State Commercial Financing Disclosure Laws: Which States Require Them (2026)

Why do these state laws exist?

The federal Truth in Lending Act applies to consumer credit. A loan or advance for business purposes falls outside it, and an MCA, written as a purchase of future receivables, does not look like a loan at all. That left businesses comparing a factor rate from one funder against an interest rate from a bank, with no common measure. States stepped in with disclosure laws modeled loosely on TILA: they do not cap prices, but they require providers to show the cost in a consistent format before you commit.

Federal law does not override these laws. Because TILA covers consumer credit only, it leaves room for states to regulate business financing disclosures. Each state's version differs in what it covers, how large a transaction it reaches, and whether brokers and providers must register.

Which states have commercial financing disclosure laws?

The table summarizes the eleven states with laws in effect as of 2026. Thresholds and dates come from the statutes and regulator materials as reported at the time of writing; always check the current rule before relying on it, because several states have amended their laws since passing them.

What must the disclosure show?

The exact list varies by state, but most disclosures include the same core items. If a provider in a covered state sends you an offer without these numbers, ask for the disclosure before you go further.

• Total amount of financing, the headline figure in the contract.
• Amount actually disbursed to you, after fees and any payoff of an existing balance.
• Finance charge or total dollar cost of the financing.
• Total repayment amount.
• Payment amount and frequency, or for sales-based financing, the estimated payment and how it is calculated.
• Estimated term, especially for sales-based financing where the term depends on your sales.
• Prepayment terms: whether you save anything by paying early, and any prepayment charges.
• Fees not included in the finance charge, and any collateral requirements.
• In California, an APR; in New York, an APR or estimated APR.

Which deals and providers are exempt?

Exemptions are where many owners are surprised. Banks, credit unions and other depository institutions are exempt in most states. Most laws also exclude large transactions (above the threshold in the table), loans secured by real estate, certain vehicle and equipment financing, and providers who do only a handful of deals in the state each year. Florida and Kansas, for example, exempt providers with five or fewer transactions in the state over a year, and New York has a similar low-volume exemption.

Coverage usually turns on where the business is located, not where the funder is. A New York funder offering an advance to a Texas business must follow Texas rules for that deal. If you are not in one of the listed states, you have no state right to a disclosure yet, though you can still ask for the same figures, and any reputable provider should be able to give them.

What do these laws not do?

They do not cap rates. Texas's law expressly bars its finance commission from setting maximum rates or fees for commercial sales-based financing. A disclosure that shows an estimated APR of 150% is a compliant disclosure, not a red flag in itself; the point is that you can now see it.

They also do not decide whether an MCA is a loan, and most do not change the contract terms. Exceptions are the newer laws that reach into the contract itself: Virginia bars confessions of judgment in sales-based financing and requires suits to be brought in Virginia, and Texas voids confessions of judgment in those contracts and restricts automatic debits unless the provider holds a first-priority perfected security interest. Enforcement is usually by the state attorney general or financial regulator. Several laws, including Texas's, give the business no private right to sue for a violation, so a missing disclosure does not automatically void the deal.

How do you use a disclosure to compare offers?

Line up every offer on four rows from the disclosures: amount disbursed, total repayment, payment amount and frequency, and estimated term. Divide the finance charge by the amount disbursed to get the cost per dollar received, then compare the estimated APRs if your state provides them (or calculate one; a factor rate is not an APR). Check the renewal section carefully: Texas, among others, requires a provider to disclose how refinancing an existing balance reduces the amount you actually receive.

Then go beyond the disclosure. It shows the price but not the risk. The contract itself still decides whether there is a confession of judgment, how broad the personal guaranty is, which events count as default, and whether a reconciliation right is real. A cheap advance with a hair-trigger default can cost more than an expensive one that flexes with your sales.

A worked example: reading a disclosure

Suppose a Florida bakery receives an offer for a $40,000 advance. The disclosure shows a total amount of financing of $40,000, an amount disbursed of $24,800 (after $1,200 of fees and a $14,000 payoff of the bakery's existing advance), a finance charge of $14,000 and a total repayment of $54,000, collected by daily debits of about $430 for an estimated six months. Without the disclosure, the owner might think she was getting $40,000. With it, she can see she is getting $24,800 of new cash and paying $14,000 for it, roughly 56 cents per new dollar, before even estimating an APR.

Those two lines, amount disbursed and payoff of existing balances, are often the most useful parts of any disclosure, because they expose renewals and fees that a headline number hides. If the amount disbursed is much smaller than the amount financed, ask exactly why before you sign.

Do brokers have to follow these laws too?

In several states, yes. Many merchant cash advances are arranged by independent brokers who are paid a commission, sometimes built into a higher factor rate. New York's law treats a person who solicits and presents specific offers on behalf of a funder as a provider for disclosure purposes. Missouri requires commercial financing brokers to register with the state Division of Finance and post a surety bond. Virginia, Texas and other states require brokers of sales-based financing to register as well.

If a broker is involved, ask who pays the broker and how much, whether the broker's fee is included in the finance charge on the disclosure, and which funder will actually sign the contract. A broker who cannot answer those questions, or who pushes you to sign the same day, is a reason to slow down and compare another offer.

Are more states adding these laws?

Yes. New Jersey has had a bill pending that would cover sales-based financing, closed-end and open-end credit and factoring, and other legislatures have considered similar proposals. Existing states also keep amending their laws: California's SB 362 is a recent example, and Texas registration deadlines run through the end of 2026. Before relying on any threshold or date in this guide, check your state regulator's website (in California, the DFPI; in New York, the Department of Financial Services; in Texas, the Office of Consumer Credit Commissioner).

The Business Financing analyzer asks for your state when you upload a merchant cash advance or business loan agreement, compares the agreement with any disclosure you were given, and calculates an estimated APR from the payment schedule even where your state does not require one.