SB 1181 Summary

• Exempts venture capital investments in equity securities issued by operating companies from California Finance Lenders Law regulations

• Extends the maximum maturity date for commercial bridge loans from one year to three years when made by venture capital companies to operating companies

• Defines "venture capital company" as entities that maintain at least 50 percent of assets in venture capital investments and approve loans through their board of directors based on reasonable inquiry into the borrower's financing needs

• Defines "operating company" as entities primarily engaged in production, sales, or research and development of products or services (excluding sole proprietorships and entities with no specific business plan)

• Allows venture capital companies to rely on written statements of intended use from borrowers without being required to verify that loan proceeds are actually used as stated