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MCA Laws in Maryland: What Business Owners Need to Know

Bar Alezrah

10 min read

April 3, 2026

Reviewed for accuracy. Based on real experience.

Maryland is one of the few states that has taken concrete steps to regulate commercial financing, including merchant cash advances. Through its Commercial Financing Disclosure Act (CFDA) and the oversight of the Commissioner of Financial Regulation, Maryland requires MCA companies to provide business owners with key information about the cost and terms of their financing. This puts Maryland ahead of most states when it comes to MCA transparency.

This guide explains what Maryland law requires and how these protections work for business owners.

Current MCA Regulations in Maryland

Maryland has enacted commercial financing disclosure requirements that apply to MCA transactions. The Maryland Commissioner of Financial Regulation, part of the Department of Labor, oversees the implementation and enforcement of these requirements.

Maryland's approach focuses on transparency. Rather than banning or reclassifying MCAs, the state requires providers to give business owners the information they need to understand the true cost of the financing.

Commercial Financing Disclosure Act

Maryland's Commercial Financing Disclosure Act requires providers of commercial financing products, including merchant cash advances, to provide specific disclosures to small businesses before a transaction is finalized. The required disclosures include:

Total amount of funds provided. The exact dollar amount the business will receive after any fees are deducted.
Total cost of the financing. The total dollar amount the business will repay, including all fees and charges.
Annual percentage rate (APR). An estimated APR that allows business owners to compare the cost of an MCA to traditional loans.
Payment amounts and frequency. How much will be collected and how often (daily, weekly, monthly).
Prepayment policies. Whether paying off the advance early reduces the total cost.

These disclosures are significant because they strip away the opacity that MCA companies have traditionally relied on. Factor rates, which are how most MCA companies present their pricing, make it nearly impossible for business owners to understand the true annual cost. Maryland's disclosure requirements change that.

Registration Requirements

Maryland requires certain commercial financing providers to register with the Commissioner of Financial Regulation. This registration requirement creates a layer of accountability, as registered providers are subject to oversight and enforcement action if they fail to comply with the state's disclosure rules.

Confession of Judgment Rules

Maryland provides strong protections against confessions of judgment. Maryland courts have historically been skeptical of COJ clauses, and the state's legal framework makes it difficult for MCA companies to use COJs against Maryland businesses.

Key protections for Maryland business owners:

Maryland courts require strict compliance with procedural requirements for confessions of judgment
COJ clauses that waive a debtor's right to notice and a hearing are viewed with suspicion by Maryland courts
If a COJ judgment is obtained in another state (such as New York), it must be domesticated in Maryland under the Uniform Enforcement of Foreign Judgments Act before it can be enforced
Maryland's domestication process provides an opportunity to challenge the judgment and raise defenses
Maryland's consumer-protective legal culture generally favors giving business owners an opportunity to contest claims

UCC Filing Rules

MCA companies file UCC-1 financing statements with the Maryland State Department of Assessments and Taxation (SDAT) to establish their claim on your business receivables.

What you need to know about UCC filings in Maryland:

You can search for UCC filings against your business through the Maryland SDAT website
UCC filings in Maryland 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
If the funder fails to terminate the filing, you may have remedies under Maryland's version of UCC Article 9 (Maryland Commercial Law Article, Title 9)

Consumer Protection Laws That Apply

Maryland has robust consumer protection laws that complement its commercial financing disclosure requirements.

Maryland Consumer Protection Act

The Maryland Consumer Protection Act (Maryland Commercial Law Article, Title 13) prohibits unfair, abusive, or deceptive trade practices. This statute is broad and has been applied in a variety of commercial contexts. If an MCA company engages in deceptive practices, such as misrepresenting the cost of financing or hiding fees, the Consumer Protection Act may provide a basis for legal action.

The Maryland Attorney General's Consumer Protection Division enforces this statute and actively investigates complaints.

Commissioner of Financial Regulation Enforcement

The Maryland Commissioner of Financial Regulation has the authority to investigate complaints, conduct examinations, and take enforcement action against commercial financing providers that violate Maryland's disclosure requirements. If an MCA company fails to provide the required disclosures or provides inaccurate information, filing a complaint with the Commissioner can trigger an investigation.

Recent Legislation and Court Cases

Maryland has been proactive in addressing commercial financing transparency, and the regulatory landscape continues to evolve.

CFDA implementation. Maryland's Commercial Financing Disclosure Act has been implemented with detailed regulations specifying exactly what disclosures are required and how they must be presented to business owners.
Enforcement actions. The Commissioner of Financial Regulation has the tools to take action against non-compliant providers. Maryland's regulatory approach serves as a model for other states considering similar legislation.
Court decisions. Maryland courts have been receptive to arguments that certain MCA arrangements function as loans when they involve fixed payments and no true reconciliation. If an MCA is reclassified as a loan, Maryland's lending laws and interest rate limits could apply.
Ongoing legislative interest. Maryland lawmakers have shown continued interest in strengthening commercial financing protections, and additional legislation may be forthcoming.

What Maryland Business Owners Should Do

Maryland business owners benefit from stronger protections than most states, but you still need to be proactive:

Demand your disclosures. Maryland law requires MCA companies to provide standardized disclosures including an APR estimate. If a provider refuses to give you these disclosures, that is a violation of Maryland law and a major red flag. Walk away.
Compare the APR to alternatives. Use the disclosed APR to compare the MCA to SBA loans, bank lines of credit, or other financing. The APR on an MCA will almost certainly be dramatically higher.
Check your UCC filings. Search the Maryland SDAT website for any existing liens on your business. Multiple MCA liens will make it extremely difficult to obtain traditional bank financing.
Report non-compliance. If an MCA company fails to provide the required disclosures, file a complaint with the Maryland Commissioner of Financial Regulation. Your complaint helps enforce the law for all Maryland businesses.
Get professional guidance. Contact the Maryland Small Business Development Center for free counseling on alternative financing options and help understanding your MCA agreement.

Helpful Resources

Maryland Commissioner of Financial Regulation for financial regulation, licensing, and complaints
Maryland Attorney General for consumer and business protection
SBA Baltimore District Office for alternative financing resources
Maryland Small Business Development Center for free business counseling

Frequently Asked Questions

Does Maryland require MCA companies to disclose APR?

Yes. Maryland's Commercial Financing Disclosure Act requires MCA companies to provide standardized disclosures to small business borrowers, including an estimated annual percentage rate, total cost of financing, payment amounts, and prepayment policies. This is one of the strongest transparency requirements in the country.

Do MCA companies need to register in Maryland?

Yes. Maryland requires certain commercial financing providers, including MCA companies, to register with the Commissioner of Financial Regulation. This registration requirement creates regulatory oversight and accountability for MCA providers operating in the state.

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

Maryland courts require strict procedural compliance for confessions of judgment and are generally skeptical of COJ clauses. Out-of-state COJ judgments must be domesticated in Maryland before enforcement, and the domestication process gives you the opportunity to challenge the judgment.

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

File a complaint with the Maryland Commissioner of Financial Regulation at dllr.state.md.us/finance for disclosure violations or licensing issues. You can also file with the Maryland Attorney General's Consumer Protection Division for deceptive practices. Both agencies actively investigate complaints against financial service providers.

Sources

Maryland Commissioner of Financial Regulation. State regulatory agency overseeing commercial financing providers in Maryland.
Maryland General Assembly. Commercial Law Article. Maryland's commercial law statutes including the Commercial Financing Disclosure Act.
SBA Baltimore District Office. Federal small business resources for Maryland businesses.
Maryland Small Business Development Center. Free counseling and resources for Maryland small businesses.