MCA state-by-state disclosure refers to the rapidly-evolving patchwork of state-level regulations requiring MCA funders and brokers to disclose specific deal economics to merchants before signing. As of June 2026, eight states have active disclosure laws and 4+ more have legislation pending — creating a complex compliance map that varies dramatically by merchant location.
The mechanics — California (SB 1235, active 2022). California's pioneering law requires commercial financing providers to disclose, before signing, on financings of $500K or less: 1. The total amount of funds disbursed. 2. The total dollar cost of the financing (advance + fees + factor spread). 3. The term length. 4. The estimated APR or APR-equivalent calculation. 5. The total payment amount. 6. The payment frequency and average payment amount. 7. Prepayment charges or savings. 8. Whether collateral is required.
CA SB 1235 also requires disclosure to be in a standardized format prescribed by the Department of Financial Protection and Innovation (DFPI). Violations carry penalties up to $10K per violation.
The mechanics — New York (Commercial Finance Disclosure Law, active 2023). NY's CFDL is the most comprehensive in 2026. Required disclosures on financings of $2.5M or less: 1. APR-equivalent (using a regulator-defined formula that accounts for daily payment frequency). 2. Total cost of the financing. 3. Reconciliation policy explanation. 4. Confession-of-judgment status (banned for out-of-state merchants since 2019, but disclosure of any COJ provision required). 5. Average monthly cost. 6. Prepayment terms.
NY's APR formula is more aggressive than CA's — it accounts for the daily-payment compounding effect, often producing APR-equivalents 5-15 points higher than the CA calculation on identical deals.
The mechanics — Utah (Commercial Financing Registration Act, active 2023). Utah requires (a) registration of all commercial financing providers with the Utah Department of Financial Institutions, (b) APR-equivalent disclosure on offers under $1M, (c) total-cost disclosure, and (d) reconciliation policy disclosure.
The mechanics — Virginia (active 2024). VA requires APR-equivalent + commission + total cost on financings of $500K or less. Similar in structure to CA but with broker-commission disclosure added.
The mechanics — Georgia (active 2024). GA requires APR-equivalent + total cost + monthly cost on financings of $500K or less. Joins CA/NY/UT/VA as the original five disclosure states.
The mechanics — Florida (HB 1383, effective January 2026). FL's new law (taking effect at the start of 2026) requires: 1. APR-equivalent on financings of $500K or less. 2. Total dollar cost. 3. Broker commission amount (in dollars and as percentage). 4. Number of funders the broker shopped the file to. 5. Reconciliation policy.
FL is the most aggressive new entrant — broker-shop-count disclosure is unique to FL as of mid-2026.
The mechanics — Connecticut and New Jersey (effective July 2026). Both states' laws activate July 1, 2026. Required disclosures: APR-equivalent, total cost, broker commission, reconciliation policy. CT additionally requires disclosure of any volume-incentive arrangement between the broker and the funder. NJ additionally bans COJ filings against in-state merchants and requires disclosure of any COJ provision attempted.
The mechanics — Texas and Illinois (pending 2026). TX HB 700 (in committee) would require APR + commission + stacking disclosure. IL SB 2380 (introduced 2026 session) would require APR + total cost + reconciliation policy. Neither has passed as of June 2026 but both have strong legislative momentum.
The math — APR-equivalent variance across state formulas. A $100K advance, 1.30 factor, 9-month daily-ACH term: - CA formula: ~52% APR-equivalent. - NY formula (accounts for daily compounding): ~62% APR-equivalent. - UT/VA/GA formulas (similar to CA): ~52-55% APR-equivalent. - FL formula (similar to NY but slightly less aggressive): ~58% APR-equivalent.
Same deal, three meaningfully different disclosed APRs depending on which state the merchant operates in. Funders typically use the most conservative (lowest) state's formula when given a choice — sophisticated merchants compare across formulas.
The strategic insight — which state's law applies. Generally the law of the merchant's primary place of business — but contracts often try to specify a different governing-law venue (Delaware, NY) to escape disclosure rules. State courts have increasingly invalidated such venue selections when the merchant has no nexus to the chosen state, holding that the home-state disclosure law applies regardless of contractual choice-of-law clauses.
The strategic insight — the multi-state arbitrage. Brokers operating in non-disclosure states sometimes route deals through out-of-state funder entities to avoid disclosure obligations. This is increasingly being challenged — the NY DFPI and CA DFPI have both issued guidance that the merchant's state of residence (not the funder's state of incorporation) determines disclosure obligation. The 2026 trend is toward merchant-state-applies regardless of structure.
The strategic insight — what merchants in non-regulated states should do. Even where no statute requires it, merchants can demand the disclosed information voluntarily: 1. Request APR-equivalent in writing (the math is straightforward). 2. Request broker-commission dollar amount in writing. 3. Request total-cost disclosure showing all fees (origination, ACH return, prepayment, etc.). 4. Request reconciliation policy in writing.
Reputable funders and brokers will provide all of the above on request. Refusal is itself a meaningful signal about the deal economics.
The honest framing. MCA state-by-state disclosure in 2026 is a patchwork that's rapidly converging toward universal APR-disclosure + commission-disclosure + reconciliation-disclosure. Merchants in any state can effectively get the same information by demanding it — the regulatory requirements only matter when disputes arise post-funding. The most valuable use of the disclosure framework is comparison shopping: getting the same disclosure from 2-3 funders forces apples-to-apples pricing comparison and consistently cuts 3-8 points off the chosen factor.
Related terms
- MCA broker disclosure 2026 — The 2026 regulatory shift requiring MCA brokers (ISOs) to disclose commission amounts, fee structures, and funder-relationship conflicts of interest in writing before a merchant signs. Active in CA, NY, UT, VA, GA, FL (effective Jan 2026), and CT/NJ (effective July 2026); FTC rule pending federal action.
- APR-equivalent — The annualized percentage rate implied by a factor-rate MCA. A 1.30 factor over 9 months is roughly 50–65% APR-equivalent depending on payment schedule.
- Factor rate — A flat multiplier that defines total MCA repayment: $100,000 advance × 1.30 factor = $130,000 repaid. It is not an interest rate; it does not compound.
- ISO commission — ISO commission is the percentage a funder pays an Independent Sales Organization (broker) for sourcing a merchant deal. Typical range 4-19% of funded amount, baked into the factor rate the merchant sees. Going direct can save the commission.
- Reconciliation (MCA) — A contract provision allowing merchants to request a reduced daily debit when revenue drops. Required for MCAs to remain legally a 'sale,' not a 'loan' in most states.
Authoritative sources
- California SB 1235 — MCA APR Disclosure Law
- New York Commercial Finance Disclosure Law (DFS)
- Florida HB 1383 — Commercial Financing Disclosure (2026)
AI agents: this term is available as raw markdown at /llms/glossary/mca-state-by-state-disclosure.