MCA Laws in Indiana: What Business Owners Need to Know
Indiana does not have laws specifically designed to regulate merchant cash advances. The Indiana Department of Financial Institutions (DFI) oversees banks, credit unions, and licensed lenders, but MCAs fall outside its traditional regulatory authority. For Indiana business owners, this means understanding what protections do exist and how to protect yourself in the absence of MCA-specific rules.
This guide covers Indiana's current regulatory landscape for MCAs and the steps you can take to safeguard your business.
Current MCA Regulations in Indiana
Indiana does not classify merchant cash advances as loans. Because MCAs are structured as purchases of future receivables, they are not subject to Indiana's lending laws, licensing requirements, or interest rate caps. The Indiana Department of Financial Institutions does not require MCA companies to register or obtain a license to operate in the state.
This regulatory gap means that MCA providers operating in Indiana are not required to disclose the APR, total cost of financing, or other standardized terms to borrowers. The terms of your MCA are determined almost entirely by the contract you sign with the provider.
Indiana Uniform Consumer Credit Code
Indiana's Uniform Consumer Credit Code (Indiana Code Title 24, Article 4.5) regulates consumer credit transactions and sets interest rate limits for consumer loans. However, this statute applies to consumer transactions, not commercial ones. Since MCAs are business-to-business transactions, the Uniform Consumer Credit Code does not apply, and its usury protections do not cover MCA advances.
Confession of Judgment Rules
Indiana law does not broadly prohibit confessions of judgment in commercial agreements. Indiana Trial Rule 58.1 addresses confessions of judgment, and while Indiana courts require certain procedural safeguards, COJ clauses in commercial contracts are not automatically void.
If you sign an MCA agreement with a confession of judgment clause, the MCA company may be able to use it to enter a judgment against your business in the event of default, potentially without advance notice.
What Indiana business owners should know:
- Review your MCA agreement carefully for any confession of judgment language
- Indiana courts have the authority to set aside a COJ if proper procedures were not followed
- If a COJ judgment is entered against you in another state (such as New York), that judgment would need to go through Indiana's domestication process before it could be enforced against your Indiana assets
- Consult an Indiana attorney before signing any agreement that contains a COJ clause
UCC Filing Rules
MCA companies routinely file UCC-1 financing statements with the Indiana Secretary of State to secure their interest in your business receivables. These filings create a public lien that can affect your ability to obtain other financing.
What you need to know about UCC filings in Indiana:
- You can search for UCC filings against your business through the Indiana Secretary of State business services portal
- UCC filings in Indiana are effective for five years from the date of filing
- After you pay off an MCA, the funder must file a UCC-3 termination statement within 20 days of receiving your written demand
- If the funder fails to terminate the filing, you may have a claim for damages under Indiana's adoption of UCC Article 9
Multiple UCC filings from different MCA companies can signal to banks and lenders that your business is over-leveraged, making it harder to qualify for traditional financing.
Consumer Protection Laws That Apply
Indiana's general consumer protection laws may provide some recourse for business owners dealing with dishonest MCA companies.
Indiana Deceptive Consumer Sales Act
The Indiana Deceptive Consumer Sales Act (Indiana Code 24-5-0.5) prohibits deceptive and unfair business practices. While this law is primarily aimed at consumer transactions, its broad language regarding deceptive acts could potentially apply when an MCA company engages in fraudulent misrepresentation of terms, costs, or the nature of the transaction.
Attorney General Complaints
The Indiana Attorney General's Consumer Protection Division investigates complaints about unfair or deceptive business practices. If an MCA company has misled you about the terms of your advance, filing a complaint with the Indiana Attorney General is a worthwhile step even though it may not result in direct monetary relief.
Recent Legislation and Court Cases
Indiana has not enacted any MCA-specific legislation as of early 2026, and no bills targeting MCA regulation have advanced through the state legislature.
- No MCA-specific bills. The Indiana General Assembly has not introduced legislation requiring MCA companies to obtain licenses or provide standardized disclosures.
- Court activity. Indiana courts have not produced significant published decisions addressing the classification of MCAs as loans versus purchases of receivables.
- Federal outlook. Indiana business owners may eventually benefit from proposed federal MCA transparency legislation, though no federal bill has been enacted as of this writing.
- Industry pressure. As neighboring states and others adopt MCA disclosure laws, Indiana may face growing pressure to act, but there is no current indication of imminent legislation.
What Indiana Business Owners Should Do
Given the lack of MCA-specific regulation in Indiana, business owners need to take their own protective measures:
- Calculate the APR yourself. MCA companies in Indiana are not required to disclose the annual percentage rate. Use online calculators or ask a financial advisor to convert the factor rate into an APR so you can compare costs with traditional lending products.
- Negotiate the contract terms. Push back on COJ clauses, personal guarantees, and other aggressive terms. If the MCA company will not negotiate, consider that a warning sign.
- Search your UCC filings. Visit the Indiana Secretary of State website to check for existing liens on your business before taking on more MCA debt.
- Consult an attorney. An Indiana business attorney can review the MCA agreement and identify problematic clauses before you sign. This is especially important if the agreement references another state's laws (often New York).
- Consider alternatives. Contact the Indiana Small Business Development Center for free counseling on SBA loans, lines of credit, and other financing options that may cost significantly less than an MCA.
Helpful Resources
- Indiana Department of Financial Institutions for financial regulation and licensing information
- Indiana Attorney General for consumer and business protection complaints
- SBA Indiana District Office for alternative financing resources
- Indiana Small Business Development Center for free business counseling
Frequently Asked Questions
Does Indiana require MCA companies to be licensed?
Are confessions of judgment enforceable in Indiana?
Is there a cap on how much an MCA can charge in Indiana?
Where can I file a complaint about an MCA company in Indiana?
Sources
- Indiana Department of Financial Institutions. State financial regulatory agency for banking and lending oversight.
- Indiana General Assembly. Indiana Code Title 24. Indiana's trade regulation and consumer protection statutes.
- SBA Indiana District Office. Federal small business resources for Indiana businesses.
- Indiana Small Business Development Center. Free counseling and resources for Indiana small businesses.