California is a step closer to becoming the first state to require online small-business lenders such as OnDeck Capital Inc., LendingClub Corp., or Kabbage Inc. to disclose financing costs to borrowers.

The state Assembly’s Appropriations Committee approved a bill Aug. 27 by a party-line 11-0 vote, with the committee’s six Republican members abstaining, to mandate commercial loan term disclosures by online or other nonbank lenders. The version passed by the committee...