Merchant cash advances are not loans, which means they don't fall under federal lending laws like the Truth in Lending Act. However, several states have passed commercial financing disclosure laws that explicitly cover MCAs and other non-loan business financing products. The federal Consumer Financial Protection Bureau began rule-making for small business credit transparency in 2023 and the rules took effect in stages through 2025-2026.
If you're shopping for an MCA, the disclosures you receive — and your legal protections — depend on what state your business is incorporated in or operates in. Here's the 2026 landscape.
The Federal Picture
There is no federal Truth in Lending equivalent for MCAs at the time of writing. The CFPB Section 1071 rule (Equal Credit Opportunity Act, small business data collection) began phased compliance in 2024 and applies to lenders making 100+ small-business credit transactions per year — but it's a data-collection rule, not a disclosure rule.
Federal Trade Commission has authority over deceptive trade practices and has acted against MCA funders for misrepresenting product terms. As of 2026, FTC enforcement actions have focused on confession-of-judgment misuse, undisclosed fees, and false speed claims.
States with Active MCA Disclosure Laws
New York — FAIR Act (effective 2023, expanded 2024)
New York's Commercial Financing Disclosure Law (commonly called the FAIR Act) requires funders providing $2,500,000 or less in commercial financing to NY businesses to provide a uniform disclosure document at the time of offer. Required disclosures include:
- Total amount financed
- Disbursement amount (after fees)
- Finance charge in dollars
- Total repayment amount
- Estimated APR (yes — even though it's an MCA, NY requires APR-equivalent disclosure)
- Average projected payment
- Payment frequency
Westline is registered with the NY Department of Financial Services and provides FAIR Act disclosures on every NY advance.
California — SB 1235 / SB 666 / SB 362 (phased 2018-2024)
California's Commercial Financing Disclosure Law applies to commercial financing of $500,000 or less to CA businesses. The DFPI (Department of Financial Protection and Innovation) regulates compliance. Required disclosures track NY's closely:
- Amount financed
- Total dollar cost
- Annualized rate (APR-equivalent)
- Payment amount and frequency
- Term
- Prepayment terms
SB 666 (effective 2024) added explicit consumer-style cooling-off and disclosure-formatting rules.
Virginia — HB 1027 (effective July 1, 2022)
Virginia's commercial financing disclosure law applies to MCAs to VA businesses for transactions of $500,000 or less. Disclosure requirements parallel NY/CA.
Utah — SB 183 (effective January 1, 2023)
Utah requires registration with the state and standard disclosures for commercial financing transactions of $1,000,000 or less.
Other states with passed or pending laws
As of 2026: Connecticut (HB 6597, effective July 2024), Florida (active rule-making), Illinois (active legislation), Texas (HB 700 considered, partial provisions), Missouri (active rule-making). Several other states have introduced bills that have not yet passed.
What This Means for You
If your business is incorporated or principally operates in NY, CA, VA, or UT (and increasingly CT, FL, IL), you are entitled to a standardized disclosure document at the time of MCA offer. The disclosure must include APR-equivalent pricing — even though MCAs technically don't have an APR — to allow apples-to-apples comparison with bank loans.
If your business is in a state without an MCA disclosure law, the funder is not legally required to provide standardized disclosures. Reputable funders (including Westline) provide them anyway as a matter of practice. If a funder refuses to break out the total cost and APR-equivalent in writing, that's a red flag regardless of state.
Regulatory Trends Through 2026
- State-by-state expansion continues. Expect 5-8 additional states to pass disclosure laws between 2026 and 2028 based on currently active legislation.
- APR-equivalent disclosure is becoming the default standard, even where state law doesn't require it. Industry trade groups (SBFA) have moved toward voluntary APR disclosure as a transparency standard.
- Confession-of-judgment use is shrinking. NY banned them in MCA contracts in 2019, and several states have followed. Reputable funders no longer use them. (See our piece on confessions of judgment for the full history.)
- CFPB rule-making is expected to expand. Section 1071 data collection is phasing in; broader disclosure rules are anticipated by 2027.
How Westline Complies
For NY, CA, VA, UT, and CT advances, we provide the state-mandated disclosure document at offer. For all other states, we provide the same disclosure information voluntarily — total cost in dollars, APR-equivalent, daily/weekly payment amount, term, prepayment terms — before any agreement is signed.
We do not use confessions of judgment in any state. We are registered with NY DFS and CA DFPI. We disclose every fee category upfront — no origination fees, no admin charges, no surprises in the agreement.
If you're shopping multiple MCA offers and want help reading the disclosures or comparing across funders, send us the offers and we'll walk through them with you. Apply with Westline and you'll get the full disclosure regardless of your state.
Sources & References
- Bank denial and small business credit access figures cited in this piece are derived from the Federal Reserve Small Business Credit Survey. Approval rates for small business credit applications at large banks have ranged from approximately 13%-31% across recent survey years, depending on bank category and reporting period.
- Small business finance landscape and lending program data: SBA Office of Advocacy.
- Merchant cash advance industry standards and disclosure practices: Small Business Finance Association (SBFA).
- Commercial financing disclosure regulations referenced (NY FAIR Act, CA SB 1235/666/362, VA, UT) are summarized from the published statutes; consult counsel for specific compliance application.