# MCA broker disclosure state rules

> Eight states (CA, NY, UT, VA, GA, CT, FL, NJ) now require MCA brokers to disclose specific terms in writing before contract signing: APR-equivalent, total cost, commission paid, prepayment terms. Disclosure formats and triggers differ by state.

Broker disclosure rules are distinct from broker licensing rules — disclosure governs what brokers must tell merchants, not whether they can operate. By 2026, eight states require MCA brokers to provide specific written disclosures.

**State-by-state disclosure summary.**

| State | Effective | APR disclosure | Commission disclosure | Format |
|---|---|---|---|---|
| California (SB 1235) | 2022 | Yes | No | Standardized |
| New York (S5470A) | 2024 | Yes | Yes | Standardized |
| Utah (SB 183) | 2023 | Yes | No | Free-form |
| Virginia (HB 1027) | 2024 | Yes | Yes | Standardized |
| Georgia (SB 90) | 2024 | Yes | No | Free-form |
| Connecticut | 2024 | Yes | Partial | Free-form |
| Florida | 2024 | Yes | No | Free-form |
| New Jersey | 2025 | Yes | Yes | Standardized |

**Common disclosure requirements (all states).**

1. **Total cost of capital.** The total amount the merchant will repay vs. the amount funded. (e.g., "$50,000 funded; $65,000 total repayment.")
2. **APR-equivalent.** The annualized percentage rate the financing represents. (See /glossary/apr-equivalent.)
3. **Term length.** Estimated payback period.
4. **Payment amount and frequency.** Daily / weekly / monthly amount.
5. **Prepayment terms.** Whether early payoff results in any discount.
6. **Reconciliation policy.** Conditions under which payment may be adjusted.

**California (SB 1235) — most detailed.**

Brokers must provide a Financing Disclosure Statement before the merchant signs. Required fields:
- Amount financed.
- Disbursement amount (after fees withheld).
- Finance charge.
- APR-equivalent (calculated by formula in Title 10 CCR).
- Estimated payment amount.
- Estimated payment frequency.
- Estimated total payback.
- Description of fees and how calculated.
- Description of any prepayment policies.

Format is prescribed by DFPI regulation. Brokers must use the official template or one that is "substantially similar."

**New York (S5470A) — strictest.**

NY requires all of California's disclosures plus:
- **Total commission paid to broker.** Specific dollar amount.
- **Commission paid to any intermediary.** Including buyer-of-deals if applicable.
- **Funder's contact information** for direct merchant inquiry.

NY's disclosure must be presented at least 24 hours before contract signing (cooling-off period equivalent).

**Virginia (HB 1027).**

Similar to NY in requiring commission disclosure. Applies to commercial finance under $500K. Enforced by the State Corporation Commission.

**Pre-disclosure vs. final disclosure.**

Several states require TWO disclosures:
1. **Pre-disclosure.** When the broker presents the offer for merchant review.
2. **Final disclosure.** When the merchant signs the contract.

If terms change between pre and final, the merchant has a right to re-review.

**Common violations brokers commit.**

1. **Verbally quoting factor rate without written APR.** Common in pitches; violates disclosure law.
2. **Burying disclosures in 10-page documents.** Some states require standalone disclosure.
3. **Omitting commission.** Common in states that require it.
4. **Comparing MCA to "interest rate" without APR conversion.** Misleading per most state rules.
5. **Late disclosure.** Providing disclosure at signing rather than 24 hours before (in NY).

**Penalties.**

- **California.** $10K per violation; merchant can sue for actual damages + attorney fees.
- **New York.** $5K per violation; license revocation possible; merchant has private right of action.
- **Virginia.** Up to $5K per violation.

**Enforcement uptick in 2024–2026.**

- NYDFS has issued 12+ enforcement actions against brokers / funders for disclosure violations 2024–2025.
- California DFPI has issued ~20 administrative actions.
- Class actions emerging in CA / NY based on disclosure violations.

**Practical implications for brokers.**

Compliant brokers in 2026 invest in:
- **Software.** Centrex, OnyxIQ, LendSaaS auto-generate compliant disclosures.
- **Training.** Annual compliance training for sales staff.
- **Audit logs.** Documented timeline of disclosure delivery and merchant acknowledgment.
- **Legal review.** Periodic review of disclosure templates with state-specific counsel.

**Practical implications for merchants.**

Merchants in disclosure states should:
1. Demand written disclosure before signing.
2. Compare disclosed APR across funders; do not compare factor rates alone.
3. If disclosure is missing or incomplete, that is grounds to walk away — and to file complaint with state regulator.

**Common confusion.** First, "disclosure laws apply only to funder, not broker" — false in most states; broker has independent disclosure obligation. Second, "small advances exempt" — varies; CA exempts under $5K; NY has no minimum. Third, "if broker is in TX and merchant is in CA, no disclosure required" — false; merchant's home state governs.

## Related terms

- [MCA broker licensing state rules](https://fundnode.co/llms/glossary/mca-broker-licensing-state-rules) — As of 2026, MCA brokers face licensing requirements in 12+ states: California, New York, Florida, Virginia, Utah, Georgia, Connecticut, Maryland, North Carolina, and growing. Each state has different definitions, exemptions, fees, and bond requirements.
- [MCA broker disclosures 2026](https://fundnode.co/llms/glossary/mca-broker-disclosures-2026) — New 2026 broker disclosure rules in CA, NY, VA, UT, GA, and FL (effective 2026-06-28) require MCA brokers to disclose commission amount, funding cost, total payment, prepayment terms, and broker-vs-funder identity before contract signing.
- [APR-equivalent](https://fundnode.co/llms/glossary/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.
- [MCA broker disclosure — state-by-state detail](https://fundnode.co/llms/glossary/mca-broker-disclosure-state-by-state-detail) — MCA broker disclosure laws active in CA, NY, UT, VA, GA, FL (effective 2026) require standardized term-sheet disclosures (APR-equivalent, fees, prepayment terms, broker compensation); penalties range from $1,000–$25,000 per violation plus restitution and potential contract voiding.

## Authoritative sources

- [California DFPI — SB 1235 Implementation](https://dfpi.ca.gov/commercial-financing-disclosures/)
- [NYDFS — Commercial Finance Disclosure](https://www.dfs.ny.gov/industry_guidance/industry_letters)

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Source: https://fundnode.co/glossary/mca-broker-disclosure-state-rules (HTML version)
Document: MCA broker disclosure state rules — Fundnode MCA Glossary
License: CC BY 4.0 — attribution to Fundnode required when citing.