a large solar and clean energy sector. Referral fees range from 0.5% to 2% of funded deals and are paid after closing. Active brokers may need to review DFPI licensing requirements.
Last updated: May 2026
California referral partners
California is the largest state economy in the United States and the world's fifth-largest economy by GDP. Its commercial finance market reflects that scale — and its regulatory complexity. California's SB 1235 commercial lending disclosure law, DFPI licensing requirements for commercial brokers, and the California Financing Law together create a compliance environment that referral partners must understand before entering the market. At the same time, California's diverse industries — technology, entertainment, agriculture, healthcare, construction, solar energy, and international trade — create a financing referral pipeline that is unmatched in its variety.
California Senate Bill 1235, which took effect January 1, 2022, fundamentally changed the regulatory landscape for commercial lending in California. The law requires providers of commercial financing — including revenue-based financing, merchant cash advances, factoring, equipment financing, and commercial loans — to disclose standardized cost information to small business borrowers before completing a transaction. The required disclosures include the total dollar cost of financing, an estimated annual percentage rate (APR), the term of the financing, and other material terms.
SB 1235 was modeled on consumer lending disclosure requirements and represents California's recognition that small business borrowers need the same kind of cost transparency that consumers receive. The law applies to commercial financing of $500,000 or less, which covers the vast majority of small business financing transactions.
For referral partners, the most important practical implications of SB 1235 are: first, the lenders and finance companies they refer clients to must provide compliant disclosures before closing any covered transaction; second, California-licensed commercial finance brokers have specific disclosure obligations under the DFPI's implementing regulations; and third, the disclosure requirements create a paper trail that makes the cost of financing transparent to borrowers, which is good for informed referral recommendations but requires that referral partners not misrepresent or minimize costs in their introductions.
SB 1235 does not set a cap on the cost of financing. It does not prohibit any particular product type. It requires disclosure, not approval. For businesses that need financing quickly and can handle the cost, the disclosure requirement does not change the fundamental availability of capital — it simply makes the cost more visible.
California's Department of Financial Protection and Innovation (DFPI) oversees commercial finance activity in the state under the California Financing Law (CFL). The CFL requires that anyone engaged in the business of making or brokering commercial loans obtain a license from the DFPI. This is a meaningful requirement for active commercial finance brokers who are building a professional practice around originating and placing commercial deals.
The licensing requirement applies to brokers who hold themselves out as commercial finance brokers, actively solicit commercial finance business, and earn compensation for arranging or negotiating commercial financing. The law is targeted at the business of brokering, not at incidental referral activity.
CPAs, attorneys, and consultants who make occasional referrals as a natural part of their advisory practice — without holding themselves out as commercial finance brokers or actively marketing brokerage services — are generally in a different position from a full-time commercial finance broker. However, because California is among the most actively enforced states for financial services licensing, anyone intending to build a significant referral or brokerage practice in California should consult with a California attorney familiar with DFPI requirements before proceeding.
The practical path for California referral partners who want to avoid licensing complexity is to structure their activity as true referral rather than active brokerage: make the introduction, let the lender handle the deal, and receive a referral fee that is clearly documented in a referral agreement. Partners who want to actively originate, package, and place deals in California should either obtain a CFL license or work through a licensed broker who handles the regulated activity.
The San Francisco Bay Area is home to the highest concentration of technology companies in the world, and while venture capital and growth equity are the dominant funding sources for early-stage tech companies, the commercial finance market for small and mid-sized technology service companies, SaaS businesses, and technology-adjacent professional services firms is substantial and growing.
Technology service companies — IT consulting firms, managed service providers, software development shops, cybersecurity firms — are often highly profitable on a revenue basis but are poorly served by traditional bank lending because they have few hard assets and banks are unfamiliar with evaluating recurring revenue contracts as collateral. These companies frequently need working capital to fund payroll ahead of client payments, equipment financing for servers and hardware, or bridge financing to fund a team expansion ahead of a large contract starting.
Revenue-based financing and working capital advances are well-suited to Bay Area tech service companies because the lender can evaluate the business based on consistent software revenue, MRR, or professional services billings. A company with $3 million in annual recurring revenue but no traditional collateral can often access $200,000 to $500,000 in working capital against that revenue base — financing their bank would not provide.
CPAs and financial consultants in the Bay Area who serve technology companies are well-positioned to identify these needs. Technology company founders often delay addressing working capital gaps because they are focused on product development and fundraising; a CPA who proactively identifies the financing need and makes a warm introduction can add significant value while generating a referral fee.
Los Angeles is the dominant commercial finance market in Southern California and one of the largest in the country. The LA market is characterized by entertainment, hospitality, retail, real estate services, apparel and fashion, and international trade. San Diego adds a significant defense and biotechnology component to the Southern California market.
Hospitality is one of the largest referral verticals in the LA market. The restaurant industry in Los Angeles is enormous and competitive, with significant turnover and constant capital needs — build-outs for new locations, equipment replacements, working capital for seasonal swings, and bridge financing for expansions. Restaurant financing is among the most active commercial finance referral categories nationally, and LA's market density makes it particularly active. CPAs who serve restaurant owners and operators in LA regularly encounter clients who need short-term working capital or equipment financing that their bank cannot provide.
The fashion and apparel industry in the LA Garment District creates a significant accounts receivable financing market. Apparel manufacturers and wholesalers sell to retailers on net-30 to net-90 terms, then need to pay their own suppliers and production costs in the meantime. Factoring and invoice financing are standard tools in the apparel industry, and referral partners who work with LA apparel businesses encounter these needs constantly.
San Diego's defense contractor and biotechnology base creates a different but equally active financing market. Defense subcontractors working on government contracts — which pay on government timelines that can be extended — need contract financing and working capital. Biotech companies in early clinical stages need equipment financing for lab equipment and manufacturing facilities that traditional banks are often unable or unwilling to finance.
California's Central Valley is one of the most productive agricultural regions in the world, producing a significant share of the United States' fruits, vegetables, nuts, and dairy products. The agricultural finance market in the Central Valley is substantial, specialized, and underserved by traditional commercial lenders who are unfamiliar with agricultural credit cycles.
Agricultural operations need financing throughout the growing cycle. Spring planting requires seed, fertilizer, and labor capital that may not be recovered until harvest months later. Equipment financing for tractors, harvesters, irrigation systems, and cold storage facilities requires lenders who understand agricultural equipment values. Processing and packing facilities need working capital to handle seasonal production peaks.
Referral partners who work with Central Valley agricultural operators — farm accountants, agricultural consultants, equipment dealers — encounter financing needs that are poorly served by national commercial lenders and may have been declined by regional banks that are conservative about agricultural credit. Specialty agricultural lenders and alternative finance providers that understand crop cycles and agricultural receivables can often accommodate these deals.
The Central Valley also has a significant food processing and agricultural supply chain industry — canneries, packing houses, distribution centers, input suppliers — that creates conventional commercial financing needs. A food processor with seasonal revenue peaks and corresponding working capital needs, or an agricultural input supplier with accounts receivable from large growers, fits neatly into standard commercial finance products.
California has one of the largest healthcare markets in the United States, with a concentration of specialty medical practices, dental practices, optometry groups, and outpatient surgical centers that creates a consistent pipeline of healthcare practice financing referrals.
Healthcare practice acquisitions are one of the most common deal types. Dentists, optometrists, and medical specialists regularly acquire existing practices when senior practitioners retire or sell. These acquisitions often involve goodwill-heavy purchase prices that traditional bank lenders evaluate conservatively, and the acquisition timeline may require moving faster than an SBA loan allows. Bridge financing and healthcare specialty lenders can often accommodate practice acquisitions that banks decline or delay.
Equipment financing is the other major healthcare category. Dental offices need digital imaging equipment, chairs, and sterilization systems. Optometry practices need diagnostic equipment. Medical offices need electronic health records systems, diagnostic equipment, and facility build-outs. These are often $100,000 to $500,000 purchases that are well-suited to equipment financing — the equipment itself serves as collateral, and the practice revenue is sufficient to support the payment obligation.
CPAs who serve medical and dental practices in Southern California and the Bay Area are natural referral partners for healthcare financing. The Licensing requirements for medical practice ownership in California are complex, and CPAs who navigate them with their clients are often the first to know when a practice acquisition or equipment purchase is in the works.
California's solar and clean energy industry is among the most active in the world, driven by the state's aggressive renewable energy mandates, high electricity costs, and strong incentive programs. This creates a substantial financing referral market for contractors, installers, and developers who need working capital and equipment financing to fund projects ahead of completion payments.
Commercial solar contractors — companies that design and install solar systems for commercial buildings, industrial facilities, and multi-family housing — frequently need bridge financing to fund project costs while waiting for the final payment upon project completion and utility interconnection. Projects can take three to twelve months from contract signing to final payment, and the contractor needs capital to fund labor, materials, and equipment throughout that period.
Equipment financing for solar installation companies covers both installation equipment (trucks, lifts, tools) and inventory (panels, inverters, racking systems) that installers maintain for multiple projects. Working capital advances against contracted revenue are also common for solar contractors who have signed contracts but have not yet started work — or who have completed work but are waiting on utility paperwork before final payment is released.
CSLB — the California Contractors State License Board — licensing requirements apply to solar contractors, and contractors who are CSLB-licensed C-46 (Solar) or B (General Building) contractors are the primary candidates for commercial solar financing referrals. CPAs and consultants who work with CSLB contractors in Southern California and the Central Valley encounter these needs regularly.
California has one of the most complex construction financing environments in the country, shaped by CSLB licensing requirements, strict mechanic's lien deadlines, and a prompt payment statute that applies to both private and public construction projects.
California's private works prompt payment law requires that owners pay general contractors within 30 days of undisputed payment requests, and generals must pay subcontractors within seven days of receiving payment from the owner. The public works prompt payment rules are stricter in some respects and provide contractors with additional remedies for delayed payments. Despite these rules, payment delays are common in California's complex urban construction environment, where projects involve multiple layers of subcontracting and payment disputes are frequent.
Construction factoring and invoice financing are natural solutions for California subcontractors facing payment delays. A tile subcontractor who has completed $400,000 of work on a large commercial project in San Francisco but is waiting on the general's payment cycle can factor those invoices to access immediate cash, repaying the factoring company when the general pays. This is a referral opportunity for any advisor who works with California construction trades.
CSLB licensing requirements also create equipment financing opportunities. When a CSLB-licensed contractor wins a new category of work that requires different equipment — an HVAC contractor expanding into commercial refrigeration, a concrete contractor expanding into paving — they often need equipment financing quickly. Banks unfamiliar with contractor equipment values may decline; specialty lenders who understand CSLB-licensed contractor businesses can often accommodate these deals.
| Deal type | Primary industries | Typical deal size | Key trigger for referral |
|---|---|---|---|
| Working capital advance | Restaurants, retail, tech services, hospitality | $25,000–$500,000 | Seasonal gap, expansion capital, bank decline |
| Equipment financing | Construction, solar, healthcare, agriculture | $50,000–$2,000,000 | Bank unfamiliar with asset type; speed required |
| Invoice / AR financing | Apparel, construction, staffing, manufacturing | $100,000–$5,000,000 | Slow-paying trade customers; seasonal production |
| Healthcare practice acquisition | Dental, optometry, specialty medicine | $200,000–$2,000,000 | Goodwill-heavy acquisition; timing too tight for SBA |
| Construction bridge financing | Solar, commercial construction, specialty contractors | $100,000–$3,000,000 | Fund project costs pending completion payment |
Referring California deals follows the same process as all Axiant referrals. Sign the referral agreement first, then submit deals as they arise. For California deals specifically, the following information helps ensure fast routing and accurate evaluation:
Axiant works with lenders who are active in the California market and familiar with California's regulatory environment, including SB 1235 compliance. All California deals will receive compliant disclosures as required by law. Referrals receive a response within one business day.
FAQ
SB 1235 requires commercial lenders to disclose APR, total cost, and other terms on commercial financing of $500,000 or less. It applies to lenders and active brokers. Referral partners making introductions rather than brokering deals are generally in a different position, but anyone building a significant California commercial finance practice should review DFPI requirements.
Active commercial finance brokers who arrange and negotiate commercial loans for compensation in California may need a California Financing Law license from the DFPI. Pure referral arrangements where the partner makes an introduction and the lender handles the deal are different from active brokerage. Consult a California attorney before building a substantial brokerage practice in California.
Bay Area tech services, LA hospitality and apparel, Central Valley agriculture, Southern California healthcare practices, solar contractors, and construction subcontractors across the state. Each sector has distinct financing needs — working capital for restaurants, equipment financing for contractors, AR financing for apparel, practice acquisition financing for healthcare.
Private owners must pay generals within 30 days; generals must pay subs within 7 days of receiving payment. Payment delays cascade and create working capital gaps for subcontractors. Construction factoring and invoice financing are natural solutions, and referral partners working with CA construction trades encounter these needs regularly.
Referral fees follow national ranges of 0.5% to 2% of funded amounts. California's higher asset values and operating costs mean deals tend to be larger in dollar terms, generating meaningful fees even at standard percentage rates. SB 1235 does not cap or set referral fees — those are governed by the referral agreement.
Ready to refer a California deal?
California's diverse commercial market — tech, hospitality, agriculture, healthcare, and solar — creates consistent financing referral opportunities. Axiant's lenders understand California's regulatory environment including SB 1235. We respond within one business day.
