Ohio SB 232 — what the new commercial financing law means for Ohio merchants.

The bill that almost did not happen

Ohio Senate Bill 232 was introduced in May 2025 by Senators Peggy Lehner and Nickie Antonio after two years of failed attempts. Earlier drafts — SB 22 in 2023 and HB 156 in 2024 — died in committee under industry pressure that argued any disclosure regime would push Ohio funders out of state. The 2025 version succeeded for three reasons: a narrower scope, a split-threshold structure that exempts mid-sized deals from full APR disclosure, and explicit safe harbors that addressed funder concerns about disclosure liability when actual repayment differs from estimates.

The bill passed the Ohio Senate 28-4 on October 14, 2025 and the Ohio House 78-12 on November 19, 2025. Governor DeWine signed it on December 18, 2025 with an effective date of July 1, 2026 — giving the industry six months to prepare and the Ohio Department of Commerce until January 1, 2027 to finalize implementing rules.

With Ohio in the fold, ten states now have commercial financing disclosure laws either operative or scheduled to become operative: California, New York, Utah, Virginia, Connecticut, Florida, Texas, Missouri, Kansas, and Ohio. Together these states account for roughly 58% of US small-business MCA volume. Ohio adds an estimated 4% to that footprint.

What SB 232 actually requires

For every covered commercial financing offer made to an Ohio recipient on or after July 1, 2026, the provider must deliver a written disclosure containing:

• Total amount of the financing. The face amount of the advance, loan, or credit extension.
• Disbursement amount. What the merchant actually receives after any withheld fees.
• Finance charge. Total dollar cost of the financing, including origination, underwriting, ACH, and similar fees.
• Total repayment. Disbursement amount plus finance charge.
• Estimated payment. Average daily, weekly, or monthly debit.
• Estimated term. Expected number of weeks or months to repay.
• Estimated APR (for sales-based financing under $250,000). Calculated under Ohio Department of Commerce methodology, to be specified in the implementing rules. For deals between $250,000 and $750,000, this is at the provider's election.
• Prepayment policy. Whether the full finance charge is owed regardless of payoff speed, and any prepayment discount.
• Itemized fees. Each fee listed with a description.

The $250,000 threshold and why it matters

The split-threshold structure is the most distinctive feature of SB 232. The legislative compromise reflected a concern from the Ohio Bankers League and several mid-market lenders that requiring estimated APR on larger commercial deals — where borrowers are sophisticated and routinely use multi-product structures — would create disclosure noise without consumer benefit.

The practical effect: small Ohio merchants — restaurants, salons, trucking owner- operators, small retailers — taking MCAs in the $25,000-$200,000 range will see the full disclosure including APR. Larger borrowers in the $300,000-$750,000 range will see the cost block (finance charge, total payback, prepayment) but APR is optional. Most major funders we have spoken to plan to disclose APR voluntarily across both tiers to avoid maintaining two disclosure templates.

The Ohio Department of Commerce rulemaking — what to watch

The Department of Commerce has scheduled three rulemaking workshops between July and October 2026 to develop the implementing rules required by SB 232. The open questions on the table:

• APR methodology. Whether to adopt California's historical sales method, New York's opt-in projection structure, or a hybrid. Industry is advocating for the New York approach because it carries the most settled case law.
• Safe harbor scope. SB 232 authorizes a safe harbor for providers who use the prescribed methodology. The open question is whether the safe harbor extends to broker conduct as well, or only to provider disclosure.
• Marketing consistency. California and New York have both pursued funders whose marketing materials inconsistent with disclosure forms. Ohio's rules will need to address whether marketing consistency is part of the disclosure obligation or a separate enforcement priority.
• Recordkeeping. Length of retention (likely 4-5 years) and format (paper, PDF, or system-of-record entry).
• Annual reporting. Whether providers will file aggregated Ohio volume and pricing data as New York requires.

Comment periods for each workshop will run 30 days. The Department of Commerce has indicated it will publish final rules in the second half of 2026 with a 90-day implementation runway.

How SB 232 differs from California, New York, and Texas

For Ohio merchants who have been following the multistate CFDL conversation, a few structural differences are worth flagging:

• Dollar threshold. Ohio at $750,000 sits between California ($500,000) and New York ($2.5M). Most small-business MCAs fall well under all three thresholds, so this matters most for mid-market deals.
• APR scope. Ohio's $250,000 split is unique. California requires APR on all covered sales-based financing. New York requires APR on all covered sales-based financing. Texas SB 1280 requires APR on all covered sales- based financing. Ohio is the only state to make APR optional above a sub-threshold.
• Private right of action. California has one (added in the 2025 amendment). New York does not (only DFS enforcement). Texas does not. Ohio does not in the original SB 232 — though a proposed 2026 amendment would add one.
• Broker liability. All five states impose some form of broker liability. Ohio's SB 232 follows the Virginia model — broker liability when the broker "arranges" the financing, with a narrower definition of arrangement than California's "material participation."
• Penalty structure. Ohio caps administrative penalties at $2,500 per violation. California caps at $10,000. New York caps at $5,000 ($75,000 for intentional). Texas caps at $5,000. Ohio is the most lenient among the five — but still impactful when stacked across volume.

What Ohio merchants should do now

Five practical steps for the next twelve months:

• Get the disclosure in writing for any deal closing after July 1, 2026. If your funder won't provide it, that is a signal about compliance posture. Walk.
• Compare offers using the finance charge and estimated APR. Factor rate alone is no longer the right comparison metric in any disclosure state. Use the APR if the deal is under $250,000; use the finance-charge-to-funding ratio if it isn't.
• Read the prepayment policy. Most Ohio MCAs we have surveyed charge the full finance charge regardless of payoff speed. The disclosure will now make this explicit. If yours offers a prepayment discount, document it.
• Watch the rulemaking. The estimated APR methodology will not be finalized until late 2026. If the methodology adopted is materially different from New York's or California's, the disclosed APR on your offer could differ from what you would see for the same deal in another state. Factor that into any cross-state comparison.
• Keep your records. The original PDF offer letter is documentary evidence in any later dispute or enforcement complaint. Save it where you can find it three years later.

How Fundnode operates under SB 232

We are a referral platform, not a funder. The SB 232 disclosure obligation falls on the providers we route Ohio merchants to. Two things we do anyway:

• We will render the SB 232 disclosure block in pre-qualification. Starting July 1, 2026, every Ohio match will surface estimated APR (for deals under $250K), finance charge, total payback, and prepayment policy at pre-qualification — before you fill out a full application.
• We only route to compliant funders. Funders without a documented SB 232 compliance plan will not appear in Ohio match results after July 1, 2026. We applied the same standard in Texas, California, and New York.

The bigger picture

Ohio joining the disclosure states is meaningful for two reasons. First, it brings another large industrial-Midwest market under explicit APR rules — and Ohio's MCA market is concentrated in segments (manufacturing, trucking, hospitality) that have historically been opaque on pricing. Second, the SB 232 compromise structure may become the template for other reluctant states. Pennsylvania, Michigan, and Indiana all have CFDL drafts circulating, and the Ohio split-threshold approach gives those legislatures a less-confrontational pathway than the California or New York models.

For Ohio merchants, the bottom line is straightforward: by mid-2026 you will see honest pricing math on every MCA offer under $250,000, and the comparison-shopping calculus that has been broken in commercial financing for two decades will finally start to function.