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MCA Laws in Pennsylvania: What Business Owners Need to Know

Bar Alezrah

10 min read

April 3, 2026

Reviewed for accuracy. Based on real experience.

Pennsylvania does not have MCA-specific legislation, but the state's strong Attorney General's office, active Department of Banking and Securities, and well-established consumer protection laws create a more protective environment than many states. Pennsylvania has also been at the center of several important MCA-related court cases that have shaped how these agreements are treated nationally.

This guide covers what Pennsylvania business owners need to know about MCAs and the protections available to them.

Current MCA Regulations in Pennsylvania

Pennsylvania has not enacted laws specifically targeting merchant cash advances. The Pennsylvania Department of Banking and Securities oversees licensed lenders, money transmitters, and other financial service providers, but MCA companies generally do not need a state license because their product is structured as a purchase of future receivables rather than a loan.

However, Pennsylvania's Department of Banking and Securities has shown interest in alternative financial products and has the authority to investigate companies that may be operating as unlicensed lenders. If an MCA agreement looks and functions like a loan, the Department may take the position that the company needs to comply with Pennsylvania's lending laws.

Usury Considerations

Pennsylvania's usury statute (41 P.S. Section 201) sets a maximum interest rate of 6% per year for certain transactions, though many types of lenders are exempt from this cap. The usury law does not directly apply to MCAs because they are not classified as loans. However, if a court determines that a specific MCA agreement is actually a disguised loan (due to fixed payments, no reconciliation, or guaranteed returns), Pennsylvania's usury limits could come into play.

Given that many MCAs carry effective APRs of 50% to 200% or more, a finding that the agreement is a loan could have serious consequences for the MCA company, potentially making the agreement voidable.

Confession of Judgment Rules

Pennsylvania has a notable history with confessions of judgment. The state's procedural rules do allow COJs in certain circumstances, which makes this an important area for Pennsylvania business owners to understand.

Key points:

Pennsylvania Rule of Civil Procedure 2950 et seq. governs confessions of judgment in the state
COJs in Pennsylvania require that the agreement clearly authorize the confession and that the debtor had knowledge of the provision
Pennsylvania courts have the authority to open (set aside) a confessed judgment if the debtor can show a meritorious defense, such as fraud, lack of consideration, or that the agreement was unconscionable
To open a confessed judgment in Pennsylvania, you must act quickly. File a petition to open the judgment as soon as you become aware of it

Because Pennsylvania does allow COJs under certain conditions, MCA companies may attempt to file them in Pennsylvania courts. If a judgment is confessed against you, do not delay. Contact a Pennsylvania attorney immediately to explore your options for having the judgment opened.

UCC Filing Rules

MCA companies file UCC-1 financing statements with the Pennsylvania Department of State to record their interest in your business receivables.

What you need to know about UCC filings in Pennsylvania:

Search for UCC filings at the Pennsylvania Department of State website
UCC-1 filings 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 business days of receiving your written demand
If the funder fails to terminate the filing, you may have remedies under Pennsylvania's adoption of UCC Article 9

Pennsylvania businesses with multiple MCA agreements should be especially vigilant about UCC filings. Stacked liens can prevent access to traditional banking products and SBA loans.

Consumer Protection Laws That Apply

Pennsylvania has a strong consumer protection framework, and the state's AG office has been active in pursuing financial misconduct.

Unfair Trade Practices and Consumer Protection Law (UTPCPL)

Pennsylvania's UTPCPL (73 P.S. Section 201-1 et seq.) is a broad statute prohibiting unfair or deceptive business practices. While it was designed primarily for consumer transactions, Pennsylvania courts have applied it in some business-to-business contexts.

If an MCA company engaged in deceptive advertising, misrepresented the cost of financing, or used high-pressure sales tactics, the UTPCPL may provide a remedy. The statute allows for actual damages, and the Attorney General can seek civil penalties and injunctive relief.

Attorney General's Office

Pennsylvania's Attorney General has one of the most active consumer protection operations in the country. The AG's Bureau of Consumer Protection investigates complaints about deceptive financial products and has the resources to pursue enforcement actions against companies operating unfairly in the state.

Filing a complaint with the Pennsylvania AG is an important step if you have been harmed by an MCA company. The office takes financial fraud seriously and has a track record of taking action.

Recent Legislation and Court Cases

Pennsylvania has been involved in important MCA-related legal developments:

Confessed judgment cases. Pennsylvania courts have handled numerous cases involving confessed judgments entered by MCA companies. These cases have helped define when a business owner can successfully challenge a COJ.
Loan vs. MCA analysis. Federal courts applying Pennsylvania law have examined whether specific MCA agreements are true purchases of receivables or disguised loans. The analysis typically focuses on whether payments adjust based on actual revenue and whether the funder bears any risk of loss.
AG enforcement. The Pennsylvania Attorney General has investigated complaints about predatory commercial financing practices, though no major MCA-specific enforcement actions have been publicly reported as of early 2026.
No pending legislation. Pennsylvania has not introduced MCA-specific disclosure or licensing bills, but the state's active regulatory environment makes future action possible.

What Pennsylvania Business Owners Should Do

Pennsylvania's strong AG office and established consumer protection laws give you meaningful tools. Here is how to use them:

Demand full cost transparency. Ask for the total repayment amount, effective APR, and all fees in writing before signing any MCA agreement. Compare these numbers to SBA loans, bank lines of credit, and other traditional options.
Understand COJ risks. Pennsylvania allows confessions of judgment under certain conditions. If your MCA agreement contains a COJ clause, have a Pennsylvania attorney review it before signing. If a judgment is confessed against you, act immediately to petition the court to open it.
Monitor UCC filings. Check the Pennsylvania Department of State website for liens filed against your business. Multiple filings will hurt your ability to access other financing.
Document everything. Keep copies of all MCA agreements, communications, payment records, and marketing materials. If the MCA company made promises that were not kept, this documentation is essential for any legal claim.
Report problems to the AG. If an MCA company engages in deceptive or unfair practices, file a complaint with the Pennsylvania Attorney General.

Helpful Resources

Pennsylvania Department of Banking and Securities for financial regulation and licensing information
Pennsylvania Attorney General, Consumer Protection for filing complaints about deceptive practices
SBA Philadelphia District Office for alternative financing resources
Pennsylvania Small Business Development Centers for free business counseling

Frequently Asked Questions

Does Pennsylvania have laws specifically regulating MCAs?

No. Pennsylvania has not enacted MCA-specific legislation. However, the state's Department of Banking and Securities, strong Attorney General's office, and consumer protection laws provide some oversight and remedies for business owners harmed by deceptive MCA practices.

Can an MCA company confess judgment against me in Pennsylvania?

Pennsylvania does allow confessions of judgment under certain conditions. However, you can petition the court to open (set aside) a confessed judgment if you have a meritorious defense, such as fraud or unconscionability. Act quickly and consult a Pennsylvania attorney if a judgment is entered against you.

Where should I report a deceptive MCA company in Pennsylvania?

File a complaint with the Pennsylvania Attorney General's Bureau of Consumer Protection at attorneygeneral.gov. The AG's office has one of the most active consumer protection operations in the country and takes complaints about financial products seriously.

Could my MCA be considered a loan under Pennsylvania law?

Possibly. If your MCA has fixed daily payments that do not adjust based on actual revenue, and the funder bears no real risk of loss, a court could determine it is a loan. If so, Pennsylvania's usury statute and lending regulations could apply, potentially making the agreement voidable.

Sources

Pennsylvania Department of Banking and Securities. State regulatory authority for financial institutions.
Pennsylvania Attorney General. Consumer protection enforcement and complaint filing.
SBA Philadelphia District Office. Federal small business resources for Pennsylvania businesses.
Pennsylvania Department of State, UCC Filings. Search and manage UCC filings in Pennsylvania.