SECTIONS 22050-22064

22050.  (a) This division does not apply to any person doingbusiness under any law of any state or of the United States relatingto banks, trust companies, savings and loan associations, insurancepremium finance agencies, credit unions, small business investmentcompanies, California business and industrial developmentcorporations, or licensed pawnbrokers. (b) This division does not apply to a check casher who holds avalid permit issued pursuant to Section 1789.37 of the Civil Codewhen acting under the authority of that permit, and shall not applyto a person holding a valid license issued pursuant to Section 23005of the Financial Code when acting under the authority of thatlicense. (c) This division does not apply to a college or university makinga loan for the purpose of permitting a person to pursue a program orcourse of study leading to a degree or certificate. (d) This division does not apply to a broker-dealer actingpursuant to a certificate then in effect and issued pursuant toSection 25211 of the Corporations Code. (e) This division does not apply to any person who makes no morethan one loan in a 12-month period as long as that loan is acommercial loan as defined in Section 22502. (f) This division does not apply to any public corporation asdefined in Section 67510 of the Government Code, any public entityother than the state as defined in Section 811.2 of the GovernmentCode, or any agency of any one or more of the foregoing, when makingany loan so long as the public corporation, public entity, or agencyof any one or more of the foregoing complies with all applicablefederal and state laws and regulations. (g) This section shall become operative December 31, 2004.22051.  This division does not apply to the following: (a) Any nonprofit cooperative association organized under Chapter1 (commencing with Section 54001) of Division 20 of the Food andAgricultural Code that loans or advances money in connection with anyactivity mentioned in that chapter. (b) Any corporation, association, syndicate, joint stock company,or partnership engaged exclusively in the business of marketingagricultural, horticultural, viticultural, dairy, livestock, poultry,or bee products on a cooperative nonprofit basis that loans oradvances money to its members or in connection with those businesses. (c) Any corporation securing money or credit from any federalintermediate credit bank organized and existing pursuant to theprovisions of an act of Congress entitled "Agricultural Credits Actof 1923" that loans or advances money or credit so secured. (d) Any corporation created pursuant to the provisions of Part 5(commencing with Section 14000) of Division 3 of Title 1 of theCorporations Code.22052.  This division does not apply to any loan of credit made by aperson not licensed under this division pursuant to a plan havingall of the following characteristics: (a) Credit cards issued pursuant to a written application and tothe plan whereby the organization issuing the cards can acquire thoseobligations that its members in good standing incur with thosepersons with whom the organization has entered into writtenagreements setting forth the plan, and where the obligations areincurred pursuant to those agreements; or whereby the organizationissuing the cards can extend credit to its members. (b) The fee for the credit cards is designed to cover theadministrative costs of the plan and is imposed upon the issuance ofthe card and on annual renewal dates thereafter. (c) Any charges, discounts, or fees resulting from the acquisitionof the charges is paid to the organization issuing the credit cardsby the persons, corporations, or associations with whom theorganization has entered into written agreements.22053.  In any proceeding under this law, the burden of proving anexemption is upon the person claiming it.22054.  This division does not apply to bona fide conditionalcontracts of sale involving the disposition of personal property whenthese forms of sales agreements are not used for the purpose ofevading this division.22055.  This division does not apply to premium financing as definedin Section 18563.22056.  This division does not apply to the CaliforniaInfrastructure and Economic Development Bank, any program authorizedpursuant to Chapter 1 (commencing with Section 14000) of Part 5 ofDivision 3 of Title 1 of the Corporations Code, or to the CaliforniaIntegrated Waste Management Board.22057.  This division does not apply to any loan that is made orarranged by any person licensed as a real estate broker by the stateand secured by a lien on real property, or to any licensed realestate broker when making such a loan. A licensed real estate brokermay make a loan secured by a lien on real property for sale to afinance lender or arrange for a loan secured by a lien on realproperty to be made by a finance lender without obtaining a licenseunder this division.22058.  This division does not apply to any cemetery broker licensedunder the Cemetery Act (Chapter 19 (commencing with Section 9600) ofDivision 3 of the Business and Professions Code).22059.  A license to act as a broker under this division does notauthorize the licensee to negotiate or perform any act as a broker inconnection with loans made or to be made by a lender not licensed asa finance lender under this division.22060.  This division does not apply to a loan made or arranged by alicensed residential mortgage lender or servicer when acting underthe authority of that license.22061.  (a) This division does not apply to any nonprofit churchextension fund. (b) For purposes of this section: (1) "Nonprofit church extension fund" means a nonprofitorganization affiliated with a church, that is formed for the purposeof making loans to that church's congregational organization ororganizations for site acquisitions, new facilities, or improvementsto existing facilities, purchased for the benefit of the churchcongregational organization. (2) What constitutes a "church" shall be determined from thefollowing criteria, none of which has controlling weight: a distinctlegal existence; a recognized creed and form of worship; a definiteand distinct ecclesiastical government; a formal code of doctrine anddiscipline; a distinct religious history; a membership notassociated with any other religion or denomination; a completeorganization of ordained ministers ministering to theircongregations; ordained ministers selected after completingprescribed courses of study; a literature of its own; establishedplaces of worship; regular congregations; regular religious services;schools for the religious instruction of youth; and schools for thepreparation of its ministers. (3) "Church congregational organization" means a group ofindividuals who gather for the purpose of practicing the religion ormanner of worship promulgated by the church with which theorganization is affiliated. (4) "Site acquisitions" means purchases of land intended for useby a church congregational organization. (5) "New facilities" means purchases of buildings or structuresintended for use by a church congregational organization. (6) "Improvements" means purchases of materials intended toincrease the quality of existing religious sites or facilities. (c) For purposes of this section, a nonprofit church extensionfund shall establish that it is exempt from federal taxation pursuantto Section 501 of Title 26 of the United States Code. (d) For purposes of this section, no individual may be heldresponsible for the repayment of any loan made by a nonprofit churchextension fund.22062.  (a) This division does not apply to a commercial bridge loanmade by a venture capital company to an operating company. (b) For purposes of this section: (1) "Venture capital company" means a person other than anindividual or sole proprietorship that meets all of the following: (A) Engages primarily in the business of promoting economic,business, or industrial development through venture capitalinvestments or the provision of financial or management assistance tooperating companies. (B) At all times maintains at least 50 percent of its assets inventure capital investments or commitments to make venture capitalinvestments, and maintains or, assuming consummation of the equityinvestment to which the commercial bridge loan relates, will maintaina material equity interest in the operating company. (C) Approves each loan made to an operating company through theventure capital company's board of directors, executive committee, orsimilar policy body, based on a reasonable belief that the loan isappropriate for the operating company after reasonable inquiryconcerning the operating company's financing objectives and financialsituation. (D) Complies, when making the loan, with all applicable federaland state laws and rules or orders governing securities transactionsincluding, but not limited to, the Securities Act of 1933, theSecurities Exchange Act of 1934, the Investment Company Act of 1940,and the Corporate Securities Law of 1968. (2) "Operating company" means a person that meets all of thefollowing: (A) Primarily engages, wholly or substantially, directly orindirectly through a majority owned subsidiary or subsidiaries, inthe production or sale, or the research or development, of a productor service other than the management or investment of capital. Thisshall not include any of the following: (i) A person that is either an individual or a soleproprietorship. (ii) A person that has no specific business plan or purpose or hasindicated that its business plan is to engage in a merger oracquisition with an unidentified company or companies or other entityor person. (B) Uses all of the proceeds of the commercial bridge loan for theoperations of its business. (C) Approves each commercial bridge loan through its board ofdirectors, executive committee, or similar policy board, in theexercise of its fiduciary duty, based on a reasonable belief that theloan is appropriate for the operating company after reasonableinquiry concerning the operating company's financing objectives andfinancial situation. (3) "Commercial bridge loan" means a loan that meets all of thefollowing criteria: (A) A loan of a principal amount of five thousand dollars ($5,000)or more, or any loan under an open-end credit program, whethersecured by personal property or unsecured, the proceeds of which areintended by the operating company for use primarily for other thanpersonal, family, or household purposes. (B) Is made with a maturity date not to exceed one year, and inconnection with or in bona fide contemplation of, an equityinvestment in the operating company. (C) Is secured, if at all, solely by the operating company'sbusiness assets, exclusive of any real property. (D) Is subject to the implied covenant of good faith and fairdealing under Section 1655 of the Civil Code. (4) For purposes of paragraph (1), "venture capital investment" isan acquisition of securities in an operating company that a person,an investment adviser of the person, or an affiliated person ofeither, has or obtains management rights to. (c) For purposes of paragraph (3) of subdivision (b), for thepurposes of determining whether a loan is a commercial bridge loan, aventure capital company may rely on any written statement ofintended purposes signed by the operating company. The statement maybe a separate statement signed by the operating company or may becontained in another document signed by the operating company, but ineach case it shall be approved by its board of directors, executivecommittee, or similar policy body. The venture capital company maynot be required to ascertain that the proceeds of the loan are usedin accordance with the statement of intended purposes. (d) For purposes of subparagraph (A) of paragraph (3) ofsubdivision (b), the principles set forth in Section 22551 shall beused to determine whether the specified amount of a commercial bridgeloan is a bona fide principal amount. (e) This section shall apply only to a commercial bridge loan madeby a venture capital company to an operating company on or afterJanuary 1, 2004. (f) Nothing in this section is intended to abrogate or diminishthe application of any other laws that are designed to protectborrowers, including, but not limited to, laws pertaining tolicensing, unfair competition, usury, and conflicts of interest.22063.  (a) This division does not apply to a franchise loan made bya franchisor to a franchisee or a subfranchisor or by asubfranchisor to a franchisee. (b) For purposes of this section: (1) "Franchise" means "franchise," as defined in Section 31005 ofthe Corporations Code. (2) "Franchisee" means "franchisee," as defined in Section 31006of the Corporations Code. (3) "Franchisor" means "franchisor," as defined in Section 31007of the Corporations Code. (4) "Area franchise" means "area franchise," as defined in Section31008 of the Corporations Code. (5) "Subfranchise" means "subfranchise," as defined in Section31008.5 of the Corporations Code. (6) "Subfranchisor" means "subfranchisor," as defined in Section31009 of the Corporations Code. (7) "Franchised business" means a business operated pursuant to afranchise or area franchise by a franchisee or pursuant to afranchise, area franchise or subfranchise by a subfranchisor. (8) "Franchise loan" means a commercial loan, as defined inSection 22502, made by a franchisor to a current or prospectivefranchisee or subfranchisor or a commercial loan by a subfranchisorto a current or prospective franchisee for the acquisition,construction, operation, development, equipping, expansion,contraction, consolidation, merger, recapitalization, reorganization,or termination of a franchised business provided that the followingconditions are satisfied: (A) The franchisor or subfranchisor making the franchise loanshall comply with all applicable federal and state franchisedisclosure and registration laws, regulations, rules and orders,including, but not limited to, the California Franchise InvestmentLaw (Division 5 (commencing with Section 31000) of Title 4 of theCorporations Code) and the Federal Trade Commission Franchise Rule:Disclosure Requirements and Prohibitions Concerning Franchising andBusiness Opportunity Ventures (Code of Federal Regulations, Title 16,Chapter 1, Subchapter D, Part 436 (16 CFR 436), as amended) inconnection with the offer or sale of any franchise, area franchise,or subfranchise to which the franchise loan relates. (B) The proceeds of the franchise loan are intended by theborrowing franchisee or subfranchisor for use primarily for otherthan personal, family, or household purposes. (C) The loan, if secured, is secured solely by the assets of thefranchised business to which the franchise loan relates. Propertyused by the borrower primarily for personal, family, or householdpurposes, including the borrower's personal residence, shall not betaken as security for the loan. (D) The loan is subject to the implied covenant of good faith andfair dealing under Section 1655 of the Civil Code. (E) The lender shall fully and clearly disclose to the borrower,at or before the time the loan is made, the rates of interest,charges, and costs of the loan. (c) For purposes of subparagraph (B) of paragraph (8) ofsubdivision (b), a lending franchisor or subfranchisor may rely onany written statement of intended purposes by the borrowingfranchisee or subfranchisor. The statement may be a separatestatement signed by the borrowing franchisee or subfranchisor or maybe contained in another document signed by the borrowing franchiseeor subfranchisor. The lending franchisor or subfranchisor may not berequired to ascertain that the proceeds of a franchise loan are usedin accordance with the statement of intended purposes. (d) Nothing in this section is intended to abrogate or diminishthe application of any other laws that are designed to protectborrowers, including, but not limited to, laws pertaining tolicensing, unfair competition, usury and conflicts of interest.22064.  (a) This division does not apply to the following: (1) A program-related investment defined in subsection (c) ofSection 4944 of the Internal Revenue Code and United States TreasuryRegulations Section 53.4944-3 that is made by a private foundation,tax-exempt organization within the meaning of Section 509(a) of theInternal Revenue Code. (2) A loan, guaranty, or investment made by a public charity,tax-exempt organization within the meaning of paragraph (1), (2), or(3) of subsection (a) of Section 509 of the Internal Revenue Codethat meets all of the following requirements: (A) The primary purpose of the loan, guaranty, or investment is toaccomplish one or more of the exempt purposes of the public charitymaking the loan, as described in Section 170(c)(2)(B) of the InternalRevenue Code. (B) Neither the production of income nor the appreciation ofproperty is a significant purpose of the loan, guaranty, orinvestment. (C) No purpose of the loan, guaranty, or investment is toaccomplish one or more of the purposes described in Section 170(c)(2)(D) of the Internal Revenue Code. (b) Subdivision (a) shall not exempt from the provisions of thisdivision a tax-exempt organization that is making consumer loans asdefined in Sections 22203 and 22204. (c) A loan that is secured by any assets owned by an individualshall be exempt under subdivision (a) only if the individualproviding the security is an "accredited investor" as defined inparagraph (5) or (6) of subsection (a) of Section 230.501 of Title 17of the Code of Federal Regulations. Property held by an individualfor personal, family, or household purposes, including an individual's personal residence, may not be taken as security for a loan. (d) A program-related investment by a private foundation, and anyloan, guaranty, or investment made by a public charity that is exemptunder subdivision (a) is subject to the implied covenant of goodfaith and fair dealing under Section 1655 of the Civil Code. (e) (1) Subdivision (a) shall exempt from the provisions of thisdivision a program-related investment by a private foundation, or aloan, guaranty, or investment by a public charity, only if thefollowing conditions are satisfied: (A) The organization making the program-related investment, loan,guaranty, or investment is exempt from federal income taxes underSection 501(c)(3) of the Internal Revenue Code and is organized andoperated exclusively for one or more of the purposes described inSection 501(c)(3) of the Internal Revenue Code. (B) No part of the net earnings of the organization making theprogram-related investment, loan, guaranty or investment inures tothe benefit of a private shareholder or individual. (C) No broker's fee will be paid in connection with the making ofthe program-related investment, loan, guaranty, or investment orplacement of the program-related investment, loan, guaranty orinvestment. (2) This subdivision does not prohibit the organization making theprogram-related investment, loan, guaranty, or investment fromcharging interest on the loan or investment or fees on the guaranty. (f) Subdivision (a) shall only exempt from the provisions of thisdivision a program-related investment by a private foundation or aloan, guaranty, or investment by a public charity that is made forthe primary purpose of accomplishing one or more of the organization's exempt purposes described in Section 501(c)(3) of the InternalRevenue Code, and no significant purpose of which is the productionof income or the appreciation of property within the meaning ofsubsection (c) of Section 4944 of the Internal Revenue Code. Arecipient shall be required to use all funds received from theprivate foundation or the public charity only for the charitablepurposes for which the program-related investment, loan, guaranty, orinvestment was made. (g) Subdivision (a) shall only exempt from the provisions of thisdivision a program-related investment by a private foundation or aloan, guaranty, or investment by a public charity if the organizationconsummates not more than 35 loans in a calendar year. In the makingand negotiating of these loans, the private foundation or publiccharity shall take into consideration the financial ability of therecipients to repay the loans in the time and manner provided. (h) Nothing in this section is intended to abrogate or diminishthe application of any other applicable laws that are designed togovern the tax-exempt organizations described in subdivision (a),including, but not limited to, laws pertaining to recordkeeping andreporting to the Attorney General and the Internal Revenue Service orto protect borrowers, including, but not limited to, laws pertainingto licenses, unfair competition, usury, and conflicts of interest.