Commercial Financing Disclosure Laws

Commercial financing disclosure laws are state laws that require providers of business financing to give the borrower a standard summary of cost and terms before the deal is signed. They grew from concern that small businesses could not compare products like merchant cash advances (MCAs), priced with a factor rate, against loans priced with an interest rate.

There is no federal rule. As of October 2026, eleven states have these laws in force: California, Connecticut, Florida, Georgia, Kansas, Louisiana, Missouri, New York, Texas, Utah and Virginia. Vermont passed a law in June 2026 that starts July 1, 2027.

The laws differ, but most share a pattern:

• What to disclose: amount financed, amount actually paid out after fees and prior balances, total repayment, total cost, payment amount and frequency, and prepayment terms.
• APR estimates: California and New York require an estimated annual percentage rate (APR), even for MCAs. Vermont will too.
• Who is covered: mostly nonbank providers. Banks and credit unions are generally exempt, as are real estate loans.
• Size limits: many cover deals up to $500,000. New York goes up to $2.5 million and Utah up to $1 million. Louisiana's law has no dollar cap.
• Registration: Virginia, Connecticut, Utah, Missouri and Texas also require providers or brokers to register. Texas registration opened September 1, 2026, and is due by December 31, 2026.

Some laws cover only sales-based financing, which is repaid from a share of revenue, such as MCAs and revenue-based financing. Virginia, Connecticut and Texas take that approach. Others, like New York's, also cover term loans, lines of credit and factoring.

Why it matters for lenders

Missing or wrong disclosures can bring fines, enforcement and contract disputes, sometimes per violation.

The hard part is operational. A funder working in many states may need several disclosure versions, each with its own formula, format and threshold, and must pick the right one based on where the business is located. For MCAs, an APR estimate depends on projected sales, so the assumptions must be documented.

How it works in practice

An online funder offers a $60,000 advance to a restaurant in New York. Before the offer goes out, the system checks the business address, picks the New York template and calculates the estimated APR from the funder's sales projection and the daily holdback. The disclosure goes with the offer, the owner signs it electronically, and a copy is saved on the deal.

If the owner asks for a different amount, the system regenerates the disclosure from the new terms. When disclosures are built in a separate spreadsheet, the numbers drift from the contract the borrower signs.