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 lenders, 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 nine state laws share a similar structure. Each one requires:
- Annual Percentage Rate (APR) disclosure on the cover sheet of the offer
- 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 lenders look similar
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.
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 specify detailed APR calculation methods for sales-based financing (MCAs) and renewal/refinance scenarios. The law also includes broker registration requirements for brokers operating in or doing business with New York merchants.
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 register, disclose their compensation, and clarify their non-fiduciary role to the merchant. The law also includes prohibitions on certain practices (double-dipping, undisclosed lender kickbacks).
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's law is closer in spirit to Utah's — registration-focused with relatively simple disclosure requirements. Providers must register with the Florida OFR and provide a basic disclosure showing total cost, payment, and APR (or estimated APR for MCA products).
MO Missouri — Commercial Financing Disclosure Law
Missouri's 2024 law follows the Florida template closely — registration plus a disclosure showing total cost, payment, and APR. Implementation is still maturing as of 2026; regulators have issued initial guidance but detailed regulations may continue to evolve.
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.
Quick comparison table
| State | Cap | Effective | APR Required | Broker Reg. |
|---|---|---|---|---|
| California | $500K | 2022 | Yes (calculated) | Provider only |
| New York | $2.5M | 2023 | Yes (calculated) | Yes |
| Virginia | No cap (MCA only) | 2022 | Yes (estimated) | Yes |
| Utah | No cap | 2023 | Optional | Provider only |
| Georgia | $500K | 2024 | Yes | Yes |
| Connecticut | $250K | 2024 | Yes | Yes |
| Florida | $500K | 2023 | Yes (estimated) | Provider only |
| Missouri | $500K | 2024 | Yes | Provider only |
| Kansas | $500K | 2024 | Yes | Provider only |
What's coming next
Several additional states have active proposed legislation as of 2026:
- Illinois — proposed commercial finance disclosure law, modeled on NY
- Texas — narrower bill focused on MCAs and broker registration
- 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.
How The Broker Shop handles disclosures
The Broker Shop is a commercial finance broker, not a direct lender. When we present you offers from our 50+ lender network, every offer arrives with the disclosure required by your state — generated by the lender, 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 lender.
Related: Glossary: Commercial Finance Disclosure Law · APR · Factor Rate · Soft Pull vs. Hard Pull