# MCA state disclosure form — explained

> California, New York, Virginia, Utah, and Georgia require MCA funders to deliver a standardized disclosure form before signing: dollar amount, APR-equivalent, total payback, fees, and prepayment language. Texas pending.

Five US states require MCA funders to deliver a standardized written disclosure to merchants before contract signing. The disclosure is not optional, is not a "thank you for considering" letter, and carries financial-services compliance weight. Here is what each disclosure contains and how merchants should read them.

**States with active disclosure laws (2026-06-28).**

| State | Law | Effective | Trigger threshold |
|---|---|---|---|
| California | SB 1235 (FAB 22) | Dec 2022 | All MCAs under $500K |
| New York | S5470A | Aug 2023 | All MCAs under $2.5M |
| Virginia | HB 1027 | July 2022 | All MCAs |
| Utah | SB 183 | Jan 2023 | All MCAs |
| Georgia | SB 90 | Jan 2024 | All MCAs |
| Texas | HB 700 (pending) | TBD | TBD |

**Required disclosure fields (varies slightly by state).**

1. **Total amount of the financing.** The advance amount the merchant receives (after origination fees deducted).
2. **Total dollar cost of the financing.** Factor-rate × advance, minus advance, = the fee.
3. **Term of the financing.** Estimated payback period in months based on revenue projections.
4. **Method of repayment.** Daily ACH, weekly ACH, or card-sale split.
5. **Payment amount and frequency.** $X.XX per business day for ~N business days.
6. **Annual Percentage Rate (APR).** Most controversial — funders must compute APR-equivalent using prescribed methodology.
7. **Prepayment information.** Whether the merchant saves money by paying early (most MCAs: NO — fee is fixed regardless of payoff timing).
8. **Fees.** Origination, ACH, wire, late fees, NSF fees.
9. **Collateral and security.** UCC filing language, personal guarantee statement.

**The APR fight.**

The most contested element is APR computation. The industry historically resisted APR disclosure on the grounds that MCAs are commercial commerce (sale of receivables), not loans, and APR is a loan-product concept.

California, NY, VA, UT, and GA disagreed. Each prescribes APR methodology — generally based on actuarial discount rate against the cash-flow stream, assuming the projected payback term.

Typical APR-equivalents on common factor rates:
- 1.15 factor, 12 months: ~25% APR
- 1.25 factor, 9 months: ~50% APR
- 1.30 factor, 9 months: ~65% APR
- 1.40 factor, 6 months: ~130% APR
- 1.50 factor, 5 months: ~200% APR

The disclosed APR is often the first time a merchant realizes the true cost of capital.

**Format requirements.**

- **California.** Form prescribed by Department of Financial Protection and Innovation (DFPI). Standardized layout, font sizes, sectional headings.
- **New York.** Form prescribed by NYDFS (regulation 23 NYCRR Part 600). Similar standardization.
- **Virginia, Utah, Georgia.** Each state's office of financial institutions publishes a model form; funders may use proprietary forms that contain required elements.

**Delivery timing.**

- Disclosure must be delivered BEFORE contract signing.
- Delivery via email is acceptable in all five states.
- Merchant typically must acknowledge receipt in writing (electronic signature is sufficient).

**Penalties for noncompliance.**

- **California.** $10K per violation; treble damages for willful violations.
- **New York.** $2,000 per violation; restitution to affected merchants.
- **Virginia.** Suspension of right to do business in state.
- **Utah, Georgia.** Civil penalties + restitution.

**What merchants should read first.**

1. **APR-equivalent.** This is the headline cost number. Compare to alternatives.
2. **Total dollar cost.** The fee in dollars — easier to reason about than factor rate.
3. **Prepayment language.** Most MCAs offer NO discount for early payoff. A few do (typically 5–25% discount for payoff in 30–90 days).
4. **Reconciliation.** Right to adjust daily payment if revenue drops — federally protected if present in contract.
5. **Personal guarantee.** Almost always present; merchant should understand personal liability scope.

**Common confusion.** First, "the disclosure means the MCA is approved" — no; it's a pre-contract document. Second, "if I'm in a non-disclosure state, the funder doesn't have to tell me APR" — correct, but you can request it. Third, "the disclosed APR is the actual rate" — it's the actuarial implied rate assuming projected payback; actual experienced APR varies with payback speed. Fourth, "funders in disclosure states are more trustworthy" — generally true; compliance discipline correlates with operational discipline.

## Related terms

- [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.
- [Factor rate](https://fundnode.co/llms/glossary/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.
- [MCA compliant](https://fundnode.co/llms/glossary/mca-compliant) — MCA-compliant means a merchant cash advance contract follows applicable state commercial-financing disclosure laws (CA SB 1235, NY NYDFS, TX SB 1280, VA, UT) and standard fair-dealing requirements. Most reputable funders are MCA-compliant; broker-placed deals require closer scrutiny.
- [MCA broker disclosure 2026](https://fundnode.co/llms/glossary/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.
- [MCA broker disclosure state rules](https://fundnode.co/llms/glossary/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.

## Authoritative sources

- [California DFPI — Commercial Financing Disclosures](https://dfpi.ca.gov/commercial-financing-disclosures/)
- [NY DFS — 23 NYCRR Part 600](https://www.dfs.ny.gov/)

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