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Bankers tell Senate bill AB 130 could make home‑equity financing riskier for small business borrowers
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Summary
Bank of America and other bankers told the committee that provisions in AB 130 touching second-lien home‑equity lines of credit could raise compliance and collateral risks, and urged follow-up meetings with industry and legislative staff.
At the Senate’s Committee on Minority Economic Development hearing, Bank of America’s Los Angeles market president, Raul Anaya, told members that home-equity lines of credit (HELOCs) are a common way entrepreneurs tap startup or growth capital and that AB 130’s provisions affecting second-lien positions create new considerations for lenders.
Anaya said the bill “specifically talks about second lien positions” and that some provisions increase the administrative and collateral-related requirements for banks when addressing collateral in second-lien circumstances. He recommended the committee convene a follow-up meeting with the California Bankers Association and legislative staff to review bill language and possible technical changes to avoid unintentionally restricting a common financing source for small business owners.
Sen. Susan Rubio acknowledged the concern and asked staff to schedule a separate discussion to examine AB 130’s language and its practical effects. No formal action was taken during the hearing; the committee signaled additional briefings and stakeholder meetings as the next steps.
