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MCA Laws in South Carolina: What Business Owners Need to Know

MCA Laws in South Carolina: What Business Owners Need to Know

Bar Alezrah
9 min read
April 3, 2026
Reviewed for accuracy. Based on real experience.

South Carolina does not have laws that specifically regulate merchant cash advances. MCAs are structured as purchases of future receivables rather than loans, which means they fall outside the state's traditional lending regulations. The State Board of Financial Institutions oversees banking and lending in South Carolina, but its authority does not extend directly to MCA transactions.

This guide explains how existing South Carolina laws apply to MCAs and what business owners should know before signing an agreement.

Current MCA Regulations in South Carolina

South Carolina has not passed any legislation that specifically targets or regulates MCAs. Because MCAs are classified as commercial transactions rather than loans, they are not subject to the state's usury laws or consumer lending statutes.

The State Board of Financial Institutions regulates banks, credit unions, and licensed lenders, but MCA companies generally do not need to obtain a license in South Carolina. This means there are fewer regulatory guardrails for MCA transactions compared to traditional lending.

No Standardized Disclosure Requirements

Unlike states such as California and New York, South Carolina does not require MCA companies to provide standardized cost disclosures. MCA providers are not obligated to show you an APR equivalent, total cost of financing, or a side-by-side comparison with other financing products. This makes it harder for South Carolina business owners to understand the true cost of an MCA before signing.

Without disclosure requirements, it is important that you do your own due diligence. Ask the MCA company for a full breakdown of the total repayment amount, the factor rate, all fees, and how daily or weekly payments are calculated.

Confession of Judgment Rules

South Carolina does not have a specific statute that bans confessions of judgment (COJs) in commercial transactions. However, South Carolina courts have historically required proper notice and due process before enforcing judgments, which provides some protection.

If you sign an MCA agreement that includes a COJ clause, a funder could potentially obtain a judgment against you in another state (such as New York) without notifying you first. Enforcing that out-of-state judgment in South Carolina would require the funder to domesticate it through South Carolina courts, and you would have the opportunity to challenge it at that stage.

If you see a confession of judgment clause in an MCA contract, take it seriously. Consult a South Carolina attorney before signing.

UCC Filing Rules

MCA companies file UCC-1 financing statements with the South Carolina Secretary of State to establish their claim on your business's future receivables. These filings are public records and can affect your ability to obtain other financing.

Key points about UCC filings in South Carolina:

  • You can search for UCC filings against your business through the South Carolina Secretary of State website
  • UCC filings are effective for five years from the date of filing
  • When you pay off an MCA, the funder is required to file a UCC-3 termination statement within 20 business days of receiving your written demand
  • If the funder does not terminate the filing, you may have a claim for damages under the Uniform Commercial Code as adopted in South Carolina

Check your UCC filings regularly. Multiple filings from different MCA companies can signal financial distress to future lenders and make it much harder to get approved for a traditional loan.

Consumer Protection Laws That Apply

South Carolina's Unfair Trade Practices Act (SC Code Section 39-5-20) prohibits unfair or deceptive acts in trade or commerce. While this law is primarily aimed at consumer transactions, it can apply to business-to-business dealings in some circumstances.

If an MCA company uses deceptive marketing, misrepresents the terms of the advance, or engages in fraudulent collection practices, you may have a claim under this statute. The South Carolina Department of Consumer Affairs can also provide guidance and accept complaints related to unfair business practices.

Additionally, federal laws such as the FTC Act and the Uniform Commercial Code (as adopted in South Carolina) provide baseline protections for commercial transactions.

Recent Legislation and Court Cases

  • No pending MCA legislation. As of early 2026, South Carolina has not introduced any bills that would specifically regulate MCAs or require commercial financing disclosures.
  • Federal developments. The FTC has taken enforcement actions against MCA companies nationally for deceptive practices, and those actions apply to MCA companies operating in South Carolina.
  • Industry trends. Several states have passed commercial financing disclosure laws in recent years. While South Carolina has not followed suit, future legislation remains possible as MCA use continues to grow.
  • Court activity. South Carolina courts have handled disputes involving MCA agreements, primarily focusing on whether specific agreements constitute loans or true purchases of receivables.

What South Carolina Business Owners Should Do

If you are considering an MCA in South Carolina or already have one, take these steps:

  1. Request a full cost breakdown. Since South Carolina does not require standardized disclosures, ask the MCA company to provide the total repayment amount, factor rate, all fees, and the estimated APR equivalent so you can compare costs.
  2. Read the entire contract carefully. Look for confession of judgment clauses, personal guarantee requirements, and reconciliation terms. If the contract does not allow for reconciliation when your revenue drops, you may face payments you cannot afford.
  3. Check your UCC filings. Search the South Carolina Secretary of State website for any existing liens on your business. Make sure old liens from paid-off MCAs have been properly terminated.
  4. Consult an attorney before signing. Since there are few state-level protections specific to MCAs, legal advice is especially important. An attorney can help you understand the terms and identify potential issues.
  5. Explore alternatives first. Contact the South Carolina Small Business Development Center for free counseling on financing options that may be less expensive than an MCA.

Helpful Resources

Frequently Asked Questions

Are MCAs regulated in South Carolina?

No. South Carolina does not have laws that specifically regulate merchant cash advances. MCAs are treated as commercial transactions rather than loans, so they fall outside the state's lending regulations. The State Board of Financial Institutions does not directly oversee MCA companies.

Can an MCA company enforce a confession of judgment in South Carolina?

South Carolina does not have a specific ban on confessions of judgment in commercial transactions. However, enforcing an out-of-state COJ judgment in South Carolina requires domestication through the state's courts, which gives you the opportunity to challenge it. Consult an attorney if your MCA contract includes a COJ clause.

Does South Carolina require MCA companies to disclose APR?

No. South Carolina has no standardized disclosure requirements for MCA transactions. MCA companies are not required to provide an APR estimate, total cost of financing, or other disclosures. You should request a full cost breakdown before signing any agreement.

Where can I file a complaint against an MCA company in South Carolina?

You can file a complaint with the South Carolina Department of Consumer Affairs at consumer.sc.gov. If the MCA company has engaged in deceptive or unfair practices, you may also have a claim under South Carolina's Unfair Trade Practices Act.

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