What is a Commercial Financing Disclosure Law (CFDL)?
A commercial financing disclosure law (CFDL) is a state law that requires providers and brokers of business financing — loans, merchant cash advances, factoring, and lines of credit — to give the borrower a standardized disclosure of the financing's cost and terms before the borrower signs. Depending on the state, that disclosure includes the total dollar cost or finance charge, the payment amount and frequency, the term, and — in states such as California and New York — an Annual Percentage Rate (APR). As of 2026, eleven states have a CFDL in force.
What these laws are and why they exist
Until recently, commercial finance — small business loans, merchant cash advances, factoring, lines of credit — was largely exempt from the Truth in Lending Act (TILA), the federal law that requires standardized APR disclosures on consumer loans. That left business borrowers comparing offers using factor rates, holdbacks, retention percentages, and other industry-specific math that was often impossible to compare side-by-side.
Starting with California's SB 1235 in 2018 (effective 2022 after regulations were finalized), a wave of states began requiring TILA-style disclosures on commercial finance. The goal: let a small business owner compare a $50,000 MCA, a $50,000 term loan, and a $50,000 line of credit on the same axes — APR, total cost of capital, payment amount, payment frequency — before signing.
For brokers and funders, the laws add complexity. For borrowers, they're a clear win: more transparency, fewer surprises, and the ability to actually compare offers.
What every law has in common
While the specifics differ, all eleven state laws share a similar backbone. Nearly every one requires:
- Total dollar cost of the financing (principal + all interest + all fees)
- Payment amount and frequency (daily, weekly, monthly)
- Term length in days, weeks, or months
- Origination and other fees, itemized
- Prepayment terms — whether there is an early payoff discount or penalty
- Standardized format so disclosures from different funders look similar
APR is the big variable. A true Annual Percentage Rate is required only in some states — most notably California and New York (with an estimated APR for sales-based financing in states like Virginia and Connecticut). Others — including Utah, Florida, Georgia, Kansas, Texas, and Louisiana — require the total dollar cost and finance charge but do not mandate an APR calculation. That single difference is why offers can look different from state to state.
Coverage caps and exemptions vary. Most laws apply to commercial finance transactions under $500K, $1M, or $2.5M, on the theory that larger borrowers have the resources to negotiate disclosures themselves. Almost all laws exempt federally chartered banks, credit unions, and certain types of secured equipment leasing.
Do these laws cover equipment financing?
It depends on how the deal is structured. Most state commercial finance disclosure laws draw a line between a true lease and a financing arrangement. A true equipment lease — where the lessor keeps ownership and you return the equipment at the end — is usually exempt. But an equipment loan, or a lease with a $1 buyout (effectively a purchase paid in installments), is often treated as commercial financing and must carry the same disclosure — APR, total cost, and payment schedule — as any other covered offer.
Because the classification turns on the contract terms rather than the label on the page, an agreement called an "equipment lease" is not automatically outside these rules. If you're financing equipment in a disclosure state, check whether your agreement is a true lease or a financing that should come with a standardized disclosure.
State-by-state details
CA California — Commercial Financing Disclosure Law
California's law was the first comprehensive commercial finance disclosure regime in the U.S. and remains the most-cited template. Providers must deliver a standardized disclosure form before consummation of the transaction, and the borrower must sign acknowledgment of receipt.
The DFPI has issued detailed regulations covering APR calculation methodology for MCAs and other non-amortizing products — a notable methodological challenge since traditional APR formulas assume fixed-term, fixed-payment loans.
NY New York — Commercial Finance Disclosure Law
New York's law has the broadest dollar coverage of any state — up to $2.5 million in transaction size. NYDFS regulations, finalized in early 2023, specify detailed APR calculation methods for sales-based financing (MCAs) and renewal/refinance scenarios. New York's CFDL is a disclosure law — it does not itself impose a separate provider or broker registration requirement the way Utah or Virginia do.
Unlike California's static one-page disclosure, NY allows the disclosure to be integrated into the contract itself, provided it appears prominently and uses the prescribed format.
VA Virginia — Sales-Based Financing Disclosure
Virginia took a narrower but deeper approach: rather than covering all commercial financing, Virginia's law targets sales-based financing (essentially MCAs and revenue-share products) and requires both the provider and any broker to register with the Virginia State Corporation Commission.
Disclosure requirements include estimated APR, total cost, average monthly payment, and prepayment policy. The "estimated APR" caveat reflects MCA repayment uncertainty — since payment timing depends on revenue, exact APR is unknowable in advance.
UT Utah — Commercial Financing Registration Act
Utah's law leans heavily on provider registration as the primary consumer protection. Any commercial financing provider doing business with Utah merchants must register annually with the Utah DFI. The disclosure requirements are simpler than California's — focused on total payment, finance charge, and payment frequency — but the registration framework gives the state visibility into who's operating in the market.
Utah is the most provider-friendly of the nine states in terms of disclosure complexity, but among the strictest in registration enforcement.
GA Georgia — Commercial Financing Disclosure Act
Georgia's law closely models California's structure but adds explicit broker-specific obligations: brokers must disclose their compensation and clarify their non-fiduciary role to the merchant. Georgia is a disclosure law and does not require providers or brokers to register with the state.
CT Connecticut — Commercial Financing Disclosure Law
Connecticut's law has the lowest coverage cap of any state at $250,000 — meaning the disclosure regime applies only to smaller transactions, where information asymmetry between provider and merchant is most pronounced. The law otherwise mirrors the California framework.
FL Florida — Commercial Financing Disclosure Law
Florida keeps disclosure relatively simple and, unlike Utah or Virginia, does not impose a registration requirement. Providers must give a basic disclosure showing the total cost and payment terms of the financing; Florida does not mandate an APR calculation.
MO Missouri — Commercial Financing Disclosure Law
Missouri's law took effect February 28, 2025. It requires brokers (not providers) to register with the Missouri Division of Finance — backed by a surety bond — and requires a single per-transaction disclosure of the financing's total cost and terms before or at consummation. Implementation is still maturing as of 2026.
KS Kansas — Commercial Finance Disclosure Act
Kansas's 2024 act is the newest in the nine-state cohort and follows what has become a recognizable multi-state template: $500K cap, registration with the state banking regulator, and a standardized disclosure listing APR, total cost, payment frequency, and prepayment terms.
TX Texas — Commercial Sales-Based Financing Disclosure & Registration
Texas is the newest and one of the strictest states, targeting sales-based financing specifically. The disclosure requirements — amount financed, total finance charge, and total repayment amount — took effect September 1, 2025, while the provider and broker registration deadline is December 31, 2026. Texas focuses on total dollar cost rather than an APR.
LA Louisiana — Revenue-Based Financing Disclosure
Louisiana's 2025 law covers revenue-based financing — funding repaid as a percentage of sales, revenue, or income, which captures merchant cash advances. Providers must disclose a defined set of data points, including the amount of funds provided and the total dollar cost of the financing. Louisiana does not require registration or an APR calculation.
Quick comparison table
| State | Cap | Effective | APR Required | Registration |
|---|---|---|---|---|
| California | $500K | 2022 | Yes (calculated) | No |
| New York | $2.5M | 2023 | Yes (calculated) | No |
| Virginia | No cap (MCA only) | 2022 | Yes (estimated) | Provider & broker |
| Utah | No cap | 2023 | No | Provider |
| Georgia | $500K | 2024 | No | No |
| Connecticut | $250K | 2024 | Yes (estimated) | Provider & broker |
| Florida | $500K | 2023 | No | No |
| Missouri | $500K | 2025 | No | Brokers only |
| Kansas | $500K | 2024 | No | No |
| Texas | No cap (MCA only) | 2025 | No | Provider & broker |
| Louisiana | RBF only | 2025 | No | No |
What's coming next
Several additional states have active proposed legislation as of 2026:
- Illinois — proposed commercial finance disclosure law, modeled on NY
- New Jersey — proposed broker registration and limited disclosure
- Maryland — proposed comprehensive disclosure modeled on CA
The federal Consumer Financial Protection Bureau (CFPB) has periodically explored extending TILA-style disclosures to small business credit but has not yet proposed binding rules. The momentum continues at the state level.
Where disclosure laws fit in commercial lending regulation
Disclosure is only one layer of how commercial financing is regulated. It helps to see the whole picture:
- Disclosure laws (the focus of this guide) govern what you must be shown — APR, total cost, payment terms — before you sign.
- Licensing and registration rules govern who is allowed to offer or broker financing in a state. Several states — including New York, Virginia, and Utah — require providers and/or brokers to register.
- Usury and rate caps limit the maximum cost of certain credit. These have historically applied to consumer and some small-dollar business loans; most true commercial financing has been exempt, though that line is being tested in several states.
- Unfair and deceptive practices rules — the federal FTC Act and state UDAP statutes — apply broadly and can reach abusive commercial lending conduct even where no specific disclosure law exists.
Note that many borrower-protection statutes are written for consumer credit and don't automatically extend to business financing. The federal Fair Credit Reporting Act (FCRA), for example, primarily governs consumer reports; its application to purely commercial transactions is limited. When commercial finance is regulated, it's usually through the state disclosure and registration laws described above — not the consumer statutes.
What if your state doesn't have a commercial financing disclosure law?
Thirty-nine states have no commercial financing disclosure law, so a funder operating there is under no state obligation to hand you a standardized cost sheet before you sign. Nothing stops you from asking for one. A funder that will not put the total dollar cost, the payment amount and frequency, the term, and the prepayment terms in writing is telling you something useful about the offer.
The absence of a law is not the absence of a right to ask. Every number a California or New York disclosure would contain is a number the funder already knows — it is how they priced your file in the first place. Requesting it in writing costs you nothing and takes the conversation out of the realm of "what's my daily payment" and into the realm of what the money actually costs. If you are in a state without a CFDL, ask for the same four figures the covered states mandate, and ask for them before you sign rather than after.
It also matters where the transaction is deemed to occur rather than simply where you sit. Several of these statutes reach financing offered to a business located in the state, which means a New York funder soliciting a California business can be pulled into California's requirements. If you are near a line — a business incorporated in one state and operating in another — that is a question for counsel rather than for a funder's sales desk.
What happens if a funder doesn't give you the required disclosure?
In a state with a CFDL in force, failing to provide the disclosure is a violation the state regulator can act on — typically through administrative penalties, orders to stop offering financing, and in registration states the loss of the provider's or broker's registration. These are regulatory remedies, not automatic borrower refunds, and none of them void a signed contract on their own.
That distinction disappoints most people who go looking for it. A missing disclosure is generally enforced by the regulator named on this page — the DFPI in California, NYDFS in New York, the State Corporation Commission in Virginia — rather than by a private right of action that lets you unwind the deal. Most of these statutes do not create a borrower right to sue for a disclosure failure. What a missing disclosure does give you is evidence, and a reason to have the agreement reviewed before you sign anything further.
The practical move is sequencing. Complain to the regulator if you believe a provider is operating without required disclosures — that is what the registries and complaint processes exist for. But if you are still at the offer stage, the far cheaper remedy is simply not to sign until the numbers are in front of you. A funder that produces the disclosure only after pressure has told you how it intends to handle the rest of the relationship. For anything already signed, talk to a business attorney in your state; nothing on this page is legal advice.
How to compare two funding offers using the disclosure
Compare offers on total dollar cost first, then on payment size against your real weekly cash flow — not on the rate. A factor rate and an APR are not the same measurement, and a shorter term makes a cheaper-looking offer more expensive per week. The disclosure exists precisely so two offers with different structures can be read on the same axes.
Read them in this order. Total cost of capital tells you what the money costs in dollars, which is the only figure that compares cleanly across a term loan, a line of credit, and a merchant cash advance. Payment amount and frequency tells you whether you can survive it — a daily debit and a monthly payment of the same annualized size land very differently on a business with lumpy receivables. Term converts the two into a rate you can reason about. Prepayment terms decide whether paying early actually saves you anything; on many advances it does not, because the fixed payback is owed regardless of speed.
This is where the disclosure earns its existence, because the gap it closes is measurable. In the Federal Reserve Banks' 2026 Report on Employer Firms, 60% of small businesses that borrowed from online lenders said their actual borrowing costs were higher than they expected, against 37% at small banks and 32% at large banks — and only 4% found costs lower than expected. High interest rates and unfavorable repayment terms were the most commonly reported challenges with online lenders. Those are the surprises a standardized cost sheet is designed to prevent, and the reason it is worth asking for even where no statute requires it.
If the offer in front of you is sales-based, our guide to factor rates explains why a 1.35 factor is not a 35% annual rate, and the merchant cash advance calculator converts a factor rate and holdback into the weekly number that actually decides whether the deal is survivable. For a wider view of what else you could be comparing against, see small business funding options.
How The Broker Shop handles disclosures
The Broker Shop is a commercial finance broker, not a direct funder. When we present you offers from our funder network, every offer arrives with the disclosure required by your state — generated by the funder, not by us. Our role is to make sure you can compare them apples-to-apples and choose the best one.
If you have questions about what a specific disclosure means, or which terms favor or disadvantage you, we'll walk through it with you. There's no charge for our time — we're paid only when you close a deal you choose, and only by the funder.
Frequently asked questions
What does CFDL stand for?
CFDL stands for Commercial Financing Disclosure Law — a state law that requires providers and brokers of business financing to disclose the cost and terms of an offer (total dollar cost, payment amount and frequency, and in some states an APR) before a business owner signs.
Which states have commercial financing disclosure laws?
As of 2026, eleven states have a CFDL in force: California, New York, Virginia, Utah, Georgia, Connecticut, Florida, Missouri, Kansas, Texas, and Louisiana. Illinois, New Jersey, and Maryland have proposed bills that are not yet law.
Do these laws apply to merchant cash advances?
Yes. Every state CFDL covers merchant cash advances or "sales-based" / "revenue-based" financing. A few states — including Virginia, Texas, and Louisiana — apply only to sales- or revenue-based financing such as MCAs, rather than to all commercial financing.
Does the FCRA apply to commercial loans?
The federal Fair Credit Reporting Act primarily governs consumer reports, and its application to purely commercial transactions is limited. Business financing is generally regulated through the state disclosure and registration laws described on this page rather than the FCRA.
Does my state require a commercial financing disclosure?
It depends where your business operates — eleven states currently require one. Even in states without a law, a reputable funder or broker should still show you the total cost and terms of an offer before you sign.
Do these laws apply if my funder is based in another state?
Often yes. Several of these statutes are written to cover financing offered to a business located in the state, not just financing offered by a provider headquartered there. So an out-of-state funder soliciting a California or New York business can still owe that state's disclosure. Because the tests differ by state, confirm with the state regulator or counsel rather than taking the funder's word for it.
Does receiving a disclosure mean the financing is a good deal?
No. A disclosure tells you what the financing costs and how it is repaid — it does not tell you whether the price is competitive or whether the payment fits your cash flow. A fully compliant disclosure can accompany an expensive offer. The disclosure is what lets you compare that offer against others; comparing is still your job.
Sources: Federal Reserve Banks, 2026 Report on Employer Firms (2025 Small Business Credit Survey) · California SB 1235 (Cal. Fin. Code §§ 22800–22805)
Related: Glossary: Commercial Finance Disclosure Law · APR · Factor Rate · Will Applying Affect My Credit?