Fair Debt Settlement Practices Act.

The definition of 'commercial financing' is expanded to include any loan with a principal amount of $5,000 or more, or any loan under an open-end credit program (secured or unsecured), intended primarily for non-personal use. Previously it only covered accounts receivable purchases, factoring, asset-based lending, commercial loans, commercial open-end credit plans, and lease financing. A new provision allows lenders to rely on a borrower's written statement of intended purposes without verifying actual use.

The term 'commercial financing recipient' is replaced throughout with 'debtor,' broadening the category of protected persons beyond just those receiving commercial financing.

A new defined term 'commercial debt' is added, meaning money (principal, interest, fees, or other charges) due or owing relating to one or more commercial loans. The old single 'debt' definition is split into separate 'commercial debt' and 'consumer debt' definitions.

A new two-part eligibility test is added for who qualifies as a 'debtor': (1) must owe commercial debt of $500,000 or less and be responsible for repaying it, AND (2) must NOT be a for-profit business entity with annual gross receipts exceeding the 'small business' threshold set by the Department of General Services under Government Code Section 14837. This excludes larger businesses from the bill's protections.

Fee restrictions are now differentiated by debt type. For consumer debt, the existing rules apply (fees only after a settlement is achieved, with proportional or percentage-of-savings calculations). For commercial debt, a new simpler cap applies: providers may not collect or retain fees in excess of the difference between the amount owed at enrollment and the amount agreed in the settlement.

The three-calendar-day pre-contract disclosure requirement is now explicitly limited to consumers only. A new provision states that this paragraph does not apply to commercial debt, meaning commercial debtors do not get the same advance disclosure period before signing a contract.

The bill's stated purpose changes from 'relating to consumer debt' to 'relating to consumer commercial debt,' reflecting the expanded coverage of both consumer and commercial debt settlement services under a single framework.