What is a Commercial Financing Disclosure Law (CFDL)?
CFDL stands for Commercial Financing Disclosure Law. It is a state law that requires providers and brokers of business financing — loans, merchant cash advances, factoring, and lines of credit — to give the borrower a standardized disclosure of the financing's cost and terms before the borrower signs. Depending on the state, that disclosure includes the total dollar cost or finance charge, the payment amount and frequency, the term, and — in states such as California and New York — an Annual Percentage Rate (APR). As of 2026, eleven states have a CFDL in force.
What these laws are and why they exist
Until recently, commercial finance — small business loans, merchant cash advances, factoring, lines of credit — was largely exempt from the Truth in Lending Act (TILA), the federal law that requires standardized APR disclosures on consumer loans. That left business borrowers comparing offers using factor rates, holdbacks, retention percentages, and other industry-specific math that was often impossible to compare side-by-side.
Starting with California's SB 1235 in 2018 (effective 2022 after regulations were finalized), a wave of states began requiring TILA-style disclosures on commercial finance. The goal: let a small business owner compare a $50,000 MCA, a $50,000 term loan, and a $50,000 line of credit on the same axes — APR, total cost of capital, payment amount, payment frequency — before signing.
For brokers and funders, the laws add complexity. For borrowers, they're a clear win: more transparency, fewer surprises, and the ability to actually compare offers.
What every law has in common
While the specifics differ, all eleven state laws share a similar backbone. Nearly every one requires:
- Total dollar cost of the financing (principal + all interest + all fees)
- Payment amount and frequency (daily, weekly, monthly)
- Term length in days, weeks, or months
- Origination and other fees, itemized
- Prepayment terms — whether there is an early payoff discount or penalty
- Standardized format so disclosures from different funders look similar
APR is the big variable. A true Annual Percentage Rate is required in only two states, California and New York, and on a sales-based deal it is an estimated APR because repayment tracks revenue. The other nine — Virginia, Utah, Georgia, Connecticut, Florida, Missouri, Kansas, Texas and Louisiana — require the total dollar cost and finance charge but do not mandate an APR calculation. That single difference is why offers can look different from state to state.
Coverage caps and exemptions vary. Most laws apply to commercial finance transactions under $500K, $1M, or $2.5M, on the theory that larger borrowers have the resources to negotiate disclosures themselves. Almost all laws exempt federally chartered banks, credit unions, and certain types of secured equipment leasing.
Do these laws cover equipment financing?
It depends on how the deal is structured. Most state commercial finance disclosure laws draw a line between a true lease and a financing arrangement. A true equipment lease — where the lessor keeps ownership and you return the equipment at the end — is usually exempt. But an equipment loan, or a lease with a $1 buyout (effectively a purchase paid in installments), is often treated as commercial financing and must carry the same disclosure — APR, total cost, and payment schedule — as any other covered offer.
Because the classification turns on the contract terms rather than the label on the page, an agreement called an "equipment lease" is not automatically outside these rules. If you're financing equipment in a disclosure state, check whether your agreement is a true lease or a financing that should come with a standardized disclosure.
Which state you are in changes the answer as much as the contract does. The broad-coverage states — California, New York, Connecticut, Utah, Georgia, Florida, Missouri and Kansas — write their laws around commercial financing as a category, so an equipment loan or a $1-buyout lease inside the state's dollar cap generally carries the same disclosure as any other covered offer. Virginia, Texas and Louisiana went the other way: their statutes reach only sales-based or revenue-based financing, so a conventional fixed-payment equipment loan usually sits outside them entirely.
That is the practical shape of equipment finance disclosure compliance today — not one national rule, but a classification test applied under eleven different state definitions. Two questions settle most deals: is this a true lease or a financing, and does the state I operate in cover all commercial financing or only sales-based deals? If you cannot answer both from the paperwork, ask the funder to put its classification in writing before you sign.
Which states require a disclosure for a merchant cash advance?
All eleven states with a commercial financing disclosure law in force cover merchant cash advances. Three of them — Virginia, Texas and Louisiana — wrote their statutes specifically around sales-based or revenue-based financing, which is what an MCA is. The other eight cover MCAs as one product category inside a broader commercial financing law.
What the disclosure has to show depends on the state, and the split falls along the APR line. California and New York require an Annual Percentage Rate, labeled as an estimate on sales-based financing. The other nine — Virginia, Utah, Georgia, Connecticut, Florida, Missouri, Kansas, Texas and Louisiana — require the total dollar cost and finance charge: the amount financed, the total you will repay, and the payment amount and frequency, without mandating an APR calculation at all.
The estimate language exists because MCA repayment is tied to your sales rather than a fixed calendar. A percentage of daily or weekly revenue means the payoff date moves with your receipts, so an exact annualized rate is genuinely unknowable when you sign. That is a real limitation of the disclosure, not a loophole — and it is the reason two offers with identical factor rates can carry very different true costs once your actual sales volume plays out.
Which states make providers and brokers register, not just disclose?
Registration is a separate requirement from disclosure, and only some states impose it. Virginia, Utah, Connecticut and Texas require commercial financing providers to register with a state regulator, and Virginia, Connecticut and Texas extend that requirement to brokers as well; Missouri registers brokers only. New York and Louisiana are disclosure-only: the provider must hand you the numbers, but no state registry stands behind the transaction.
The distinction matters more than it sounds. A disclosure-only law tells you what an offer costs. A registration law also tells you who you are dealing with — Virginia's providers and brokers appear in the State Corporation Commission's registry, Utah's register annually with the Department of Financial Institutions under Utah Code Title 7, Chapter 27, Connecticut’s providers and brokers register with the state Banking Commissioner, and Texas providers and brokers register with the Office of Consumer Credit Commissioner ahead of the December 31, 2026 deadline. If you operate in one of those states, the registry is a free check you can run before you sign anything.
Commercial financing disclosure laws by state
Eleven states have a commercial financing disclosure law in force. Each one below sets out what the statute is called, which products it reaches, who regulates it, and what a business owner in that state should expect to receive before signing. Jump straight to your state, or read them in order — the rules differ more than the shared name suggests.
- CA California
- NY New York
- VA Virginia
- UT Utah
- GA Georgia
- CT Connecticut
- FL Florida
- MO Missouri
- KS Kansas
- TX Texas
- LA Louisiana
CA California’s commercial financing disclosure law (SB 1235)
California's law was the first comprehensive commercial finance disclosure regime in the U.S. and remains the most-cited template. Providers must deliver a standardized disclosure form before consummation of the transaction, and the borrower must sign acknowledgment of receipt.
The DFPI has issued detailed regulations covering APR calculation methodology for MCAs and other non-amortizing products — a notable methodological challenge since traditional APR formulas assume fixed-term, fixed-payment loans.
NY New York’s commercial financing disclosure law for merchant cash advances
New York's commercial financing disclosure law is the Commercial Finance Disclosure Law, N.Y. Fin. Servs. L. §§ 801–812. It requires a written disclosure, including an estimated APR, on commercial financing of up to $2.5 million offered to a New York business — and it covers merchant cash advances and other sales-based financing as well as conventional commercial loans, factoring and lines of credit.
Which New York transactions are covered: the $2.5 million line and the exemptions
Article 8 defines commercial financing broadly — open-end financing, closed-end financing, sales-based financing, factoring and “other forms of financing” — so a merchant cash advance is squarely inside it, with its own disclosure section (§ 803). The exemptions in § 802 are what keep most large or specialised deals out: financial institutions; technology companies that only license software to an exempt lender; Farm Credit lenders; financing secured by real property; true leases; any person or provider that makes no more than five commercial financing transactions in New York in a 12-month period; any individual transaction over $2,500,000; and financing of $50,000 or more where the recipient is a vehicle dealer or rental company. New York has the broadest dollar coverage of any state law.
What a New York sales-based financing disclosure must show
For a specific offer of sales-based financing, § 803 requires: the total financing amount and the disbursement amount after withheld fees; the finance charge; the estimated annual percentage rate, labeled “APR”, calculated under the federal Regulation Z method from the estimated term and projected payments; the total repayment amount; the estimated term based on projected sales; the payment amounts and frequency, or for variable payments the schedule or calculation method plus the average monthly amount; all other fees such as draw, late and returned-payment fees; any extra finance charge or fee for paying off or refinancing early; and any collateral or security interest. NYDFS’s regulation, 23 NYCRR Part 600, fixes the calculation methods and formats, and unlike California’s separate one-page form it allows the disclosure to sit inside the contract itself, provided it is prominent and uses the prescribed layout.
Penalties under New York’s CFDL
New York’s law is a disclosure law: it does not create a provider or broker registry the way Virginia, Utah, Connecticut and Texas do. What it does carry is a penalty schedule. Under § 812, a provider that violates Article 8 or its regulations owes a civil penalty of up to $2,000 per violation, rising to $10,000 per violation where the violation is willful, and for knowing violations the Superintendent of Financial Services may also order restitution or an injunction on behalf of affected recipients.
VA Virginia’s commercial financing disclosure law for small business financing (HB 1027)
Virginia's commercial financing disclosure law is HB 1027, codified at Va. Code §§ 6.2-2228 through 6.2-2238. It applies to sales-based financing — merchant cash advances and revenue-share products sold to Virginia small businesses — in single transactions of $500,000 or less, and it requires both the provider and the broker to register with the State Corporation Commission and to give the business a written disclosure before funding.
What Virginia’s sales-based financing law covers, and who is exempt
Virginia’s statute is the state’s commercial financing disclosure law, but it took a narrower and deeper approach than California’s: it reaches only sales-based financing, which the statute defines as financing repaid over time as a percentage of the recipient’s sales or revenue, including fixed-payment deals with a true-up that reconciles the payments to sales. Three exemptions matter most. Financial institutions are exempt; so are providers or brokers that complete no more than five sales-based financing transactions with a Virginia recipient in a 12-month period; and so is any single transaction over $500,000 (§ 6.2-2229). The chapter applies to deals done over the internet with a Virginia business whether or not the provider has an office in the state (§ 6.2-2235).
Who must register with the Virginia SCC, and what it costs
Every sales-based financing provider and every broker had to register with the State Corporation Commission on or before November 1, 2022, and must hold authority to transact business in Virginia (§ 6.2-2230). Registration costs $1,000 initially and $500 a year after that, due by September 15, and it lapses automatically if the annual fee goes unpaid. The application must disclose any judgment, order or conviction involving fraud, breach of trust or money laundering. Virginia is one of four states, with Utah, Connecticut and Texas, that back the disclosure with a registry.
What a Virginia sales-based financing disclosure must show
When a provider extends a specific offer it must disclose, in the SCC’s prescribed format (§ 6.2-2231): the total financing amount and the amount actually disbursed after withheld fees; the finance charge; the total repayment amount; the estimated number of payments; the payment amount, its frequency and whether it is fixed or variable; every other potential fee, including draw, late, returned-payment and prepayment fees; what changes if the business prepays or refinances, and the prepayment policy; any collateral or security interest; and whether the provider will pay a broker and how much. Virginia does not require an APR, estimated or otherwise; the dollar figures carry the disclosure.
Contract terms Virginia prohibits
HB 1027 also regulates the contract itself. A sales-based financing agreement may not contain a confession-of-judgment provision; a suit on the contract must be brought in a Virginia court, so an out-of-state venue clause is unenforceable; and arbitration cannot require in-person proceedings outside the recipient’s jurisdiction, with the provider paying the arbitrator’s and administrative fees (§ 6.2-2234). Any contract provision that violates the chapter is unenforceable against the business (§ 6.2-2236), and the Attorney General may sue to enjoin violations and obtain restitution for affected recipients (§ 6.2-2238).
UT Utah’s commercial financing registration and disclosure requirements for MCAs
Utah's commercial financing law is the Commercial Financing Registration and Disclosure Act, Utah Code §§ 7-27-101 et seq., enacted as SB 183 in 2022. It combines registration with disclosure: a provider of commercial loans, merchant cash advances or other sales-based financing of $1,000,000 or less must register with the Utah Department of Financial Institutions and deliver a written cost disclosure with every specific offer, with both duties in force since January 1, 2023.
What Utah’s law covers, and the $1 million exemption
Utah wrote its statute around commercial financing as a category — closed-end loans, open-end credit, merchant cash advances and other sales-based financing — rather than around one product, so it reaches a wider range of offers than Virginia’s or Texas’s laws. The limit runs the other way: a transaction of more than $1,000,000 is exempt, as is a transaction of $50,000 or more where the recipient is a motor vehicle dealer, and depository institutions, licensed money transmitters and providers that do only an occasional transaction are outside the Act entirely. The statute defines a broker as someone who, for compensation, obtains an offer from a third-party funder and communicates it to a Utah business, and keeps that role separate from the provider that actually funds the deal.
Registration with the Utah Department of Financial Institutions
Since January 1, 2023 it has been unlawful to engage in a commercial financing transaction as a provider in Utah, or with a Utah resident, without registering with the Department of Financial Institutions and keeping that registration current (Utah Code § 7-27-201). Registration runs through the Nationwide Multistate Licensing System (NMLS) and expires on December 31 each year, so it is an annual obligation rather than a one-time filing. A 2024 amendment (SB 25, effective May 1, 2024) tightened the definitions so that “broker” and “provider” are distinct terms; the registration duty sits with the provider, while the provider’s disclosure must still show what it pays any broker.
What a Utah commercial financing disclosure must show
Before the deal is consummated, § 7-27-202 requires the provider to disclose: the total amount of funding provided; the total amount disbursed, if different; the total amount the business must pay back; the total dollar cost, meaning the difference between what is paid and what was funded; the manner, frequency and amount of each payment, or, where payments vary, the method used and an estimate of the first payment; whether prepaying would increase or decrease the cost, with a reference to the relevant contract terms; and any part of the funding that the provider pays to a broker. Like Virginia and Texas, Utah requires no APR; the comparison is meant to be made in dollars.
GA Georgia’s commercial financing disclosure law
Georgia's law closely models California's structure but adds explicit broker-specific obligations: brokers must disclose their compensation and clarify their non-fiduciary role to the merchant. Georgia is a disclosure law and does not require providers or brokers to register with the state.
CT Connecticut’s commercial financing disclosure law
Connecticut's law has the lowest coverage cap of any state at $250,000 — meaning the disclosure regime applies only to smaller transactions, where information asymmetry between provider and merchant is most pronounced. The law otherwise mirrors the California framework.
FL Florida’s commercial financing disclosure law
Florida keeps disclosure relatively simple and, unlike Utah or Virginia, does not impose a registration requirement. Providers must give a basic disclosure showing the total cost and payment terms of the financing; Florida does not mandate an APR calculation.
MO Missouri’s commercial financing disclosure law
Missouri's law took effect February 28, 2025. It requires brokers (not providers) to register with the Missouri Division of Finance — backed by a surety bond — and requires a single per-transaction disclosure of the financing's total cost and terms before or at consummation. Implementation is still maturing as of 2026.
KS Kansas’s commercial finance disclosure act
Kansas's 2024 act is the newest in the nine-state cohort and follows what has become a recognizable multi-state template: $500K cap, registration with the state banking regulator, and a standardized disclosure listing APR, total cost, payment frequency, and prepayment terms.
TX Texas’s sales-based financing disclosure and registration requirements
Texas's commercial financing disclosure law is HB 700, which added Chapter 398, “Commercial Sales-Based Financing,” to the Texas Finance Code effective September 1, 2025. It requires a written, signed disclosure on any specific offer of sales-based financing of less than $1 million to a Texas business, voids confession-of-judgment clauses, and requires providers and brokers to register with the Office of Consumer Credit Commissioner.
What Texas HB 700 covers: sales-based financing offers under $1 million
Chapter 398 applies to commercial sales-based financing — an advance repaid as a percentage of the recipient’s sales, used for business rather than personal purposes — and its disclosure duty attaches to any specific offer of less than $1 million (§ 398.051). It reaches providers and brokers that deal with Texas businesses over the internet even without a physical presence in the state (§ 398.002). Exempt under § 398.003 are banks, credit unions and their affiliates; technology companies that merely service an exempt lender; Farm Credit lenders; financing secured by real property; true leases; transactions of $50,000 or more with motor vehicle dealers or rental companies; and financing tied to products the provider itself manufactures or distributes.
What the Texas disclosure must show, and why you sign it
The provider must disclose the total amount of financing; the disbursement amount; the finance charge; the total repayment amount; the estimated period for the periodic payments to add up to that total; the payment amounts and frequency, or for variable payments the schedule or calculation method plus the average projected monthly payment; all other potential fees, including draw, late and returned-payment fees; the finance charge and any additional fees due if the financing is paid off or refinanced early; any collateral or security interest; and whether the provider pays compensation to a broker and how much (§ 398.051). If the new financing is conditioned on paying off an existing one, that payoff must be disclosed too. The recipient must sign the disclosures before the application is finalized (§ 398.052). Texas, like Virginia and Utah, requires no APR.
Registration with the Texas OCCC
A provider or broker that engages in commercial sales-based financing for compensation must register with the Office of Consumer Credit Commissioner before doing business, renew by January 31 each year and report changes within 90 days (§§ 398.053–398.054). Businesses already operating when the law took effect have until December 31, 2026 to register, and the Finance Commission and OCCC must adopt their rules, fees and forms by September 1, 2026. Texas is the fourth state, after Virginia, Utah and Connecticut, to put a public registry behind an MCA disclosure.
Prohibited contract terms and penalties
A commercial sales-based financing contract that contains a confession-of-judgment provision, or anything similar, is void and unenforceable (§ 398.055), and a provider or broker may not set up automatic debits from the business’s deposit account unless it holds a validly perfected, first-priority security interest in that account (§ 398.056). Each violation of the chapter carries a civil penalty of $10,000 (§ 398.101). The chapter creates no private right of action, so enforcement runs through the state rather than through borrower lawsuits (§ 398.102).
LA Louisiana’s revenue-based financing disclosure law
Louisiana's 2025 law covers revenue-based financing — funding repaid as a percentage of sales, revenue, or income, which captures merchant cash advances. Providers must disclose a defined set of data points, including the amount of funds provided and the total dollar cost of the financing. Louisiana does not require registration or an APR calculation.
Quick comparison table
| State | Cap | Effective | APR Required | Registration |
|---|---|---|---|---|
| California | $500K | 2022 | Yes (calculated) | No |
| New York | $2.5M | 2023 | Yes (estimated) | No |
| Virginia | $500K (MCA only) | 2022 | No | Provider & broker |
| Utah | $1M | 2023 | No | Provider |
| Georgia | $500K | 2024 | No | No |
| Connecticut | $250K (MCA only) | 2024 | No | Provider & broker |
| Florida | $500K | 2023 | No | No |
| Missouri | $500K | 2025 | No | Brokers only |
| Kansas | $500K | 2024 | No | No |
| Texas | Under $1M (MCA only) | 2025 | No | Provider & broker |
| Louisiana | RBF only | 2025 | No | No |
What's coming next
Several additional states have active proposed legislation as of 2026:
- Illinois — proposed commercial finance disclosure law, modeled on NY
- New Jersey — proposed broker registration and limited disclosure
- Maryland — proposed comprehensive disclosure modeled on CA
The federal Consumer Financial Protection Bureau (CFPB) has periodically explored extending TILA-style disclosures to small business credit but has not yet proposed binding rules. The momentum continues at the state level.
Where disclosure laws fit in commercial lending regulation
Disclosure is only one layer of how commercial financing is regulated. It helps to see the whole picture:
- Disclosure laws (the focus of this guide) govern what you must be shown — APR, total cost, payment terms — before you sign.
- Licensing and registration rules govern who is allowed to offer or broker financing in a state. Several states — including New York, Virginia, and Utah — require providers and/or brokers to register.
- Usury and rate caps limit the maximum cost of certain credit. These have historically applied to consumer and some small-dollar business loans; most true commercial financing has been exempt, though that line is being tested in several states.
- Unfair and deceptive practices rules — the federal FTC Act and state UDAP statutes — apply broadly and can reach abusive commercial lending conduct even where no specific disclosure law exists.
Note that many borrower-protection statutes are written for consumer credit and don't automatically extend to business financing. The federal Fair Credit Reporting Act (FCRA), for example, primarily governs consumer reports; its application to purely commercial transactions is limited. When commercial finance is regulated, it's usually through the state disclosure and registration laws described above — not the consumer statutes.
What if your state doesn't have a commercial financing disclosure law?
Thirty-nine states have no commercial financing disclosure law, so a funder operating there is under no state obligation to hand you a standardized cost sheet before you sign. Nothing stops you from asking for one. A funder that will not put the total dollar cost, the payment amount and frequency, the term, and the prepayment terms in writing is telling you something useful about the offer.
The absence of a law is not the absence of a right to ask. Every number a California or New York disclosure would contain is a number the funder already knows — it is how they priced your file in the first place. Requesting it in writing costs you nothing and takes the conversation out of the realm of "what's my daily payment" and into the realm of what the money actually costs. If you are in a state without a CFDL, ask for the same four figures the covered states mandate, and ask for them before you sign rather than after.
It also matters where the transaction is deemed to occur rather than simply where you sit. Several of these statutes reach financing offered to a business located in the state, which means a New York funder soliciting a California business can be pulled into California's requirements. If you are near a line — a business incorporated in one state and operating in another — that is a question for counsel rather than for a funder's sales desk.
What happens if a funder doesn't give you the required disclosure?
In a state with a CFDL in force, failing to provide the disclosure is a violation the state regulator can act on — typically through administrative penalties, orders to stop offering financing, and in registration states the loss of the provider's or broker's registration. These are regulatory remedies, not automatic borrower refunds, and none of them void a signed contract on their own.
That distinction disappoints most people who go looking for it. A missing disclosure is generally enforced by the regulator named on this page — the DFPI in California, NYDFS in New York, the State Corporation Commission in Virginia — rather than by a private right of action that lets you unwind the deal. Most of these statutes do not create a borrower right to sue for a disclosure failure. What a missing disclosure does give you is evidence, and a reason to have the agreement reviewed before you sign anything further.
The practical move is sequencing. Complain to the regulator if you believe a provider is operating without required disclosures — that is what the registries and complaint processes exist for. But if you are still at the offer stage, the far cheaper remedy is simply not to sign until the numbers are in front of you. A funder that produces the disclosure only after pressure has told you how it intends to handle the rest of the relationship. For anything already signed, talk to a business attorney in your state; nothing on this page is legal advice.
How to compare two funding offers using the disclosure
Compare offers on total dollar cost first, then on payment size against your real weekly cash flow — not on the rate. A factor rate and an APR are not the same measurement, and a shorter term makes a cheaper-looking offer more expensive per week. The disclosure exists precisely so two offers with different structures can be read on the same axes.
Read them in this order. Total cost of capital tells you what the money costs in dollars, which is the only figure that compares cleanly across a term loan, a line of credit, and a merchant cash advance. Payment amount and frequency tells you whether you can survive it — a daily debit and a monthly payment of the same annualized size land very differently on a business with lumpy receivables. Term converts the two into a rate you can reason about. Prepayment terms decide whether paying early actually saves you anything; on many advances it does not, because the fixed payback is owed regardless of speed.
This is where the disclosure earns its existence, because the gap it closes is measurable. In the Federal Reserve Banks' 2026 Report on Employer Firms, 60% of small businesses that borrowed from online lenders said their actual borrowing costs were higher than they expected, against 37% at small banks and 32% at large banks — and only 4% found costs lower than expected. High interest rates and unfavorable repayment terms were the most commonly reported challenges with online lenders. Those are the surprises a standardized cost sheet is designed to prevent, and the reason it is worth asking for even where no statute requires it.
If the offer in front of you is sales-based, our guide to factor rates explains why a 1.35 factor is not a 35% annual rate, and the merchant cash advance calculator converts a factor rate and holdback into the weekly number that actually decides whether the deal is survivable. For a wider view of what else you could be comparing against, see small business funding options.
How The Broker Shop handles disclosures
The Broker Shop is a commercial finance broker, not a direct funder. When we present you offers from our funder network, every offer arrives with the disclosure required by your state — generated by the funder, not by us. Our role is to make sure you can compare them apples-to-apples and choose the best one.
If you have questions about what a specific disclosure means, or which terms favor or disadvantage you, we'll walk through it with you. There's no charge for our time — we're paid only when you close a deal you choose, and only by the funder.
Frequently asked questions
What does CFDL stand for?
CFDL stands for Commercial Financing Disclosure Law — a state law that requires providers and brokers of business financing to disclose the cost and terms of an offer (total dollar cost, payment amount and frequency, and in some states an APR) before a business owner signs.
Which states have commercial financing disclosure laws?
As of 2026, eleven states have a CFDL in force: California, New York, Virginia, Utah, Georgia, Connecticut, Florida, Missouri, Kansas, Texas, and Louisiana. Illinois, New Jersey, and Maryland have proposed bills that are not yet law.
Do these laws apply to merchant cash advances?
Yes. Every state CFDL covers merchant cash advances or "sales-based" / "revenue-based" financing. A few states — including Virginia, Texas, and Louisiana — apply only to sales- or revenue-based financing such as MCAs, rather than to all commercial financing.
Does the FCRA apply to commercial loans?
The federal Fair Credit Reporting Act primarily governs consumer reports, and its application to purely commercial transactions is limited. Business financing is generally regulated through the state disclosure and registration laws described on this page rather than the FCRA.
Does my state require a commercial financing disclosure?
It depends where your business operates — eleven states currently require one. Even in states without a law, a reputable funder or broker should still show you the total cost and terms of an offer before you sign.
Do these laws apply if my funder is based in another state?
Often yes. Several of these statutes are written to cover financing offered to a business located in the state, not just financing offered by a provider headquartered there. So an out-of-state funder soliciting a California or New York business can still owe that state's disclosure. Because the tests differ by state, confirm with the state regulator or counsel rather than taking the funder's word for it.
Does receiving a disclosure mean the financing is a good deal?
No. A disclosure tells you what the financing costs and how it is repaid — it does not tell you whether the price is competitive or whether the payment fits your cash flow. A fully compliant disclosure can accompany an expensive offer. The disclosure is what lets you compare that offer against others; comparing is still your job.
Does a merchant cash advance disclosure have to show an APR?
It depends on the state. Only California and New York require an APR, labeled as an estimate on sales-based financing. Virginia, Utah, Georgia, Connecticut, Florida, Missouri, Kansas, Texas and Louisiana require the total dollar cost and finance charge instead. Any APR on a sales-based deal is an estimate, because repayment tracks your revenue rather than a fixed schedule.
How do I check whether my funder or broker is registered?
In the three states that require registration, the regulator holds the list: Virginia's State Corporation Commission, the Utah Department of Financial Institutions, and the Texas Office of Consumer Credit Commissioner. Ask the provider or broker for its registration number and verify it with the regulator directly rather than relying on a claim made in an email or on a website.
What happens if a provider or broker is not registered in a state that requires it?
Registration is a condition of doing business, not a formality. In states such as Virginia, Utah and Texas, a provider or broker that transacts without registering is operating outside the statute, and the state regulator can take enforcement action against it. For a business owner the practical step is simpler: the registries are public, so search your provider and your broker before you sign, and treat an absence from the list as a reason to ask questions rather than as a technicality.
Does Virginia require a disclosure for a merchant cash advance?
Yes. Virginia's sales-based financing disclosure law, HB 1027, covers merchant cash advances and revenue-share products offered to Virginia businesses. Before funding, the provider must give you a written disclosure showing the amount financed, the finance charge, the total repayment amount, the payment schedule, any broker fee and the prepayment terms (Virginia does not require an APR, and single transactions over $500,000 are exempt) — and both the provider and any broker arranging the deal must be registered with the Virginia State Corporation Commission.
Does Utah's commercial financing law require providers to register as well as disclose?
Yes — registration is the core of Utah's Commercial Financing Registration and Disclosure Act. A provider offering commercial loans, merchant cash advances or other sales-based financing to a Utah business must register annually with the Utah Department of Financial Institutions, and that registry is searchable. Utah's disclosure itself is lighter than California's or New York's, focused on total cost and payment structure rather than a prescribed APR calculation.
Does New York's commercial financing disclosure law apply to merchant cash advances?
Yes. New York's Commercial Finance Disclosure Law covers all commercial financing up to $2.5 million, and NYDFS regulations set out specific APR calculation methods for sales-based financing — which is what a merchant cash advance is. New York allows the disclosure to sit inside the contract itself rather than on a separate page, provided it is prominent and uses the prescribed format.
Does Virginia's disclosure law apply to a merchant cash advance over $500,000?
No. Virginia's sales-based financing law exempts any single transaction over $500,000 (Va. Code § 6.2-2229), along with financial institutions and providers or brokers that complete no more than five sales-based financing transactions with a Virginia recipient in a 12-month period. A merchant cash advance of $500,000 or less to a Virginia business is covered: the provider must deliver the written disclosure, and both the provider and any broker must be registered with the State Corporation Commission.
What does Texas HB 700 require a merchant cash advance provider to disclose?
For any specific offer of sales-based financing under $1 million, Texas Finance Code Chapter 398 requires the provider to disclose the total financing amount, the disbursement amount, the finance charge, the total repayment amount, the estimated payoff period, the payment amount and frequency (or the calculation method and average monthly payment when payments vary), all other fees, the cost of paying off or refinancing early, any collateral, and whether it pays a broker and how much. The recipient must sign the disclosure before the application is finalized, and each violation carries a $10,000 civil penalty.
Sources: Federal Reserve Banks, 2026 Report on Employer Firms (2025 Small Business Credit Survey) · California SB 1235 (Cal. Fin. Code §§ 22800–22805) · Va. Code Title 6.2, Chapter 22.1 (Sales-Based Financing Providers and Brokers) · N.Y. Financial Services Law Article 8, §§ 801–812 · Utah Department of Financial Institutions, Commercial Financing Registration and Disclosure Act · Texas HB 700 (89th Leg., 2025), enrolled text · Connecticut Public Act 23-201
Related: Glossary: Commercial Finance Disclosure Law · APR · Factor Rate · Will Applying Affect My Credit?