Merchant Cash Advance Cost Disclosure Laws by State
Which states make funders show the price, and how many small businesses those rules reach.
11 states have a cost disclosure law for merchant cash advances, and together they cover about half of U.S. small businesses. California and New York require the most detail, and four states make brokers register. Find your state in the table below to see what an offer has to show you.
What are the headline findings?
- 11 states have a commercial financing disclosure law that reaches merchant cash advances or similar sales-based financing. Together they hold 18.1 million of the 36.3 million small businesses the SBA counts across the 50 states and DC, or 49.9%.
- Only 2 states, California and New York, require an estimated APR on the disclosure. They hold 18.5% of small businesses. The other 9 require a dollar cost and payment terms but no APR.
- 4 states make MCA brokers register before they work: Connecticut, Missouri, Texas and Virginia. They hold 14.8% of small businesses. California has passed a license law for brokers and providers that starts later.
- The largest deal each law covers ranges from $250,000 in Connecticut to $2.5 million in New York. Louisiana sets no dollar ceiling at all.
- In the Federal Reserve's latest Small Business Credit Survey, 8% of small employer firms applied for a merchant cash advance in the prior 12 months, and 60% of firms that borrowed from online companies said the total cost came in higher than they expected.
Which states have MCA cost disclosure laws?
These laws make a provider, meaning the funder and in some states the broker, show the cost of the deal in a set format before you sign. Each row links to our page on that state where we have one, and every law is linked in the sources.
| State | Law | What it covers | Largest deal covered | Estimated APR required | Registration |
|---|---|---|---|---|---|
| California | Financial Code Division 9.5 (SB 1235), DFPI rules 10 CCR § 900 et seq.; SB 362 | Commercial financing incl. sales-based | $500,000 | Yes | No registration under the disclosure law; AB 2116 adds a DFPI license for brokers and providers on a later start date |
| New York | Financial Services Law Article 8; 23 NYCRR Part 600 | Commercial financing incl. sales-based | $2,500,000 | Yes | None |
| Utah | Utah Code Title 7, Chapter 27 (SB 183) | Commercial financing | $1,000,000 | No | Providers register with the Department of Financial Institutions |
| Virginia | Va. Code § 6.2-2228 et seq. (HB 1027) | Sales-based financing only | $500,000 | No | Providers and brokers register with the State Corporation Commission |
| Georgia | O.C.G.A. § 10-1-393.18 (SB 90) | Commercial financing | $500,000 | No | None |
| Florida | Fla. Stat. §§ 559.961-559.9615 (HB 1353) | Commercial financing | $500,000 | No | None |
| Connecticut | Conn. Gen. Stat. §§ 36a-861 to 36a-872 (Public Act 23-201) | Sales-based financing only | $250,000 | No | Providers and brokers register with the Department of Banking (NMLS) |
| Texas | Texas Finance Code chapter 398 (HB 700) | Commercial sales-based financing | Under $1,000,000 | No | Providers and brokers register with the OCCC (NMLS) |
| Missouri | RSMo § 427.300 (SB 1359) | Commercial financing | $500,000 | No | Brokers register with the Division of Finance and post a $10,000 bond |
| Kansas | K.S.A. §§ 75-783 to 75-787 (SB 345) | Commercial financing | $500,000 | No | None |
| Louisiana | Act 198 (HB 470) | Revenue-based financing | No dollar ceiling | No | None |
Banks, credit unions and some other providers are exempt in most of these states, and most laws also exempt a provider that makes only a handful of deals in the state each year. Louisiana is the exception: its law has no entity or dollar exemptions.
How many small businesses do these laws reach?
We matched each state's rule to the SBA Office of Advocacy's count of small businesses in that state, which includes owners with no employees.
California, Texas and Florida alone hold 11.3 million small businesses. Counting only businesses with paid employees, the 11 states hold 3,880,520 of the nation's 8,361,342 employer establishments (46.4%), and 46.8% of establishments with fewer than 20 employees, from the Census Bureau's County Business Patterns.
Where do MCA brokers have to register?
A broker shops your file to funders and is paid by the funder when a deal funds. Four states require brokers themselves to register before they work in the state, and Utah requires providers to register:
| State | Rule |
|---|---|
| Virginia | Providers and brokers register with the State Corporation Commission |
| Connecticut | Providers and brokers register with the Department of Banking (NMLS) |
| Texas | Providers and brokers register with the OCCC (NMLS) |
| Missouri | Brokers register with the Division of Finance and post a $10,000 bond |
| Utah | Providers register with the Department of Financial Institutions |
| California | License coming (AB 2116) |
| New York | Brokers count as providers for disclosure |
| Georgia | No registration; the statute limits what brokers may do |
| Florida | No registration; brokers may not charge advance fees and must show their address and phone in ads |
Before you send a file, ask any broker for its registration in your state where one is required. You can check Connecticut and Texas registrations through NMLS Consumer Access, and Virginia's through the State Corporation Commission.
How large a deal do the laws cover?
Most laws stop at $500,000. Above a state's ceiling the provider doesn't owe the state form, so a larger offer can arrive with fewer cost facts on paper. Whatever the size, you can still ask for the cash you receive, the total payback, the payment and the expected term in writing.
What does the Fed survey show about MCA applicants?
The Federal Reserve Banks' Small Business Credit Survey asks thousands of small employer firms, those with 1 to 499 employees, how they sought financing. In the latest report on employer firms (6,525 responses):
- 8% of firms applied for a merchant cash advance in the prior 12 months, against 26% for a loan and 24% for a line of credit.
- 7% of firms use merchant cash advances on a regular basis.
- Among firms that applied for a loan, line of credit or cash advance, 12% applied for a merchant cash advance.
- 37% of applicants sought less than $50,000.
- The share of applicants that applied at online and fintech companies has risen for five survey rounds in a row, to 29%.
Merchant cash advance applicants were the least likely to be denied of the products shown, at 12%. The cost picture is the other side of that: firms that used online and fintech companies were the most likely to say the price surprised them, and only 35% of them said they were satisfied, against 76% at credit unions. A written cost disclosure is the rule meant to close that gap.
How do you read the cost where no APR is required?
In 9 of the 11 states the form shows dollars, not an APR, and in 39 states and DC there's no required form at all. Three figures still let you compare any two offers:
- Cost per dollar: total payback minus the cash you receive, divided by the cash you receive.
- Expected term: total payback divided by the payment, turned into days, weeks or months.
- Estimated APR: put the cash received, the payback and the payment schedule into an APR calculator.
Our MCA cost checker does the math, and factor rate to APR, worked examples walks through it by hand.
What does every state look like?
| State | Disclosure law | Estimated APR | Small businesses (SBA) | Employer establishments (Census) |
|---|---|---|---|---|
| Alabama | No | - | 465,610 | 105,720 |
| Alaska | No | - | 77,814 | 22,178 |
| Arizona | No | - | 706,640 | 162,845 |
| Arkansas | No | - | 292,728 | 70,452 |
| California | Yes | Yes | 4,340,784 | 1,029,689 |
| Colorado | No | - | 730,887 | 182,486 |
| Connecticut | Yes | No | 381,129 | 89,234 |
| Delaware | No | - | 111,346 | 29,706 |
| District of Columbia | No | - | 82,666 | 23,801 |
| Florida | Yes | No | 3,485,976 | 645,575 |
| Georgia | Yes | No | 1,374,972 | 261,320 |
| Hawaii | No | - | 144,375 | 32,911 |
| Idaho | No | - | 207,670 | 58,100 |
| Illinois | No | - | 1,353,957 | 322,415 |
| Indiana | No | - | 591,671 | 155,692 |
| Iowa | No | - | 289,962 | 83,321 |
| Kansas | Yes | No | 273,419 | 76,139 |
| Kentucky | No | - | 393,860 | 94,402 |
| Louisiana | Yes | No | 511,235 | 108,561 |
| Maine | No | - | 160,215 | 43,345 |
| Maryland | No | - | 696,710 | 142,967 |
| Massachusetts | No | - | 756,096 | 183,767 |
| Michigan | No | - | 983,079 | 229,564 |
| Minnesota | No | - | 560,428 | 154,455 |
| Mississippi | No | - | 294,768 | 60,465 |
| Missouri | Yes | No | 590,131 | 151,475 |
| Montana | No | - | 141,011 | 42,566 |
| Nebraska | No | - | 193,495 | 56,503 |
| Nevada | No | - | 353,621 | 77,297 |
| New Hampshire | No | - | 145,314 | 39,298 |
| New Jersey | No | - | 1,051,630 | 237,968 |
| New Mexico | No | - | 172,113 | 44,861 |
| New York | Yes | Yes | 2,378,996 | 541,313 |
| North Carolina | No | - | 1,107,537 | 258,169 |
| North Dakota | No | - | 78,219 | 25,402 |
| Ohio | No | - | 1,081,292 | 255,049 |
| Oklahoma | No | - | 395,520 | 96,402 |
| Oregon | No | - | 417,747 | 122,451 |
| Pennsylvania | No | - | 1,169,008 | 307,065 |
| Rhode Island | No | - | 116,149 | 29,510 |
| South Carolina | No | - | 530,402 | 122,958 |
| South Dakota | No | - | 96,770 | 29,106 |
| Tennessee | No | - | 741,196 | 150,129 |
| Texas | Yes | No | 3,517,343 | 670,878 |
| Utah | Yes | No | 371,569 | 95,494 |
| Vermont | No | - | 81,949 | 20,841 |
| Virginia | Yes | No | 880,366 | 210,842 |
| Washington | No | - | 695,695 | 202,177 |
| West Virginia | No | - | 118,045 | 35,839 |
| Wisconsin | No | - | 497,370 | 144,774 |
| Wyoming | No | - | 81,924 | 23,865 |
"Disclosure law" means a state law that requires a set cost disclosure on merchant cash advances or similar sales-based financing. Other state laws, such as usury and unfair-practice rules, apply in every state and aren't counted here.
How was this report built?
- We read each state's statute or regulator page for scope, the largest deal covered, whether an estimated APR is required and who has to register. Every law is linked in the sources.
- Small business counts are the SBA Office of Advocacy's state figures, which include businesses with and without employees.
- Employer establishments and the under-20 counts come from the Census Bureau's County Business Patterns state file, all industries.
- Survey figures are quoted from the Federal Reserve Banks' Small Business Credit Survey report on employer firms, as printed in the report.
- Shares are simple sums: a state counts toward a rule if its law is in force when this page was reviewed.
Laws change. Texas registration has a statutory deadline, California's broker license starts later, and other states are weighing bills. We update this page when a law changes. This is general information, not legal advice. For your contract and your state, talk to a business lawyer.
Can I download, cite or embed this data?
Yes. Download the full table as a CSV: every state with its rule, SBA small business count and Census employer establishments. You're free to use it with a link to this page as the source.
To embed the headline chart, paste this code:
<a href="https://afterfirstmca.com/data/mca-disclosure-laws-by-state"><img src="https://afterfirstmca.com/assets/img/mca-disclosure-laws-by-state.b78a7d9630.png" alt="Half of U.S. small businesses are in the 11 states with MCA cost disclosure laws. Only California and New York require an APR." width="1200" height="630"></a> <p>Source: <a href="https://afterfirstmca.com/data/mca-disclosure-laws-by-state">Afterfirst MCA, Merchant Cash Advance Cost Disclosure Laws by State</a></p>
Suggested citation: Afterfirst MCA, "Merchant Cash Advance Cost Disclosure Laws by State," https://afterfirstmca.com/data/mca-disclosure-laws-by-state.
What is the short version for reporters?
Half of America's small businesses (49.9%) now operate in one of the 11 states that make merchant cash advance providers show the cost in writing, but only California and New York, home to 18.5% of them, require that cost as an APR.
The other 9 states, Utah, Virginia, Georgia, Florida, Connecticut, Texas, Missouri, Kansas and Louisiana, require a dollar cost and payment terms without an APR. Four of them make brokers register. Coverage stops at $250,000 in Connecticut and $2.5 million in New York, and Louisiana sets no ceiling. In the 39 states and DC without a law, which hold 50.1% of small businesses, no set form is required. The Federal Reserve's latest survey found that 8% of small employer firms applied for a merchant cash advance and that 60% of firms that borrowed from online companies said the total cost came in higher than expected.
Afterfirst MCA is a nationwide merchant cash advance broker headquartered in Los Angeles. It's a broker, not a funder: it shops one free application with third-party funders, and funding companies pay it a monthly membership and a commission when a deal funds. For questions about this data, email info@afterfirstmca.com or call 877-FUND-654.
Sources
- California Legislature, Financial Code Division 9.5, commercial financing disclosures (SB 1235): leginfo.legislature.ca.gov
- California DFPI, commercial financing disclosure regulation, final text: dfpi.ca.gov
- California Legislature, SB 362, commercial financing: disclosures: leginfo.legislature.ca.gov
- California Legislature, AB 2116, commercial financing licensing: leginfo.legislature.ca.gov
- New York DFS, 23 NYCRR Part 600, disclosure requirements for commercial financing: www.dfs.ny.gov
- Utah Department of Financial Institutions, Commercial Financing Registration and Disclosure Act: dfi.utah.gov
- Code of Virginia, Title 6.2, Chapter 22.1, sales-based financing providers: law.lis.virginia.gov
- Georgia Code § 10-1-393.18, disclosures for commercial financing transactions: law.justia.com
- Florida Statutes § 559.9613, disclosures: www.flsenate.gov
- Florida Statutes § 559.9614, prohibited acts by brokers: www.flsenate.gov
- Connecticut General Assembly, Public Act 23-201, an act requiring certain financing disclosures: www.cga.ct.gov
- Connecticut Department of Banking, commercial financing provider or broker registration: portal.ct.gov
- Texas Legislature, HB 700, enrolled text (Finance Code chapter 398): capitol.texas.gov
- Texas OCCC, commercial sales-based financing: occc.texas.gov
- Missouri Revised Statutes § 427.300, commercial financing disclosure law: revisor.mo.gov
- Kansas Session Laws, SB 345, Commercial Financing Disclosure Act: sos.ks.gov
- Louisiana Legislature, HB 470 (Act 198), revenue-based financing disclosures: www.legis.la.gov
- Federal Reserve Banks, Small Business Credit Survey, report on employer firms: www.fedsmallbusiness.org
- SBA Office of Advocacy, state small business statistics (SBA open data): data.sba.gov
- U.S. Census Bureau, County Business Patterns: www.census.gov
Questions about your file?
Call 877-FUND-654 with any question. We call you back, and we always talk with you before we shop your file.