Ten states now require MCA funders to show you an annualized rate before you sign, not just a factor rate. Here is what the disclosure actually has to say, what changed in 2025 and 2026, and what it does not fix.
The short answer: As of 2026, ten states — California, Connecticut, Florida, Georgia, Kansas, Missouri, New York, Texas, Utah, and Virginia — require commercial financing providers, including MCA funders, to give business borrowers a written disclosure before closing: total amount financed, finance charges, total repayment amount, fees, and repayment schedule, expressed as an annualized rate. None of this caps what a funder can charge, and none of it changes your contract once you have signed. It changes what you have to be shown before you sign, and it gives you a paper trail if a funder did not show it to you.
Factor-rate pricing has always been the industry's biggest information gap. A 1.35 factor rate on a six-month term sounds modest until you annualize it — it is often well north of 70–90% APR-equivalent, sometimes higher depending on payment frequency. The new disclosure rules do not ban that pricing. They force the funder to do the math for you, in writing, before you are committed.
The laws vary by state, but they converge on the same core disclosure: the total amount you are receiving, the total dollar cost on top of it, the total amount you will repay, and — critically — that cost expressed as an annualized percentage rate, not just a factor rate or a flat fee. Several of the statutes, including California's and Texas's, specifically prohibit language that could "reasonably mislead" a borrower about the true cost, meaning a funder cannot bury the annualized rate in a way that makes the factor rate look like the real number.
Texas. House Bill 700 took effect in September 2025 and is one of the more aggressive versions of this law: it applies to sales-based financing regardless of deal size, with no small-transaction carve-out, and it does not allow funders to argue their way around the disclosure by capping or restructuring the APR figure. Funders and brokers doing business with Texas-based companies must register with the Texas Office of Consumer Credit Commissioner by the end of 2026, with annual renewal after that.
California. Senate Bill 362 tightened up ambiguity in how APR has to be presented and reinforced the ban on misleading pricing language. In November 2025, California's Department of Financial Protection and Innovation entered a consent order against a financial services company specifically over disclosure violations — an early signal the state intends to enforce this, not just publish it.
New Jersey (pending). Senate Bill 1760 would extend similar requirements across a broader set of financing products, with civil penalties up to $10,000 per violation if it passes.
This is the part funders won't volunteer, and borrowers often assume incorrectly: disclosure laws are not usury laws. None of the ten states cap the rate an MCA can charge under these statutes — they only require the rate be shown accurately. If you received a compliant disclosure, that disclosure does not make the underlying cost fair, and it does not create a defense if you later default. What it creates is a record. If your funder never gave you the disclosure at all, or gave you one that buried or misstated the annualized cost, that is a compliance failure you — or an attorney — can potentially use as leverage in a dispute, a renegotiation, or litigation.
It is also worth knowing this only applies going forward from each state's effective date. If you signed before your state's law took effect, the funder had no disclosure obligation at the time, and the new law generally does not reach back to require one retroactively.
If you are evaluating a new MCA offer and you are in one of the ten states listed above, ask for the written disclosure before you sign, not after, and do not rely on the sales rep's verbal summary of it. Read the annualized rate, not just the factor rate or the daily or weekly payment amount. If you already have MCA debt and are trying to figure out whether your existing agreements were properly disclosed, that is a document review worth doing before you negotiate, restructure, or bring in counsel — it tells you whether compliance is part of your leverage.
Does my state need to be on this list for the disclosure rules to matter?
Generally, these laws apply based on where your business is located or where the transaction is deemed to occur, not where the funder is headquartered. A Texas or California business is covered even if the funder is based in New York.
Can I use a missing disclosure to get out of my MCA contract?
Not automatically. A missing or non-compliant disclosure is a regulatory violation, not an automatic contract defense — but it can shift negotiating leverage and give an attorney something to work with.
Is a factor rate the same thing as an APR?
No. A factor rate is a flat multiplier applied to the amount you receive; it does not account for time. The new disclosure laws require funders to convert that into an annualized rate specifically because factor rates alone make deals look far cheaper than they are.
This article is general information about state disclosure laws as of 2026 and is not legal or financial advice. Renaissance Capital Advisors provides business consulting services only and is not a law firm, CPA firm, or licensed financial advisor. Disclosure requirements and their application vary by state and by the specific facts of a transaction; consult a licensed attorney in your state before relying on any disclosure — or the absence of one — as leverage in a negotiation or dispute.
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