Commercial financing disclosure laws now apply in ten states and counting. Here's what every borrower should expect to see on a covered offer — and what to ask if it's missing.
Five states have active commercial financing disclosure laws (CFDLs) in 2026: California (SB 1235), New York (S5470-B + AB 10118), Virginia, Utah, and Georgia. All require APR-equivalent disclosures, total dollar cost, payment schedule, and prepayment treatment on small business financing offers including MCAs. More states are queued. Federal-level disclosure rule is not on the immediate horizon.
Five years ago, the only commercial financing disclosure rule that mattered was California's. Today, ten 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.
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 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.
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.
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.
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.
In effect since July 2022. Applies to sales-based financing (which includes most MCAs). Disclosure includes total cost and an APR or estimated APR.
Effective January 2024 for commercial financing transactions ≤ $500,000. Requires substantially the California-style disclosure set.
Effective July 2023. Applies to commercial financing ≤ $500,000. Disclosure required at or before consummation.
Effective July 1, 2024. Substantively similar disclosure framework to CA / NY.
Effective July 1, 2024. Lower transaction threshold ($500,000) and brokerage coverage.
Effective February 28, 2025. Commercial financing disclosure framework that mirrors the CA / NY pattern.
Several additional states are at varying stages — bills introduced, working through committee, or with effective dates in 2025–2026. The list moves quickly; if your state isn't on the active list above, that may change inside a calendar quarter. Always confirm with current counsel for the state of operation.
Whether or not your state currently has a disclosure law, every borrower should demand the disclosure-style information set before signing. Specifically:
1. 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)
2. 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.
3. 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.
4. 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.
5. 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.
Two reasons disclosure compliance is more important now than two years ago:
1. The state-law map is denser. Nine 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.
2. 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.
If you're going deeper on this topic, these are the next stops:
California (SB 1235), New York (S5470-B and AB 10118), Virginia, Utah, and Georgia. Each enforces through its own regulator — DFPI in CA, DFS in NY, equivalents elsewhere. Penalties include fines and license revocation.
Yes. All five state laws define commercial financing broadly enough to include MCAs (sales of future receivables) alongside traditional loans, lines of credit, and factoring.
Not yet. CFPB has flagged SMB financing transparency as a policy concern but no federal rule is finalized. State-level CFDLs are filling the gap.