MCA Laws in Louisiana: What Business Owners Need to Know
Louisiana occupies a unique position in the American legal landscape. As the only state with a legal system rooted in French civil law rather than English common law, Louisiana's commercial regulations have distinct characteristics. The Louisiana Office of Financial Institutions (OFI) oversees banking and lending in the state, and while there are no MCA-specific laws, Louisiana's commercial lending oversight provides some framework that may affect MCA transactions.
This guide explains what Louisiana law does and does not cover when it comes to merchant cash advances.
Current MCA Regulations in Louisiana
Louisiana does not have statutes specifically targeting merchant cash advances. The Office of Financial Institutions regulates banks, credit unions, and licensed lenders under Louisiana's financial institution laws, but MCAs are not classified as loans under Louisiana law. MCA companies are not required to obtain a license from the OFI to operate in Louisiana.
However, Louisiana's broader commercial lending oversight means the OFI pays attention to companies offering financing products to Louisiana businesses. If an MCA arrangement functions more like a loan (with fixed payments and no true reconciliation based on receivables), the OFI could potentially assert jurisdiction.
Louisiana Lending and Interest Laws
Louisiana Revised Statutes Title 9, Sections 3500 through 3534 govern interest rates and lending. Louisiana sets a maximum conventional interest rate that varies based on the type of transaction. For commercial loans, the maximum is generally 12% per year unless the parties agree in writing to a higher rate. Because MCAs are structured as purchases of future receivables rather than loans, these interest rate caps do not directly apply. However, if a court determines that an MCA is actually a disguised loan, Louisiana's interest rate limits could become relevant.
Confession of Judgment Rules
Louisiana's civil law tradition includes the concept of "confession of judgment," though it operates somewhat differently than in common law states. Under Louisiana Code of Civil Procedure, a judgment by confession requires specific procedural steps.
What Louisiana business owners should know:
- Louisiana law requires that confessions of judgment follow specific procedural requirements under the Code of Civil Procedure
- COJ clauses in MCA agreements may be challenged if they do not comply with Louisiana's procedural requirements
- Louisiana courts are generally protective of due process rights, and a COJ obtained without proper notice and opportunity to be heard may be vulnerable to challenge
- COJ judgments obtained in other states must be domesticated in Louisiana under the Uniform Enforcement of Foreign Judgments Act (La. R.S. 13:4241 et seq.) before they can be enforced
- The domestication process gives you the opportunity to raise defenses to the judgment
UCC Filing Rules
MCA companies file UCC-1 financing statements with the Louisiana Secretary of State to establish their claim on your business receivables. Louisiana has adopted the Uniform Commercial Code for secured transactions despite its civil law foundation.
What you need to know about UCC filings in Louisiana:
- You can search for UCC filings against your business through the Louisiana Secretary of State website
- UCC filings in Louisiana are effective for five years from the date of filing
- After paying off an MCA, the funder must file a UCC-3 termination statement within 20 days of receiving your written demand
- Failure to terminate a satisfied UCC filing may give you remedies under Louisiana's version of UCC Article 9 (La. R.S. 10:9)
Consumer Protection Laws That Apply
Louisiana has consumer protection laws that may offer some recourse for business owners who have been deceived by MCA companies.
Louisiana Unfair Trade Practices Act
The Louisiana Unfair Trade Practices and Consumer Protection Law (La. R.S. 51:1401 et seq.), commonly known as LUTPA, is one of the broader consumer protection statutes in the region. LUTPA prohibits unfair or deceptive acts or practices in trade or commerce.
Notably, LUTPA applies to business-to-business transactions, not just consumer transactions. This means that if an MCA company engages in deceptive practices when dealing with your business, LUTPA may provide a legal basis for action. Courts have allowed LUTPA claims in commercial disputes involving fraud, misrepresentation, and unfair business practices.
OFI Complaints
The Louisiana Office of Financial Institutions accepts complaints about financial service providers. While MCAs are not directly regulated, filing a complaint creates a record and may prompt the OFI to investigate, particularly if the MCA arrangement appears to function as an unlicensed loan. Visit the Louisiana OFI website to file a complaint.
Recent Legislation and Court Cases
Louisiana has not passed MCA-specific legislation as of early 2026, but there are notable developments worth monitoring.
- No pending MCA bills. The Louisiana Legislature has not introduced bills specifically targeting MCA disclosure or licensing requirements.
- OFI oversight. The OFI has shown interest in monitoring the commercial financing landscape in Louisiana, and future regulatory guidance is possible.
- Court activity. Louisiana courts have addressed disputes involving MCA agreements, though no landmark decision has definitively resolved whether certain MCAs should be reclassified as loans under Louisiana law.
- LUTPA as a tool. Louisiana's Unfair Trade Practices Act provides a stronger tool for business owners than similar statutes in many other states because it explicitly covers business-to-business transactions.
What Louisiana Business Owners Should Do
Louisiana business owners should take these steps to protect themselves when dealing with MCAs:
- Calculate the true cost. Louisiana does not require MCA companies to disclose an APR. Convert the factor rate into an annualized cost to understand what you are really paying. A factor rate of 1.40 on a 6-month advance translates to an effective APR of roughly 80%.
- Understand your LUTPA rights. Louisiana's Unfair Trade Practices Act applies to business transactions. If an MCA company misrepresented terms, hid fees, or engaged in deceptive practices, you may have a claim. Consult a Louisiana attorney about your rights under LUTPA.
- Check your UCC filings. Search the Louisiana Secretary of State website for any existing liens. Multiple MCA liens can prevent you from accessing traditional bank financing.
- Review COJ clauses carefully. If your MCA agreement contains a confession of judgment provision, have a Louisiana attorney evaluate whether it complies with Louisiana's procedural requirements before you sign.
- Explore alternatives. Contact the Louisiana Small Business Development Center for free counseling on SBA loans, CDFI loans, and other financing options that are likely much less expensive than an MCA.
Helpful Resources
- Louisiana Office of Financial Institutions for financial regulation and complaints
- Louisiana Attorney General for consumer and business protection
- SBA New Orleans District Office for alternative financing resources
- Louisiana Small Business Development Center for free business counseling
Frequently Asked Questions
Does Louisiana regulate merchant cash advances?
Can Louisiana's Unfair Trade Practices Act help with MCA disputes?
Are confessions of judgment enforceable against Louisiana businesses?
Where can Louisiana business owners report MCA problems?
Sources
- Louisiana Office of Financial Institutions. State regulatory agency for banking and financial institutions in Louisiana.
- Louisiana Legislature. La. R.S. Title 9, Sections 3500-3534. Louisiana's interest rate and lending statutes.
- SBA New Orleans District Office. Federal small business resources for Louisiana businesses.
- Louisiana Small Business Development Center. Free counseling and resources for Louisiana small businesses.