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MCA Laws in North Dakota: What Business Owners Need to Know

Bar Alezrah

9 min read

April 3, 2026

Reviewed for accuracy. Based on real experience.

North Dakota has no laws specifically regulating merchant cash advances. The state's Department of Financial Institutions oversees banks and licensed lenders, but MCAs are not classified as loans and fall outside its regulatory scope. For North Dakota business owners, this means there are no state-mandated disclosure requirements or licensing rules for MCA companies.

This guide explains the current legal landscape for MCAs in North Dakota and how business owners can protect themselves.

Current MCA Regulations in North Dakota

North Dakota has not enacted any legislation targeting MCA companies. The Department of Financial Institutions regulates traditional lenders, money brokers, and money transmitters, but MCA providers are generally not required to obtain a license or register with the state.

Because MCAs are structured as purchases of future receivables rather than loans, they are not subject to North Dakota's lending laws. This means MCA companies operating in the state are not required to disclose APR, provide standardized cost breakdowns, or comply with interest rate caps.

North Dakota's Regulatory Context

North Dakota has a unique financial landscape. The state is home to the Bank of North Dakota, the only state-owned bank in the country. This institution provides lending programs and works with local banks to support North Dakota businesses. The availability of these programs means that North Dakota business owners may have more traditional financing options than businesses in other states, reducing the need to rely on MCAs.

However, small businesses that do not qualify for traditional bank loans may still turn to MCAs. In those cases, the lack of state regulation means you need to be your own advocate.

Confession of Judgment Rules

North Dakota law addresses confessions of judgment in its civil procedure rules. The state provides procedural protections that make COJs harder to enforce than in more permissive states.

Key points for North Dakota business owners:

North Dakota courts require proper notice and an opportunity to be heard before entering a judgment
Out-of-state COJs obtained in states like New York must be domesticated through North Dakota courts before enforcement
During domestication, you can raise defenses including lack of proper consideration, fraud, or procedural deficiencies
North Dakota's rural court system may be less familiar with MCA disputes, so working with an attorney who understands commercial financing is important

If an MCA company threatens to enforce a COJ obtained in another state, do not panic. Contact a North Dakota attorney to understand your rights and defenses.

UCC Filing Rules

MCA companies file UCC-1 financing statements with the North Dakota Secretary of State to establish their claim on your business receivables.

What you need to know about UCC filings in North Dakota:

Search for UCC filings at the North Dakota Secretary of State website
UCC-1 filings are effective for five years
After paying off an MCA, the funder must file a UCC-3 termination statement within 20 business days of receiving your written demand
If a funder fails to file a termination, you have remedies under North Dakota's version of the Uniform Commercial Code

For small businesses in North Dakota, particularly those in agriculture, energy, or other capital-intensive industries, having multiple UCC filings can interfere with seasonal lending and equipment financing. Monitor your filings closely.

Consumer Protection Laws That Apply

North Dakota's consumer protection framework provides some baseline protections for business owners dealing with MCA companies.

Consumer Fraud Laws

North Dakota's consumer fraud statute (N.D.C.C. Chapter 51-15) prohibits deceptive and fraudulent business practices. While the statute primarily targets consumer transactions, it may apply when a small business owner is in a position similar to a consumer, particularly sole proprietors or very small operations.

If an MCA company made materially false statements about payment terms, total cost, or fees, this statute could provide a basis for legal action.

Attorney General's Office

The North Dakota Attorney General's Consumer Protection Division investigates complaints about unfair and deceptive business practices. Filing a complaint puts the MCA company on the AG's radar and can contribute to broader enforcement patterns.

Recent Legislation and Court Cases

North Dakota has seen minimal legislative or judicial activity related to MCAs:

No MCA-specific legislation. The North Dakota Legislative Assembly has not introduced bills targeting MCA disclosure, licensing, or regulation as of early 2026.
Bank of North Dakota alternatives. The presence of the state-owned Bank of North Dakota may reduce the political pressure to regulate MCAs, since the state offers alternative financing channels for small businesses.
Limited case law. North Dakota state courts have not produced significant MCA-related decisions. Federal courts with jurisdiction in North Dakota have handled some cases, generally analyzing whether specific agreements are loans or true purchases of receivables.
National trends. As more states adopt MCA regulations, North Dakota may eventually follow. The FTC's increasing attention to commercial financing also provides some federal-level protection.

What North Dakota Business Owners Should Do

Without MCA-specific state protections, North Dakota business owners should take these steps:

Explore Bank of North Dakota programs first. Before considering an MCA, check whether the Bank of North Dakota or a local bank participating in its programs can offer you better financing terms. The rates will almost certainly be lower.
Get the total cost in writing. Ask any MCA company for the total repayment amount, effective APR, and a list of all fees before signing. If they will not provide this information clearly, walk away.
Monitor your UCC filings. Search the North Dakota Secretary of State website for liens against your business. This is especially important if you rely on seasonal credit lines for agriculture or other industries.
Be cautious with COJ clauses. If an MCA agreement includes a confession of judgment, understand the risks. Have a North Dakota attorney review the agreement before you sign.
Report problems to the Attorney General. If an MCA company engages in deceptive practices, file a complaint with the North Dakota Attorney General.

Helpful Resources

North Dakota Department of Financial Institutions for state financial regulation
North Dakota Attorney General, Consumer Protection for complaints about deceptive business practices
Bank of North Dakota for state-backed lending programs and alternatives to MCAs
North Dakota Small Business Development Centers for free business counseling

Frequently Asked Questions

Does North Dakota have any laws regulating MCAs?

No. North Dakota has not enacted any MCA-specific legislation. MCAs are not classified as loans under state law, and there are no mandatory disclosure or licensing requirements for MCA companies operating in the state.

Can a COJ from another state be enforced against my North Dakota business?

An out-of-state COJ must be domesticated through North Dakota courts before it can be enforced. During this process, you have the right to raise defenses and challenge the judgment. North Dakota courts require proper notice and due process.

Is the Bank of North Dakota a better option than an MCA?

In most cases, yes. The Bank of North Dakota offers lending programs with significantly lower interest rates than the effective cost of most MCAs. Check with the Bank of North Dakota or a participating local bank before considering an MCA.

Where do I report an MCA company for deceptive practices in North Dakota?

File a complaint with the North Dakota Attorney General's Consumer Protection Division at attorneygeneral.nd.gov. You can also file a complaint with the Federal Trade Commission at ftc.gov for additional oversight.

Sources

North Dakota Department of Financial Institutions. State regulatory authority for financial services.
North Dakota Century Code, Chapter 51-15. Consumer fraud and deceptive practices statutes.
Bank of North Dakota. State-owned bank offering business lending programs.
SBA North Dakota District Office. Federal small business resources for North Dakota businesses.