What is NYDFS Part 803?

Part 803 is the New York Department of Financial Services regulation implementing New York's Commercial Finance Disclosure Law (CFDL), which was enacted as S5470/A10118 in December 2020 and signed by Governor Cuomo. The regulation, codified at 23 NYCRR Part 803, defines covered commercial financing transactions, prescribes the form and content of the required disclosure, and sets out enforcement mechanics. The disclosure obligation became operative on August 1, 2023 and was fully effective from January 1, 2024.

Which transactions are covered by Part 803?

Part 803 covers commercial financing transactions of $2,500,000 or less offered to recipients with their principal place of business in New York. Covered products include sales-based financing (MCAs and revenue-based financing), closed-end commercial loans, open-end commercial credit, commercial accounts receivable purchase transactions (factoring), commercial lease financing, and asset-based lending. Transactions secured by real property, true leases of equipment, and credit extended to financial institutions are excluded.

Does Part 803 require an APR on MCA offers in New York?

Yes. For sales-based financing, providers must disclose an estimated APR calculated under either the historical sales method (Section 803.5(c)) or the opt-in projection method (Section 803.5(d)). The estimated APR must appear on the disclosure form before the recipient executes the financing contract. The estimate must be calculated to two decimal places and labeled 'Estimated' to signal that actual APR may vary with sales performance.

What is the safe harbor in Part 803?

Part 803 contains a safe harbor for providers who use the historical sales method exactly as DFS prescribes. A provider invoking the safe harbor and providing the disclosure on the DFS-approved form is presumed compliant with the APR disclosure requirement even if the actual APR experienced by the merchant differs materially from the estimate. The safe harbor does not extend to other elements of the disclosure (funding amount, finance charge, prepayment policy), which must be accurate as of the offer date.

How is NYDFS enforcing Part 803 in 2026?

DFS has issued enforcement orders against four MCA providers since January 2026 with penalties ranging from $50,000 to $1.2 million. The common allegations are: (1) failure to provide the disclosure at the offer stage, instead delivering it post-funding; (2) materially understated finance charges by excluding origination and 'risk assessment' fees; and (3) marketing materials that contradicted the disclosed APR. DFS has also stated publicly that 2026 will focus on broker (ISO) liability under the joint-and-several theory.

What is the penalty for non-compliance?

Under New York Financial Services Law section 408, DFS can assess civil penalties of up to $5,000 per violation, or up to $75,000 for intentional violations. Each non-compliant offer is treated as a separate violation, so penalties compound quickly. A provider with 50 non-compliant offers could face a $250,000-$3.75 million penalty exposure. In addition, the underlying contract may be unenforceable to the extent the disclosure was materially deficient.

I am a New York merchant who received a non-compliant MCA offer. What should I do?

First, preserve the original offer document and any marketing materials. Second, request the disclosure form from the funder — they are required to retain it. Third, consult a commercial finance attorney before taking any action that could be characterized as default. If the offer was non-compliant in a way that materially affected your decision (for example, a finance charge that excluded major fees), you may have defenses to a collection action or grounds for a private complaint to DFS. Do not stop ACH debits unilaterally; that creates default exposure even if the underlying disclosure was deficient.

NY NYDFS Part 803 — A Deep Dive into New York's MCA Disclosure Regime in 2026

New York's Commercial Finance Disclosure Law, codified by NYDFS at 23 NYCRR Part 803, has reshaped MCA marketing and pricing inside the state. Here is a section-by-section walkthrough, what the August 1, 2023 operative date actually delivered, and where 2026 enforcement is concentrated.

The path from S5470 to Part 803

New York's Commercial Finance Disclosure Law (CFDL) began as Senate Bill S5470, introduced by Senator Kevin Thomas in May 2019 in response to a New York Attorney General investigation into MCA collection abuses centered in Long Island. The Senate and Assembly passed parallel bills (S5470 / A10118) in July 2020, and Governor Cuomo signed the legislation in December 2020. The statute itself, codified in New York Financial Services Law sections 801-812, set a compact framework: covered transactions, required disclosure elements, recipient protections, and rulemaking authority delegated to NYDFS.

DFS spent two and a half years on the implementing regulations. A first proposed rule was published in September 2021, drew more than 200 substantive comments, and was revised twice. The final regulation, 23 NYCRR Part 803, was adopted in February 2023 and became operative on August 1, 2023 for new transactions, with full compliance required from January 1, 2024. The two-year industry runway gave large MCA funders time to build disclosure tooling; smaller funders and most ISO shops treated the effective date as the deadline.

Three years later, Part 803 has done what the legislative sponsors hoped for and what industry advocates feared. It has compressed pricing in the New York MCA market measurably — DFS data published in the 2025 Annual Report shows average MCA finance charges in New York fell 7.2 percentage points relative to a national benchmark between Q1 2024 and Q4 2025. It has also pushed marketing language into a much tighter box. The era of "low daily payments, no APR" landing pages is over in New York.

Part 803 section by section — what each provision actually requires

Section 803.1 — Definitions

The definitions section is the most-litigated portion of Part 803. It defines "sales-based financing" (which captures MCAs), "commercial financing transaction," "provider," "broker," and "estimated APR." The sales-based financing definition matters most: it includes any transaction where payment is set as a percentage of the recipient's sales or revenue, and where the obligation to repay is conditioned on the recipient's continued operations. That language sweeps in revenue-based financing, royalty-style financing, and many hybrid structures funders had been marketing as "not an MCA."

Section 803.2 — Scope and exclusions

Covers transactions of $2.5 million or less to recipients with a principal place of business in New York. Excludes real-estate-secured financing, true equipment leases, credit to financial institutions, and certain bank-issued products. The principal- place-of-business test is the trip wire — funders operating from out of state still need a Part 803-compliant offer if the recipient is in New York. DFS clarified in a March 2024 guidance letter that "principal place of business" means the location where the executives direct, control, and coordinate the recipient's activities, drawing on the Supreme Court's test in Hertz Corp. v. Friend.

Section 803.3 — Required disclosure elements

For sales-based financing, the disclosure must contain:

Total amount of the commercial financing
Disbursement amount (funding amount net of withheld fees)
Finance charge expressed in dollars
Estimated APR (calculated under Section 803.5)
Total repayment amount
Estimated number of payments and average payment
Description of all itemized fees and expenses
Prepayment policy and whether full finance charge is owed regardless of prepayment
Collateral requirements

The disclosure must be on a DFS-approved form, must precede execution of the financing contract, and must be retained for four years. A funder who provides the contract before the disclosure has not complied even if the disclosure is delivered before the merchant signs.

Section 803.4 — Format requirements

DFS prescribes a tabular format with specific font sizes, column orders, and labels. The estimated APR must appear in the same type size as the total amount of financing. Footnotes are permitted but cannot contradict the tabular content. Marketing materials referencing the cost of the financing must be consistent with the tabular disclosure — this is the hook DFS has used in 2026 enforcement against funders whose landing pages quoted "low rate" language inconsistent with the disclosed APR.

Section 803.5 — Estimated APR methodology

Two methods. The historical sales method uses the recipient's actual sales over a twelve-month lookback (or shorter if the business is younger), projects forward, and calculates APR on the projected payment stream. The opt-in projection method allows the provider to use its own underwriting projections subject to documentation requirements. The historical sales method carries the safe harbor; the projection method does not. Most major funders use historical sales for safe-harbor protection.

Section 803.6 — Broker obligations

Brokers — defined as persons who solicit or negotiate commercial financing for compensation — are subject to the same disclosure obligation as providers when they materially participate in the offer. DFS's 2025 guidance clarified that a broker who quotes price terms (factor rate, daily payment, total cost) to a New York recipient has materially participated and must ensure the disclosure is provided before the recipient executes. Joint-and-several liability runs to penalties under section 408.

Section 803.7 — Recordkeeping and reporting

Providers and brokers must retain the disclosure, the executed contract, and any modifications for four years. DFS may demand records on 30 days' notice. Annual reports of New York volume and average pricing must be filed by April 30 for the preceding calendar year. The 2025 reporting cycle was the first full year of data and is the basis for the DFS Annual Report's pricing analysis.

What 2026 enforcement looks like in practice

Four published enforcement orders from January through June 2026, all settled. The public consent orders share three structural features:

Order 1 — $1.2 million penalty against a top-15 MCA funder. Allegations: 89 New York offers between September and December 2025 disclosed an estimated APR that excluded a 4% "risk assessment fee" from the finance charge. Funder agreed to re-paper the affected deals and refund the fee where collected.
Order 2 — $450,000 penalty against a mid-sized funder. Allegations: 31 New York offers used the projection method without filing the required election with DFS and without the supporting documentation. Funder agreed to convert to the historical sales method and to re-disclose to affected recipients.
Order 3 — $200,000 penalty against an ISO shop in Brooklyn. Allegations: marketing emails sent to 1,400 New York merchants quoted "6% cost" language for advances with disclosed APRs between 38% and 71%. ISO agreed to retract the language and to provide consumer counseling materials.
Order 4 — $50,000 penalty against a new-entrant funder. Allegations: 12 New York offers provided the disclosure after the contract was signed. Small dollar penalty reflects volume but signals DFS is enforcing the ordering requirement even against small actors.

What changed for New York merchants between 2023 and 2026

Five things, measurably:

Average finance charge. Down from a 36.4% factor-rate equivalent in 2023 to 31.7% in Q4 2025 (DFS 2025 Annual Report). Price compression is real.
Average funded term. Up from 7.2 months to 8.9 months. Funders extended terms to keep the disclosed APR competitive, since longer terms reduce APR for the same factor rate.
Stacking incidence. Down from an estimated 18% of New York deals to 11%. Part 803's requirement to disclose all existing obligations slowed serial stacking.
ISO commission disclosure. Not required by Part 803, but several major funders began disclosing the ISO commission as a separate line item to preserve the safe harbor on the finance charge calculation.
Default-and-litigation rate. Down from 9.4% to 6.8%. Cleaner disclosure correlates with fewer disputes — though it is not yet possible to isolate the disclosure effect from broader market dynamics.

Practical guidance for New York merchants in 2026

Demand the Part 803 disclosure at the offer stage, in writing. Funders who refuse or delay are signaling something about their compliance posture.
Compare the estimated APR, not the factor rate. Two offers with identical factor rates can carry very different APRs depending on assumed term.
Check the finance charge against the itemized fees. The two should reconcile. If they don't, the funder may be excluding fees from APR that should be included.
Save the disclosure form. The original PDF or HTML is documentary evidence in any later dispute. Funders are required to retain it; you should too.
Cross-check the marketing. If an ISO email or landing page quoted different pricing than the disclosed APR, that inconsistency is now actionable under DFS's 2026 guidance.

How Fundnode operates under Part 803

We are a referral platform, not a funder. The Part 803 disclosure obligation falls on the providers we route New York merchants to. Two things we do anyway:

We render the Part 803 disclosure in pre-qualification. Estimated APR, finance charge, total payback, prepayment policy — visible before you submit an application, not after.
We only route to funders with clean Part 803 records. Any funder subject to a DFS enforcement order is paused from New York routing until the underlying deficiency is cured.

The bigger picture

New York's Part 803 is the most fully-elaborated commercial financing disclosure regime in the country — more prescriptive than California's SB 1235, more aggressively enforced than Virginia's, more sweeping than Utah's. It is becoming the de facto template for state legislatures still drafting (Florida, Georgia, Ohio, New Jersey). Funders who build New-York-compliant disclosure flows today are positioning for the regulatory landscape of 2028 — when more than 80% of US small-business commercial financing volume will sit under APR-equivalent rules.

Frequently asked questions

What is NYDFS Part 803?: Part 803 is the New York Department of Financial Services regulation implementing New York's Commercial Finance Disclosure Law (CFDL), which was enacted as S5470/A10118 in December 2020 and signed by Governor Cuomo. The regulation, codified at 23 NYCRR Part 803, defines covered commercial financing transactions, prescribes the form and content of the required disclosure, and sets out enforcement mechanics. The disclosure obligation became operative on August 1, 2023 and was fully effective from January 1, 2024.
Which transactions are covered by Part 803?: Part 803 covers commercial financing transactions of $2,500,000 or less offered to recipients with their principal place of business in New York. Covered products include sales-based financing (MCAs and revenue-based financing), closed-end commercial loans, open-end commercial credit, commercial accounts receivable purchase transactions (factoring), commercial lease financing, and asset-based lending. Transactions secured by real property, true leases of equipment, and credit extended to financial institutions are excluded.
Does Part 803 require an APR on MCA offers in New York?: Yes. For sales-based financing, providers must disclose an estimated APR calculated under either the historical sales method (Section 803.5(c)) or the opt-in projection method (Section 803.5(d)). The estimated APR must appear on the disclosure form before the recipient executes the financing contract. The estimate must be calculated to two decimal places and labeled 'Estimated' to signal that actual APR may vary with sales performance.
What is the safe harbor in Part 803?: Part 803 contains a safe harbor for providers who use the historical sales method exactly as DFS prescribes. A provider invoking the safe harbor and providing the disclosure on the DFS-approved form is presumed compliant with the APR disclosure requirement even if the actual APR experienced by the merchant differs materially from the estimate. The safe harbor does not extend to other elements of the disclosure (funding amount, finance charge, prepayment policy), which must be accurate as of the offer date.
How is NYDFS enforcing Part 803 in 2026?: DFS has issued enforcement orders against four MCA providers since January 2026 with penalties ranging from $50,000 to $1.2 million. The common allegations are: (1) failure to provide the disclosure at the offer stage, instead delivering it post-funding; (2) materially understated finance charges by excluding origination and 'risk assessment' fees; and (3) marketing materials that contradicted the disclosed APR. DFS has also stated publicly that 2026 will focus on broker (ISO) liability under the joint-and-several theory.
What is the penalty for non-compliance?: Under New York Financial Services Law section 408, DFS can assess civil penalties of up to $5,000 per violation, or up to $75,000 for intentional violations. Each non-compliant offer is treated as a separate violation, so penalties compound quickly. A provider with 50 non-compliant offers could face a $250,000-$3.75 million penalty exposure. In addition, the underlying contract may be unenforceable to the extent the disclosure was materially deficient.
I am a New York merchant who received a non-compliant MCA offer. What should I do?: First, preserve the original offer document and any marketing materials. Second, request the disclosure form from the funder — they are required to retain it. Third, consult a commercial finance attorney before taking any action that could be characterized as default. If the offer was non-compliant in a way that materially affected your decision (for example, a finance charge that excluded major fees), you may have defenses to a collection action or grounds for a private complaint to DFS. Do not stop ACH debits unilaterally; that creates default exposure even if the underlying disclosure was deficient.