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MCA Laws in Hawaii: What Business Owners Need to Know

Bar Alezrah

10 min read

April 3, 2026

Reviewed for accuracy. Based on real experience.

Hawaii does not have any laws specifically regulating merchant cash advances. The state's Division of Financial Institutions (DFI), which operates under the Department of Commerce and Consumer Affairs (DCCA), regulates traditional lenders but does not require MCA companies to obtain licenses or provide standardized disclosures. For Hawaii business owners, this means general contract law and consumer protection statutes are your main safeguards when dealing with MCA providers.

This guide covers what protections exist in Hawaii and how to protect your business when considering an MCA.

Current MCA Regulations in Hawaii

Hawaii does not classify MCAs as loans, and there is no state statute specifically addressing merchant cash advances, commercial financing disclosures, or MCA company licensing. The Hawaii Division of Financial Institutions regulates banks, credit unions, money transmitters, and other financial service providers, but MCA companies generally fall outside its regulatory scope.

There are no state-mandated disclosure requirements for MCA transactions in Hawaii. MCA companies operating in the state are not required to provide an APR estimate, total cost breakdown, or standardized payment information. This puts the burden on Hawaii business owners to evaluate MCA offers on their own.

Geographic Considerations

Hawaii's geographic isolation creates unique challenges for business owners dealing with MCA companies. Nearly all MCA companies are based on the mainland, primarily in New York and Florida. This means that MCA contracts often include forum selection clauses requiring disputes to be resolved in the MCA company's home state, which can be extremely inconvenient and expensive for Hawaii business owners.

The distance also makes it harder for mainland-based MCA companies to enforce judgments in Hawaii. If an MCA company obtains a judgment against your business on the mainland, it must go through the domestication process in Hawaii courts, which adds time and cost to their enforcement efforts.

Confession of Judgment Rules

Hawaii law does not explicitly prohibit confessions of judgment in commercial transactions. However, Hawaii courts follow due process principles that require proper notice and an opportunity to be heard. Pre-dispute confessions of judgment embedded in form contracts are not favored by Hawaii courts.

If an MCA company obtains a COJ judgment in another state (typically New York), enforcing it in Hawaii requires domestication under the Uniform Enforcement of Foreign Judgments Act, as adopted in Hawaii (HRS Chapter 636C). You have the right to be notified of the filing and to challenge the judgment on grounds such as lack of personal jurisdiction, fraud, or violation of due process.

Hawaii's distance from mainland courts where COJs are commonly filed provides a practical barrier to enforcement. However, this does not guarantee protection. If you have signed an MCA agreement with a COJ clause, consult a Hawaii attorney to understand your rights.

UCC Filing Rules

MCA companies file UCC-1 financing statements with the Hawaii Bureau of Conveyances, which handles UCC filings in the state. These filings create a public record of the MCA company's claim on your business receivables.

What you need to know about UCC filings in Hawaii:

You can search for UCC filings against your business through the Hawaii Bureau of Conveyances portal
UCC filings in Hawaii are effective for five years from the date of filing
When you pay off an MCA, the funder must file a UCC-3 termination statement within 20 days of receiving a written demand from you
If the funder fails to terminate the filing, you may have a claim for damages under Hawaii's adoption of UCC Article 9

Hawaii's smaller business lending market means that UCC filings can have an outsized impact on your ability to get traditional financing. Banks in Hawaii are familiar with UCC searches and will flag existing liens.

Consumer Protection Laws That Apply

Hawaii has a strong consumer protection framework. Hawaii Revised Statutes Chapter 480 (Unfair and Deceptive Acts or Practices) prohibits unfair methods of competition and unfair or deceptive acts or practices in trade or commerce.

Unfair and Deceptive Acts or Practices (UDAP)

Hawaii's UDAP statute is broad and has been applied to business transactions. If an MCA company misrepresents the cost of financing, hides fees, fails to honor reconciliation provisions, or engages in misleading marketing, you may have a claim under HRS Chapter 480. Successful claims can result in treble damages (three times actual damages) and attorney's fees.

The Hawaii Office of Consumer Protection, which is part of the Department of Commerce and Consumer Affairs, investigates complaints and can take enforcement action against businesses that violate UDAP.

DCCA Oversight

The Hawaii Department of Commerce and Consumer Affairs (DCCA) provides a broad regulatory umbrella for business practices in the state. While the DCCA does not specifically regulate MCA companies, its Office of Consumer Protection can investigate complaints and take action against deceptive business practices.

Recent Legislation and Court Cases

Hawaii has not introduced any MCA-specific legislation as of early 2026. The state legislature has not considered commercial financing disclosure bills similar to those passed in California, New York, Virginia, or Colorado.

Key considerations for Hawaii business owners:

No pending legislation. There are currently no bills in the Hawaii Legislature addressing MCA regulation or commercial financing disclosure.
Limited court precedent. There are few reported Hawaii court decisions specifically addressing MCA agreements. Most disputes involving Hawaii businesses and MCA companies are resolved in mainland courts due to forum selection clauses.
Federal attention. Federal regulatory scrutiny of the MCA industry could benefit Hawaii business owners by creating baseline protections that apply nationwide, regardless of state-level regulation.
National trends. As more states adopt commercial financing disclosure laws, pressure may build for Hawaii to follow suit. Business owners should monitor the Hawaii Legislature for any developments.

What Hawaii Business Owners Should Do

If you are considering an MCA in Hawaii or already have one, take these steps:

Get everything in writing. Since Hawaii does not require standardized disclosures, ask the MCA company for the total repayment amount, factor rate, holdback percentage, and all fees in writing before signing anything.
Calculate the APR yourself. Convert the factor rate to an approximate APR. A factor rate of 1.35 on a 6-month advance translates to roughly 70% APR or more. Compare this to local bank loans, SBA financing, or credit union options in Hawaii.
Check your UCC filings. Search the Hawaii Bureau of Conveyances for any existing liens on your business receivables. Multiple filings will make it very difficult to get traditional financing.
Push back on forum selection clauses. Many MCA contracts require disputes to be resolved in New York or another mainland state. For Hawaii business owners, this creates a major practical barrier. Try to negotiate for Hawaii jurisdiction.
File complaints when needed. If an MCA company uses deceptive practices, file a complaint with the Hawaii Office of Consumer Protection.

Helpful Resources

Hawaii Division of Financial Institutions for financial regulation information
Hawaii Office of Consumer Protection for consumer and business protection complaints
SBA Hawaii District Office for alternative financing resources
Hawaii Small Business Development Center for free business counseling

Frequently Asked Questions

Does Hawaii regulate merchant cash advances?

No. Hawaii does not have any laws specifically regulating MCAs. The Division of Financial Institutions regulates traditional lenders, but MCA companies are not required to obtain a license or provide disclosures. Business owners must rely on general contract law and consumer protection statutes.

Can an MCA company enforce a confession of judgment in Hawaii?

Hawaii does not explicitly ban confessions of judgment, but courts follow due process principles. If a COJ judgment is obtained on the mainland, the MCA company must domesticate it in Hawaii courts, giving you the right to challenge it. Hawaii's geographic distance from mainland courts provides a practical barrier to enforcement.

Where do I file a complaint about an MCA company in Hawaii?

File a complaint with the Hawaii Office of Consumer Protection at cca.hawaii.gov/ocp. This office investigates unfair and deceptive business practices under HRS Chapter 480. You can also contact the Hawaii Division of Financial Institutions at cca.hawaii.gov/dfi.

Is there a rate cap on MCAs in Hawaii?

Hawaii does not have a usury cap that directly applies to MCAs because they are not classified as loans. Hawaii's general usury limits apply to loan transactions, not to purchases of future receivables. If a court recharacterizes an MCA as a loan, usury limits could potentially apply.

Sources

Hawaii Division of Financial Institutions. Financial regulation and oversight in Hawaii.
Hawaii Office of Consumer Protection. Consumer protection and complaint resources.
SBA Hawaii District Office. Federal small business resources for Hawaii businesses.
Hawaii Small Business Development Center. Free counseling and resources for Hawaii small businesses.