Virginia merchant cash advance law: what your offer has to show
Virginia requires providers and brokers of sales-based financing, the category most merchant cash advances fall into, to register with the State Corporation Commission and give a detailed disclosure. A confession of judgment in these contracts can't be enforced, and suits against Virginia businesses go to Virginia courts. The law is Code of Virginia title 6.2, chapter 22.1.
Which offers the Virginia law covers
Chapter 22.1 covers sales-based financing to Virginia recipients. Banks are exempt, and so are providers that do five or fewer deals in twelve months and single deals over $500,000.
The disclosure, line by line
Section 6.2-2231 lists what the disclosure has to show. In plain terms:
| Line on the form | What it tells you | Check it against |
|---|---|---|
| Total amount and disbursement amount | The advance and what reaches you | Your funding-day deposit |
| Finance charge | The total cost | Payback minus disbursement |
| Total repayment amount | Everything you'll deliver | The purchased amount |
| Estimated term and payments | How long and how much | The ACH authorization |
| Other fees | Charges outside the finance charge | The fee schedule |
| Payoff or refinance | What happens to the balance if you pay off or refinance | The prepayment section |
| Collateral and broker compensation | What secures the deal and what a broker is paid | The UCC section and the broker |
Do brokers have to register?
Yes. Both providers and brokers register with the SCC before doing business in Virginia, and renew each year.
Confession of judgment
Under § 6.2-2234, a confession of judgment in a sales-based financing contract is unenforceable, and a suit against a Virginia recipient has to be brought in Virginia.
Where to raise a problem
Complaints go to the Virginia SCC.
Why the payoff line matters
It's the one place the form tells you what renewing costs. Read it next to the renewal calculator before you renew.
Sources
- Code of Virginia, title 6.2, chapter 22.1 (sales-based financing)
- Virginia SCC Bureau of Financial Institutions
This is general information, not legal advice. For your contract and your state, talk to a business lawyer. This page gets a legal review before it's indexed.
Funding a Virginia business?
We check which funders fit and what the offer has to show before anything goes out. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.