# MCA broker fee cap by state 2026 > As of 2026-06-29, no US state caps MCA broker fees by hard percentage. Disclosure requirements (CA, NY, NJ, VA, UT, GA, CT) create market pressure. Typical broker commission: 8-15%; spread: 5-25% additional. Some states (NY) limit total broker compensation to 'reasonable' standard. MCA broker fee cap by state 2026 overview tracks state regulations on broker compensation in merchant cash advance transactions. Unlike traditional consumer lending where broker fees are often capped by usury statutes, MCA broker fees operate in a largely unregulated space. As of 2026-06-29, no US state has a hard percentage cap on MCA broker fees, but seven states require disclosure that creates market pressure on excessive fees. **States with broker fee disclosure (no cap).** 1. **California.** SB 1235 requires disclosure of broker fee as part of standardized disclosure. No cap, but disclosure creates market pressure. 2. **New York.** CFDL requires disclosure of broker fee. No cap. "Reasonableness" standard under CFDL implementation. 3. **New Jersey.** S 819 requires disclosure of broker fee. 4. **Virginia.** VA CFDL requires disclosure. 5. **Utah.** UT CFRDA requires disclosure. 6. **Georgia.** GA SB 90 requires disclosure. 7. **Connecticut.** SB 1029 (2026) requires disclosure. **States with no broker fee regulation.** 43 states have no specific broker fee disclosure or cap requirements. **Typical broker fee structures.** 1. **Commission from funder.** 8-15% of funded amount; paid by funder at funding. 2. **Spread between funder rate and merchant rate.** Broker negotiates rate with funder, then sells to merchant at higher rate; captures difference. 3. **Combined commission + spread.** Most common in 2024-2026. **Typical aggregate broker compensation.** - A-paper merchants: 8-15% (commission only; spread compressed by competition). - B-paper merchants: 15-25% (commission + spread). - C-paper merchants: 25-40% (commission + larger spread due to weaker merchant negotiating position). **"Reasonableness" standard in New York.** NY CFDL implementation guidance has signaled that broker compensation must be "reasonable" relative to services provided. While no hard cap exists, NY DFS has indicated that compensation above 20-25% may trigger enforcement scrutiny under UDAP-style theory. **Disclosure timing requirements.** States with disclosure laws require broker fee disclosure: - **Before contract signing.** Most states. - **In standardized format.** CA, NY, NJ require specific format. - **Itemized.** Most states require broker fee shown as separate line item. **Common disclosure failures.** 1. **Spread not disclosed.** Funder discloses contract terms; broker's spread captured in factor rate not separately shown. 2. **Commission classified as funder fee.** Broker commission disclosed as funder "origination fee" rather than broker compensation. 3. **Aggregate disclosure.** Total cost shown but broker portion not itemized. **Enforcement examples.** - **2024 NY action.** $4M settlement against broker network for undisclosed spread; spread averaged 18% on top of disclosed factor rate. - **2026 FTC sweep.** Six funders settled for $42M aggregate; broker compensation undisclosed in many cases. **Mathematics of broker spread.** Example transaction: - Funder's actual rate to broker: 1.20 factor on $100K advance ($120K total). - Broker's quote to merchant: 1.35 factor on $100K advance ($135K total). - Broker spread: $15K (15% of advance). - Funder commission to broker: $10K (10% of advance). - Total broker compensation: $25K (25% of advance). Merchant pays effective rate of 1.35 (35% premium over advance) while funder receives effective rate of 1.20 (20% premium). Broker captures the $15K spread plus $10K commission. **State approach trends.** The trend in 2024-2026 is toward: - Mandatory broker disclosure (more states adding). - Itemized fee disclosure (not just aggregate). - "Reasonableness" standards rather than hard caps. No state has enacted a hard percentage cap on MCA broker fees as of 2026-06-29. **Proposed federal action.** CFPB has signaled interest in broker fee transparency but no specific rule proposal as of 2026-06-29. **Implications for brokers.** Brokers should: - Disclose commission and spread separately in disclosure states. - Document services provided to justify compensation. - Limit total compensation to industry-standard ranges (8-25%). - Maintain compliance documentation. **Implications for funders.** Funders should: - Require broker disclosure compliance. - Audit broker channel for excessive fees. - Include broker fee disclosure in standardized disclosure documents. - Document broker oversight programs. **Implications for merchants.** Merchants should: - Ask broker for itemized compensation disclosure. - Compare offers from multiple brokers to assess spread variation. - Note that 25%+ total broker compensation may indicate excessive markup. - Consider going directly to funder to bypass broker spread. **Going direct vs broker.** Direct-to-funder applications eliminate broker spread but eliminate broker shopping assistance: - **Direct.** Lower factor rate (saves 5-20%); single funder, no shopping. - **Broker.** Higher factor rate (broker captures spread); multi-funder shopping; may surface better non-rate terms. Net economic benefit depends on factor rate spread vs broker's value-add in shopping multiple funders. As of 2026-06-29, Fundnode discloses its referral fee structure transparently and explicitly notes that we earn fees only on completed funded transactions so merchants understand compensation flows. ## Related terms - [MCA broker licensing thresholds 2026](https://fundnode.co/llms/glossary/mca-broker-licensing-thresholds-2026) — As of 2026-06-29, 9 states require ISO/broker registration for MCA brokers. Thresholds range from any brokerage activity (CA, NY, NJ) to $1M aggregate annual originations (some states). Penalties for unlicensed brokerage: $2K-$50K per transaction. - [MCA disclosure law comparison by state 2026](https://fundnode.co/llms/glossary/mca-disclosure-law-comparison-by-state-2026) — As of 2026-06-29, six states (CA, NY, UT, VA, GA, NJ) require pre-contract APR-equivalent disclosure for commercial financing including MCAs. Connecticut joined in 2026. Standardized format mandates APR, total cost, average monthly payment, prepayment terms. - [MCA licensing thresholds by state 2026](https://fundnode.co/llms/glossary/mca-licensing-thresholds-by-state-2026) — As of 2026-06-29, 14 states require some form of MCA funder licensing or registration. Thresholds range from any MCA activity (CA, NY) to $50M+ in originations (proposed federal). Penalties for unlicensed activity: $5K-$100K per transaction. --- Source: https://fundnode.co/glossary/mca-broker-fee-cap-by-state-2026 (HTML version) Document: MCA broker fee cap by state 2026 — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.