Five years ago, the only commercial financing disclosure rule that mattered was California's. Today, eleven states have effective commercial financing disclosure laws (Texas joined in 2025 via HB 700), and several more are working through state legislatures. The patchwork is real, the requirements differ enough to matter, and most borrowers we talk to don't know what their state's law entitles them to see before they sign.
This is the working map as of April 2026, with the practical takeaway: what every borrower should expect to receive, and what to ask for if it's missing.
That's up from a single state (California) in 2018 to eleven states today — California, Connecticut, Florida, Georgia, Kansas, Louisiana, Missouri, New York, Texas, Utah, and Virginia — with Louisiana notable as the first CFDL with no dollar-amount ceiling on the transactions it covers.
What a "commercial financing disclosure" actually is
Commercial financing disclosure laws require providers (and, in many states, brokers) to deliver a standardized disclosure form before a small business owner signs a financing contract. Depending on the state and product, the form typically includes:
- The total amount of the financing and the disbursement amount (after fees deducted up front);
- The finance charge (the dollar cost of capital);
- The total payback amount (principal plus all fees and interest);
- The estimated APR or APR equivalent;
- The payment schedule — amount, frequency, term length;
- Prepayment terms — whether early payoff reduces cost, and by how much;
- Information about the broker (in states that cover broker disclosures).
The point is to let small business owners compare two offers using the same numbers — the same problem APR vs. factor rate creates when one product prices in factor rates and the other in APR.
States with effective laws (April 2026)
California — Senate Bill 1235 (CFDL)
In effect since December 2022 for transactions ≤ $500,000. Requires APR-equivalent, finance charge, total cost, prepayment treatment. Enforcement sits with the Department of Financial Protection and Innovation (DFPI). California is the prototype — most other state laws are modeled on it with variations.
New York — Senate Bill S5470B
In effect since August 2023 for transactions ≤ $2.5 million. Coverage is broader than California (higher threshold). Disclosures are required from the provider; brokers also have specific disclosure obligations. New York additionally banned confessions of judgment in commercial transactions in 2019, which sits adjacent to the disclosure regime — see Confessions of judgment in MCA contracts.
Utah — Senate Bill 183
In effect since January 2023. Registration regime — providers and brokers must register with the Department of Financial Institutions before offering commercial financing in Utah. Disclosure requirements track CA and NY at the substance level.
Virginia — HB 1027 / SB 1252
In effect since July 2022. Applies to sales-based financing (which includes most MCAs). Disclosure includes total cost and an APR or estimated APR.
Georgia — Senate Bill 90
Effective January 2024 for commercial financing transactions ≤ $500,000. Requires substantially the California-style disclosure set.
Florida — HB 1353
Effective July 2023. Applies to commercial financing ≤ $500,000. Disclosure required at or before consummation.
Connecticut — Public Act 23-201
Effective July 1, 2024. Substantively similar disclosure framework to CA / NY.
Kansas — Senate Bill 345
Effective July 1, 2024. Lower transaction threshold ($500,000) and brokerage coverage.
Missouri — House Bill 2989
Effective February 28, 2025. Commercial financing disclosure framework that mirrors the CA / NY pattern.
Texas — House Bill 700
Disclosure requirements effective September 1, 2025 (broker registration with the OCCC required by December 31, 2026). Narrower in scope than CA/NY — covers commercial sales-based financing (including MCAs) under $1 million, not commercial financing generally.
Louisiana — Senate Bill 335
Effective August 1, 2024. Creates the Louisiana Commercial Financing Disclosure Law, requiring written disclosures on commercial financing transaction terms.
Recent 2026 developments: California tightens further, New Jersey still pending
Two updates worth flagging beyond the 11 states listed above. First, California added a second layer on top of its original CFDL: Senate Bill 362, effective January 1, 2026, restricts how providers can use the words "rate" and "interest" on offers of $500,000 or less. A provider can't call a non-annualized daily, weekly, or monthly charge an "interest rate" without clarifying it isn't annual, and can't quote a "factor rate" or "fee rate" when that figure diverges materially from the APR. It also requires re-disclosing the APR every time a provider states a new charge, pricing metric, or financing amount during the application process — not just once at the initial offer. As of this writing, California's Department of Financial Protection and Innovation had not yet issued clarifying regulations for SB 362, so expect some interpretive uncertainty in the first year.
Second, New Jersey's Senate Bill 1760, a proposed law modeled on the CA/NY pattern, remained pending — not yet enacted — as of legal-industry tracking in March 2026, keeping the active count at 11 states, not twelve, contrary to some industry summaries you may see elsewhere. It's worth watching if you borrow in New Jersey, but it isn't a compliance requirement yet. Bills like this move quickly; confirm current status with counsel for the state where you're borrowing rather than assuming a "proposed" law has become active.
What this means for borrowers — practical checklist
Whether or not your state currently has a disclosure law, every borrower should demand the disclosure-style information set before signing. Specifically:
Ask for the disclosure in writing. The product needs all of the following on a single document:
- Amount funded (the wire to your account, after fees)
- Total payback (every dollar leaving your account)
- Finance charge (dollar cost of capital)
- APR or estimated APR
- Payment schedule (amount, frequency, business-day count)
- Prepayment treatment (discount, no change, or penalty)
If a broker is involved, ask for broker-specific disclosure. Some states require brokers to disclose their compensation; even where the law doesn't, the cleanest firms in the space will tell you on request. ClearValue Lending is a funding platform, so this category of disclosure question doesn't apply to us the same way it applies to traditional brokers.
Compare two offers side-by-side using the disclosure. The whole point of standardized disclosure is to let you do this. If two providers quote you different products and you can't tell which is cheaper, that's the disclosure problem the laws are designed to solve.
Confessions of judgment. If you see a confession-of-judgment clause in any commercial financing contract, slow down — they're banned against out-of-state defendants in New York since 2019 and are increasingly disfavored elsewhere. See What is a confession of judgment.
Read the prepayment language carefully. The single most expensive misunderstanding in commercial financing is assuming early payoff reduces cost. For most MCAs, it doesn't — the full factor-rate payback is owed regardless of speed unless the contract explicitly includes a prepayment discount.
Why this matters even more in 2026
Two reasons disclosure compliance is more important now than two years ago:
The state-law map is denser. Eleven states with active laws plus several more proposed means most U.S. small business owners now operate in a jurisdiction with disclosure rights. Borrowers are more likely to know what to ask for.
Enforcement is real and visible. California's DFPI has issued written guidance and brought enforcement actions; the New York Department of Financial Services has done the same. The cost of non-compliance for a provider has gone up.
For ClearValue Lending's part: every covered offer that comes back from our funding lender network ships with the state-required disclosure, in writing, before you sign. The disclosure isn't a courtesy — it's how borrowers comparison-shop, and how regulators check whether the market is working.
If you're shopping financing now and your state is on the list above, ask for the disclosure form by name. Any reputable provider can produce it.
Where to read more
- What is a Merchant Cash Advance — the product these laws most often cover
- How to compare APR vs factor rates — the underlying math the disclosures expose
- 5 signs of a predatory lender — including provider behavior around disclosure
- The respective state regulator websites (CA DFPI, NY DFS, etc.) for the current rules in your state.
Keep reading
If you're going deeper on this topic, these are the next stops: