MCA Multi-State Disclosure Laws in 2026: The Complete Broker Compliance Guide

The Disclosure Wave Has Arrived - and It Is Spreading Fast

Three years ago, only California and New York required merchants to receive standardized disclosures before signing a merchant cash advance agreement. Today, eleven states have enacted commercial financing disclosure laws, and that number grew again in 2026 when Illinois and New Jersey passed their own versions. Florida, Maryland, and North Carolina are actively debating similar bills.

If you are an MCA broker closing deals in multiple states - and most active brokers are - you are now operating in a patchwork of compliance obligations that vary by state, deal size, and product type. Getting this wrong is not a minor administrative headache. Penalties range from $500 per violation in California to $100,000 per violation in Connecticut. Texas requires mandatory registration with the state by December 31, 2026.

This guide breaks down every state with an active law, what each requires, and gives you a practical compliance checklist you can use on every deal. For background on MCA-specific terminology used throughout this article, our glossary covers the key terms.

Why States Are Regulating MCAs Now

The regulatory push stems from a straightforward problem: merchants were signing MCA agreements without understanding the true cost. A funder quoting a 1.35 factor rate sounds very different from a funder quoting an annualized cost of 80 to 120 percent - but both can describe the same deal. Factor rates work differently than interest rates, and that gap in understanding is exactly what regulators targeted.

Consumer protection agencies in California and New York argued that small business owners were effectively retail consumers in terms of financial sophistication, and that the lack of standardized disclosures enabled predatory structuring. When California and New York enacted their laws and enforcement actions proved relatively straightforward, other states followed.

The other driver is stacking. Restaurant and retail bankruptcy filings listing multiple MCAs as creditors rose again in Q1 2026, and state attorneys general have been paying close attention. Disclosure requirements are one tool - mandatory APR-equivalents make it much harder for a merchant to take a fourth advance without understanding they are paying triple-digit annualized rates on the stack. Use our underwriting calculator to see how stacked positions affect the effective cost to a merchant.

States With Active Disclosure Laws: What Each Requires

California (SB 362 - Effective January 1, 2026)

California has the most demanding disclosure framework in the country. The original 2022 law required APR disclosure, total repayment amount, and all fees before signing. SB 362, effective January 1, 2026, goes further: it restricts funders and brokers from using the words rate or interest in ways that could mislead applicants, and requires that the APR be re-disclosed every time a provider communicates a charge, pricing metric, or financing amount during the application process.

In plain terms: you can no longer hand a merchant a one-page disclosure at contract signing and call it done. Every time you discuss the deal math, you need to restate the APR. Brokers handling their own funder negotiations must ensure their funder counterparties are complying on the disclosure document itself, and brokers must separately disclose their own compensation before the deal closes.

Penalties for willful violations reach $10,000 per transaction. Our dedicated guide to California SB 362 compliance covers the full requirements in detail.

New York (Commercial Finance Disclosure Law)

New York's law applies to commercial financing transactions of $2.5 million or less and covers sales-based financing, closed-end and open-end financing, and factoring. Funders must disclose the total amount financed, total repayment amount, the disbursement amount after fees, the estimated APR, the average monthly payment, and any prepayment penalties.

New York also has some of the strongest broker transparency rules. Brokers must disclose their compensation to the merchant before consummating a transaction, and the funder bears responsibility for ensuring that disclosure happens. The New York Department of Financial Services has been active in enforcement since the law took full effect in 2023.

Our full breakdown of New York's commercial financing disclosure requirements covers the specifics brokers need to know.

Texas (HB 700 - Registration Deadline December 31, 2026)

Texas took a different approach: rather than just requiring disclosures, it created a mandatory registration regime. Every sales-based financing provider and broker operating in Texas must register with the Texas Office of Consumer Credit Commissioner (OCCC) by December 31, 2026, with annual renewal by January 31 each year.

Texas also requires disclosure of: the total amount provided, disbursement amount, total repayment amount, all fees, the payment amount and frequency, a description of the collateral (if any), and whether the funder has the right to reconcile. The reconciliation disclosure is significant - Texas specifically calls out that merchants must be told if and how they can request a payment adjustment based on actual revenue.

Failing to register in Texas by the deadline means operating illegally in one of the largest MCA markets in the country. See our dedicated Texas HB 700 compliance guide for registration steps.

Florida (Effective January 1, 2024)

Florida enacted its Commercial Financing Disclosure Law in June 2023, with requirements taking effect January 1, 2024. The law applies to commercial financing transactions of $500,000 or less, and covers closed-end loans, open-end credit, sales-based financing (MCAs), factoring, and lease financing.

Florida requires disclosure of: the total amount financed, the finance charge, the total repayment amount, the APR, broker compensation (disclosed separately), and a description of any collateral. The law explicitly prohibits brokers from collecting advance fees - meaning you cannot charge a merchant before the deal closes.

For non-compliance, Florida imposes fines up to $20,000 for first offenses and up to $50,000 for repeated violations per transaction.

Connecticut

Connecticut has one of the strictest enforcement postures of any state. Its commercial financing disclosure law carries penalties up to $100,000 per violation - the highest in the country. Connecticut also has licensing requirements for providers, making it one of a handful of states where you need an active license, not just a registration, before doing business.

Connecticut requires the standard suite of disclosures (APR-equivalent, total repayment, fees) plus specific language around payment frequency and the right to prepay. Deals structured as revenue-based financing are captured by the law, not just deals labeled as MCAs.

Utah

Utah's commercial financing disclosure law was one of the first after California and New York. It follows a similar framework: APR disclosure, total repayment, fees, and broker compensation - all required before the merchant signs. Utah also has a provider registration requirement, and the state has been active in reviewing registration applications from funder-side operations.

Virginia

Virginia requires disclosures for sales-based financing transactions under $500,000. The state modeled its requirements closely on New York's framework, including the estimated APR calculation methodology. Virginia does not currently require provider registration, but enforcement through the Attorney General's office has been documented.

Georgia

Georgia's law covers commercial financing of $500,000 or less. Like most states, it requires APR disclosure, total repayment, and a breakdown of all fees. Georgia is notable for having enacted relatively quickly after the California and New York templates became available, suggesting the legislature viewed standardized disclosures as an uncontroversial consumer protection measure.

Illinois (2026)

Illinois added its commercial financing disclosure law in 2026, targeting small business borrowers with requirements for plain-language contracts and APR disclosure. The Illinois law also imposes penalties for unlicensed activity - meaning brokers referring deals to funders who are not compliant in Illinois could face exposure. Illinois has historically been an active state in consumer finance enforcement, and the commercial financing law is expected to receive similar attention.

New Jersey (2026)

New Jersey's 2026 law adds APR disclosure requirements and caps certain fees on deals structured as receivables purchases when those deals function economically like loans. New Jersey already had a prohibition on confessions of judgment in business financing contracts with New Jersey debtors since 2020, so the 2026 disclosure law builds on an existing regulatory foundation.

New Jersey is also notable for having ongoing litigation against multiple MCA funders, meaning the state's attorney general is actively engaged in this market beyond just passing legislation.

Missouri, Kansas, and Louisiana

Missouri, Kansas, and Louisiana all enacted commercial financing disclosure requirements in recent years, following the national template. Missouri requires registration for providers and has specific fee disclosure rules for brokers. Kansas and Louisiana have narrower scopes but both cover MCA products in the under-$500,000 range.

What Every Compliant Disclosure Must Include

Across all eleven states, the core required elements are consistent, though the specific formatting and timing requirements differ. Every deal you broker should have documentation showing that the merchant received the following before signing:

• Total amount financed - what the merchant actually receives after fees
• Total repayment amount - the full dollar amount the merchant will repay
• Finance charge or total cost - the difference between what they receive and what they repay
• APR or APR-equivalent - calculated using a standardized methodology; in California, this must be re-disclosed every time pricing is discussed
• Payment amount and frequency - daily, weekly, or monthly holdback amount and percentage
• All fees - origination fees, broker fees, processing fees, any other charges
• Prepayment terms - whether there is a prepayment discount or penalty
• Collateral description - if a UCC filing or personal guarantee is involved
• Broker compensation - disclosed separately, before the deal closes, in most states

The APR calculation for MCAs is inherently imprecise because remittance is tied to revenue, not fixed calendar payments. Most states allow funders to use an assumed repayment timeline based on historical daily remittances, but the methodology must be documented and consistent. Our MCA calculator tool can help you model the effective annualized cost under different repayment scenarios before submitting a deal.

Broker-Specific Obligations

Most MCA brokers focus on getting deals approved and getting paid. Compliance obligations feel like the funder's problem. That assumption is dangerous in 2026.

In New York, California, Texas, and Florida, brokers have direct and independent obligations to disclose their compensation to merchants. The funder's disclosure document does not satisfy the broker's separate obligation. If a merchant later claims they did not know how much you were earning on the deal, and you cannot produce a signed broker fee disclosure, you have a problem - regardless of what the funder disclosed.

Several states also hold brokers jointly liable if the funder they placed a deal with was not compliant. This is the most underappreciated risk in the brokerage side of the industry. You are not insulated from enforcement actions just because you did not issue the disclosure document yourself. If you regularly work with a funder who operates across multiple states, confirm they have compliant disclosure processes in each jurisdiction.

Practical steps for brokers:

• Use a broker disclosure form that itemizes your compensation (points, percentage, flat fee) and get the merchant to sign it before submitting the application
• Keep disclosure documentation in your CRM or deal file for each funded deal - you want a paper trail if a state regulator or merchant attorney ever asks
• Confirm which states your active funders are compliant in before referring deals; if a funder is not registered in Texas, do not send them Texas merchants
• If you are operating as an ISO with multiple funders, consider having your ISO agreement confirm the funder's disclosure obligations so responsibility is clearly assigned
• If you create your broker account on our platform, you can filter funders by their compliance profile and verified status - which signals a higher operational standard

Registration Requirements: Know Where You Need a License

Disclosure requirements and registration requirements are not the same thing. Several states require funders and brokers to register or obtain a license before doing any business in the state.

As of 2026:

• Texas - mandatory registration with OCCC by December 31, 2026 for all providers and brokers; annual renewal required
• California - providers must register; the registration process involves submitting information about principals, compliance procedures, and disclosure templates
• Connecticut - full licensing required for providers; one of the most rigorous licensing processes in the country
• Utah - provider registration required
• Missouri - provider registration required
• South Carolina - licensing requirements for certain commercial finance providers

If you are a broker - not a funder - your registration obligations are narrower in most states, but Texas and California both explicitly include brokers in their registration frameworks. Check the specific requirements in each state where you actively source and submit deals.

Penalties: The Real Cost of Non-Compliance

To put the stakes in concrete terms, here is what non-compliance can cost:

• California - $500 per violation, up to $10,000 for willful violations; potential criminal liability for repeated offenses
• Connecticut - up to $100,000 per violation
• New York - enforcement by the NYDFS with civil penalties; funders have faced licensing actions and cease-and-desist orders
• Florida - up to $20,000 for first offense, $50,000 for repeated violations per transaction
• Texas - operating without registration after December 31, 2026 constitutes unlicensed activity with civil penalties
• Illinois - penalties for unlicensed activity apply to brokers as well as funders

Beyond direct fines, non-compliance creates deal rescission risk. A merchant who later decides they cannot afford their MCA can retain an attorney who will comb through the disclosure documents looking for technical violations. If the funder did not deliver a compliant disclosure - or if the broker did not separately disclose their compensation - a court may void the agreement or require a refund of fees already paid. The collections process gets significantly more complicated when there are disclosure defects in the underlying agreement.

Practical Broker Compliance Checklist for Every Deal

Use this checklist before submitting any deal to a funder:

• Identify every state the merchant operates in - not just where they are incorporated, but where they have locations or revenue activity
• Confirm the funder you are submitting to has a compliant disclosure process in every applicable state
• Prepare your own broker fee disclosure document naming your compensation amount and get a merchant signature or email acknowledgment before submitting
• If the deal is in Texas, confirm both you and the funder have active OCCC registrations (or have applied before the December 31, 2026 deadline)
• If the deal is in California, remind the funder they must re-disclose the APR in every pricing conversation, not just at contract signing
• File the signed disclosure documents in your CRM against the deal ID - not just the contract, but specifically the disclosure paperwork
• For multi-state merchants, use the most demanding state's requirements as your floor - if the merchant has locations in California and Georgia, use California-level disclosure standards for the whole deal
• Before placing deals with a new funder, ask directly: which states are you registered or licensed in, and can you send me a sample disclosure document for a California deal? If they cannot produce one, route California merchants elsewhere

Finding Compliant Funders for Your Deals

The proliferation of state disclosure laws has had one useful side effect: funders who have invested in compliance infrastructure tend to be operationally stronger overall. A funder that has gone through California's registration process, built compliant disclosure workflows, and trained their operations team on APR recalculation is typically a more reliable partner than one who has not.

When you search our funder directory, verified funders - those with subscription_active status - have cleared a higher bar for operational standards. Filtering your search by verified status is a reasonable proxy for funders who take compliance seriously, since the same operational discipline that drives verification tends to carry over into regulatory compliance.

For specific industry deals, keep in mind that compliance obligations stack on top of industry-specific underwriting challenges. Restaurant and retail merchants face tighter scrutiny in 2026 due to rising default rates, and healthcare merchants operate under their own regulatory overlay. MCA funders for restaurants who are active and compliant in your state are worth building a targeted relationship with.

The Takeaway

The era of MCA brokers operating as if compliance is the funder's problem is over. Eleven states have enacted commercial financing disclosure laws. Several require broker-specific disclosures and registrations. Penalties are real and documented enforcement actions are accumulating. And the trend is unambiguously toward more states, not fewer.

The brokers who will thrive in this environment are the ones who build compliance into their workflow now - not as a burden, but as a differentiator. Merchants who receive clear, honest disclosures before signing are less likely to default, less likely to call an MCA defense attorney six months later, and more likely to come back for a renewal. Compliance is not separate from good brokering. In 2026, it is part of it.