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MCA Laws in Washington: What Business Owners Need to Know

Bar Alezrah

9 min read

April 3, 2026

Reviewed for accuracy. Based on real experience.

Washington State has taken a significant step in regulating merchant cash advances by passing a commercial financing disclosure law. This puts Washington alongside California, New York, and Virginia as one of the states that require MCA companies to provide standardized cost information to small business owners before a transaction is finalized.

This guide covers Washington's disclosure requirements and other state protections that apply to MCAs.

Current MCA Regulations in Washington

Washington has enacted legislation that directly impacts MCA transactions. The state's Department of Financial Institutions (DFI) oversees financial services companies, and Washington's commercial financing disclosure law gives the DFI additional authority over MCA providers operating in the state.

Commercial Financing Disclosure Law

Washington's commercial financing disclosure law requires providers of commercial financing, including MCA companies, to give small businesses standardized disclosures before a transaction is completed. The required disclosures include:

Total amount of funds provided. The exact dollar amount the business will receive after all fees are deducted.
Total repayment amount. The total amount the business will pay back over the life of the advance, including all fees and charges.
Annual percentage rate (APR). An estimated APR that lets business owners compare the cost of an MCA to traditional loans and other financing products.
Payment amounts and frequency. How much will be debited from your account and how often (daily, weekly, etc.).
Prepayment terms. Whether you can pay off the MCA early and whether doing so reduces the total cost.

This is a major protection for Washington business owners. Before this law, MCA companies could present costs using factor rates (like 1.30 or 1.45) that obscure the true annual cost. A factor rate of 1.40 on a six-month MCA can translate to an APR well above 80%, but without a standardized disclosure, most business owners would never realize that.

DFI Registration and Oversight

The Washington Department of Financial Institutions requires certain commercial financing providers to register with the state. MCA companies that do business in Washington may need to comply with registration requirements, which gives the DFI the ability to track these companies and take enforcement action if they violate the law.

Confession of Judgment Rules

Washington has strong protections against confessions of judgment. Washington courts generally do not favor COJs and require proper procedural protections before enforcing judgments against defendants.

If you sign an MCA agreement with a COJ clause and the MCA company obtains a judgment against you in another state, enforcing that judgment in Washington would require domestication through Washington courts. Washington courts would evaluate whether proper due process was followed and could decline to enforce the judgment if it was obtained without adequate notice to you.

This protection is meaningful. Combined with Washington's disclosure requirements, business owners in the state have more tools to defend themselves against aggressive MCA collection practices than business owners in many other states.

UCC Filing Rules

MCA companies file UCC-1 financing statements with the Washington Secretary of State to establish their claim on your business's future receivables.

What you need to know about UCC filings in Washington:

You can search for UCC filings against your business through the Washington Secretary of State website
UCC filings in Washington are effective for five years from the date of filing
After you pay 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 after receiving your demand, you may have a claim for damages under Washington's version of the Uniform Commercial Code

Multiple UCC filings can signal financial distress to lenders and make it harder to obtain traditional financing. Check your filings regularly and ensure that old liens are properly released.

Consumer Protection Laws That Apply

Washington's Consumer Protection Act (RCW Chapter 19.86) is one of the strongest in the country. It prohibits unfair or deceptive acts or practices in trade or commerce, and it applies to both consumer and business transactions.

CPA Claims Against MCA Companies

If an MCA company uses deceptive marketing, misrepresents the terms of the advance, hides fees, or fails to provide required disclosures, you may have a claim under Washington's Consumer Protection Act. The CPA allows private lawsuits, and successful plaintiffs can recover treble damages (three times the actual damages) plus attorney fees.

This is a powerful tool. The threat of treble damages gives MCA companies a strong incentive to comply with Washington law.

Attorney General Oversight

The Washington Attorney General's office actively investigates unfair business practices. If you believe an MCA company is operating deceptively in Washington, filing a complaint with the Attorney General can trigger an investigation.

Recent Legislation and Court Cases

Commercial financing disclosure law. Washington's disclosure law represents one of the most significant regulatory developments for MCAs in the state. It requires standardized cost disclosures including APR for commercial financing transactions.
DFI enforcement. The Department of Financial Institutions has the authority to take action against MCA companies that fail to comply with registration and disclosure requirements.
Court decisions. Washington courts have been receptive to arguments that MCAs with fixed payments and no true reconciliation may actually be loans, which would subject them to the state's lending regulations.
Continued regulatory attention. Washington legislators continue to monitor the commercial financing industry, and additional regulations are possible as MCA use grows.

What Washington Business Owners Should Do

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

Demand your disclosures. Washington law requires MCA companies to provide standardized cost disclosures including an APR estimate. If a company refuses or cannot provide these disclosures, do not sign the agreement and report them to the DFI.
Compare the APR to alternatives. Use the disclosed APR to compare the MCA cost to SBA loans, business lines of credit, or invoice factoring. The APR on an MCA will almost certainly be much higher.
Check your UCC filings. Search the Washington Secretary of State website for any active liens on your business. Make sure old liens from paid-off MCAs have been properly terminated.
Know your CPA rights. If an MCA company engages in deceptive practices, you may be entitled to treble damages under Washington's Consumer Protection Act. Consult an attorney to evaluate your options.
File complaints. If an MCA company fails to provide disclosures or uses unfair practices, file a complaint with the DFI and the Attorney General.

Helpful Resources

Washington Department of Financial Institutions for financial services regulatory information and complaints
Washington Attorney General for consumer and business protection complaints
SBA Seattle District Office for alternative financing resources
Washington Small Business Development Center for free business counseling

Frequently Asked Questions

Does Washington require MCA companies to disclose APR?

Yes. Washington's commercial financing disclosure law requires MCA companies to provide standardized disclosures to small businesses, including an estimated annual percentage rate. This allows you to compare the true cost of an MCA to traditional loans and other financing options.

Can I sue an MCA company under Washington's Consumer Protection Act?

Yes. Washington's Consumer Protection Act (RCW Chapter 19.86) prohibits unfair or deceptive practices in trade or commerce. If an MCA company uses deceptive marketing, hides fees, or fails to provide required disclosures, you may have a CPA claim. Successful plaintiffs can recover treble damages plus attorney fees.

Are confessions of judgment enforceable in Washington?

Washington courts generally do not favor confessions of judgment and require proper procedural protections. An out-of-state COJ judgment would need to be domesticated through Washington courts, which would evaluate whether proper due process was followed before allowing enforcement.

Where do I report an MCA company in Washington?

File a complaint with the Washington Department of Financial Institutions at dfi.wa.gov. You can also file with the Washington Attorney General at atg.wa.gov. Both agencies investigate complaints about financial services companies and can take enforcement action.

Sources

Washington Department of Financial Institutions. Regulatory oversight of financial services in Washington.
Washington Secretary of State, UCC Filings. Search for UCC liens filed against your business.
SBA Seattle District Office. Federal small business resources for Washington businesses.
Washington Small Business Development Center. Free counseling and resources for Washington small businesses.