MCA Laws by State

Merchant cash advance regulations vary dramatically from state to state. Some states require full cost disclosure, licensing, and broker registration. Others have zero MCA-specific protections, leaving business owners to rely on general contract law. Knowing where your state stands can help you negotiate better terms, spot red flags, and protect your business.

States with Strong MCA Protections

These states have enacted laws specifically targeting merchant cash advance transactions, requiring disclosure, licensing, or both.

California

SB 1235 requires APR disclosure on commercial financing

Colorado

HB 23-1229 requires disclosure and licensing for funders

Illinois

SB 2234 requires APR and fee disclosure for small businesses

Maryland

HB 1211 requires licensing and disclosure for MCA providers

New York

Disclosure law requires APR, total cost, and prepayment terms

Utah

SB 183 requires registration and disclosure for MCA funders

Virginia

SB 1252 requires licensing, disclosure, and broker registration

Washington

SB 5031 requires disclosure on commercial financing transactions

States with No MCA-Specific Laws

The majority of states have not passed laws that specifically regulate merchant cash advances. In these states, MCA transactions are governed by general contract law, the Uniform Commercial Code (UCC), and whatever terms are written into your agreement. This means fewer automatic protections for business owners, making it even more important to read every page of your contract before signing.

All 50 States

Alabama

No MCA-specific laws; general contract law applies

Alaska

No MCA-specific laws; general contract law applies

Arizona

No MCA-specific laws; general contract law applies

Arkansas

Strict usury cap of 17% limits some MCA structures

California

Regulated

SB 1235 requires APR disclosure on commercial financing

Colorado

Regulated

HB 23-1229 requires disclosure and licensing for funders

Connecticut

SB 1032 requires disclosure on small business financing

Delaware

No MCA-specific laws; general contract law applies

Florida

No MCA-specific laws; general contract law applies

Georgia

No MCA-specific laws; general contract law applies

Hawaii

No MCA-specific laws; general contract law applies

Idaho

No MCA-specific laws; general contract law applies

Illinois

Regulated

SB 2234 requires APR and fee disclosure for small businesses

Indiana

No MCA-specific laws; general contract law applies

Iowa

No MCA-specific laws; general contract law applies

Kansas

No MCA-specific laws; general contract law applies

Kentucky

No MCA-specific laws; general contract law applies

Louisiana

No MCA-specific laws; general contract law applies

Maine

No MCA-specific laws; general contract law applies

Maryland

Regulated

HB 1211 requires licensing and disclosure for MCA providers

Massachusetts

No MCA-specific laws; general contract law applies

Michigan

No MCA-specific laws; general contract law applies

Minnesota

No MCA-specific laws; general contract law applies

Mississippi

No MCA-specific laws; general contract law applies

Missouri

No MCA-specific laws; general contract law applies

Montana

No MCA-specific laws; general contract law applies

Nebraska

No MCA-specific laws; general contract law applies

Nevada

No MCA-specific laws; general contract law applies

New Hampshire

No MCA-specific laws; general contract law applies

New Jersey

No MCA-specific laws; general contract law applies

New Mexico

No MCA-specific laws; general contract law applies

New York

Regulated

Disclosure law requires APR, total cost, and prepayment terms

North Carolina

No MCA-specific laws; general contract law applies

North Dakota

No MCA-specific laws; general contract law applies

Ohio

No MCA-specific laws; general contract law applies

Oklahoma

No MCA-specific laws; general contract law applies

Oregon

No MCA-specific laws; general contract law applies

Pennsylvania

No MCA-specific laws; general contract law applies

Rhode Island

No MCA-specific laws; general contract law applies

South Carolina

No MCA-specific laws; general contract law applies

South Dakota

No MCA-specific laws; general contract law applies

Tennessee

No MCA-specific laws; general contract law applies

Texas

No MCA-specific laws; general contract law applies

Utah

Regulated

SB 183 requires registration and disclosure for MCA funders

Vermont

No MCA-specific laws; general contract law applies

Virginia

Regulated

SB 1252 requires licensing, disclosure, and broker registration

Washington

Regulated

SB 5031 requires disclosure on commercial financing transactions

West Virginia

No MCA-specific laws; general contract law applies

Wisconsin

No MCA-specific laws; general contract law applies

Wyoming

No MCA-specific laws; general contract law applies

Why MCA Laws Matter

A merchant cash advance is not technically a loan. It is structured as a purchase of future receivables, which means it falls outside most traditional lending regulations. This distinction has allowed MCA providers to operate with minimal oversight in many states, sometimes charging effective APRs well above 100% without any disclosure requirement.

State-level MCA laws close that gap. In states with strong regulations, providers must disclose the total cost of financing in clear, standardized terms. This lets business owners compare offers, understand what they are actually paying, and make informed decisions instead of relying on confusing factor rates.

What to Look For in Your State

When reviewing MCA regulations in your state, pay attention to these key areas:

Disclosure requirements: Does the state require providers to show APR, total repayment amount, or estimated term length?
Licensing: Must MCA providers register or obtain a license to operate in your state?
Broker registration: Are MCA brokers required to disclose their fees and register with a state agency?
Usury protections: Does your state have interest rate caps that could apply to MCA-like products?
Right to rescind: Can you cancel an MCA within a certain number of days after signing?

Federal Protections

While there is no federal law that directly regulates MCAs, two agencies play an important role in protecting business owners:

Federal Trade Commission (FTC): The FTC can take action against MCA providers that engage in deceptive or unfair business practices, even if the product is not classified as a loan.
Consumer Financial Protection Bureau (CFPB): The CFPB has expanded its focus to include small business lending and has proposed rules that would require data collection on small business credit applications, including MCAs.

Until stronger federal rules take effect, state laws remain the primary line of defense for business owners considering an MCA.

Frequently Asked Questions

Are merchant cash advances regulated by federal law?+

MCAs are not directly regulated by federal lending laws like the Truth in Lending Act (TILA) because they are structured as purchases of future receivables, not loans. However, the FTC can take action against deceptive practices, and the CFPB has signaled increasing interest in oversight of commercial financing.

Which states have the strongest MCA protections?+

California, New York, Virginia, and Utah currently have the strongest MCA-specific laws. These states require disclosure of APR or equivalent cost metrics, total repayment amounts, and other key terms before a business owner signs an MCA agreement.

Can an MCA company sue me in a different state?+

Many MCA contracts include a forum selection clause that requires disputes to be resolved in a specific state (often New York). Some states have pushed back on this practice, but it remains common. Always review the jurisdiction clause in your contract before signing.

Do MCA laws protect sole proprietors differently than LLCs?+

In most states, the protections apply based on the size of the transaction or the revenue of the business, not the entity type. For example, California's SB 1235 applies to transactions under $500,000 regardless of whether the borrower is a sole proprietor or an LLC.

What should I do if an MCA company violates my state's laws?+

Document everything, including your contract, payment records, and any communications. File a complaint with your state attorney general's office and consider consulting a business attorney who specializes in commercial financing disputes.

Sources

California Department of Financial Protection and Innovation, SB 1235 Commercial Financing Disclosure - dfpi.ca.gov
New York Department of Financial Services, Commercial Financing Disclosure Law - dfs.ny.gov
Virginia State Corporation Commission, Commercial Financing Licensees - scc.virginia.gov
Federal Trade Commission, Small Business Financing - ftc.gov
Consumer Financial Protection Bureau, Small Business Lending Rule - consumerfinance.gov