Your rights as a borrower

Commercial Financing Disclosure Laws: What Borrowers in CA, NY and Other States Get

Short answer

California (SB 1235, financing up to $500,000) and New York (CFDL, up to $2.5 million) require providers of loans, advances and factoring to disclose total cost, an annualised rate, payment schedule and prepayment terms before you sign; Utah, Virginia, Georgia, Florida, Connecticut and Kansas have similar laws. Coverage follows the location of your business, not the funder.

Updated September 21, 2026 · market ranges reviewed monthlyPart of: How to get a small business loanRead next: What a Factor Rate Really Costs (Factor Rate vs APR)

Consumer loans have carried standard cost disclosures for decades. Business financing did not, until California passed the first commercial financing disclosure law in 2018 and New York followed. As of 2026, a growing list of states requires providers of business loans, advances and factoring to show the total cost, an annualised rate and the payment terms in a standard form before you sign. This guide explains what those laws require, where they apply, and how to use the disclosure to compare offers.

Updated September 2026 · Market ranges are published guidelines, not AIDBIZ offers.

Key takeaways

The short version

A standard cost sheet, like a consumer loan

Covered offers must show total dollar cost, an annualised rate, payment amount and frequency, term and prepayment terms.

It applies to advances, not just loans

Merchant cash advances, factoring and revenue-based financing are covered in most of these states, which is the point.

Location of the business decides coverage

The laws apply to recipients located in the state, whatever state the funder is in.

Small deals are covered, large ones often not

California covers financing up to $500,000; New York up to $2.5 million; thresholds vary.

The disclosure is a comparison tool

Use the annualised rate and total cost lines to compare an advance against a term loan on equal terms.

Missing disclosure is a warning

If you are in a covered state and receive no disclosure, ask why before signing.

Why these laws exist

Business borrowers are presumed to be sophisticated, so most federal consumer-protection rules, including the Truth in Lending Act, do not apply to commercial financing. As merchant cash advances and other factor-rate products grew, regulators found that small-business owners often could not tell a 1.30 factor over six months from 30 percent interest over a year, or compare an advance against a loan at all. Disclosure laws answer that by requiring every covered offer to state its cost the same way.

The laws do not cap prices or ban products. They require that the cost be shown clearly and comparably. That is a meaningful protection: the annualised rate on a short-term advance frequently surprises borrowers, and seeing it next to a term-loan alternative changes decisions.

Which states have a law, and what it covers

The table summarises the main state laws in force as of September 2026. Coverage thresholds, exemptions and the exact metrics differ, and states continue to add and amend laws, so treat this as a starting point and confirm the current rule for your state with the regulator or counsel before relying on it.

State commercial financing disclosure laws (summary, September 2026; verify current status)
State	Law	In effect	Covers financing up to	Key metric disclosed
California	SB 1235; DFPI regulations	December 2022	$500,000	Annual percentage rate, total cost, payment terms, prepayment
New York	Commercial Finance Disclosure Law (CFDL)	August 2023	$2,500,000	APR, finance charge, total repayment, payment schedule
Utah	Commercial Financing Registration and Disclosure Act	January 2023	No cap (registration + disclosure)	Total cost, payment amount and frequency; no APR
Virginia	Sales-based financing disclosure law	July 2022	No cap; sales-based financing	Total cost, payment terms; provider registration
Georgia	Commercial financing disclosure law	January 2024	$500,000	Total cost, total repayment, payment schedule
Florida	Commercial Financing Disclosure Law	January 2024	$500,000	Total cost, total repayment, payment schedule, broker rules
Connecticut	Commercial financing disclosure law	July 2024	$250,000	Total cost, payment terms; provider registration
Kansas	Commercial financing disclosure law	July 2024	$500,000	Total cost, total repayment, payment schedule

Other states have enacted or proposed similar laws since; several follow the Georgia and Florida model without an annualised rate. Banks, credit unions and very large transactions are generally exempt.

What the disclosure shows

In California and New York, the disclosure is a one- or two-page form delivered with the offer, before you sign. It states the amount financed, the total dollar cost, an annual percentage rate calculated on the payment schedule, the term or estimated term, the payment amount and frequency, and what happens on prepayment. For sales-based products such as merchant cash advances, where the term depends on your sales, providers estimate the term from your historical receipts and must explain the method.

States on the Georgia and Florida model omit the annualised rate but still require the total cost and the full payment schedule, which lets you calculate a comparison yourself using the method in the factor-rate guide on this site. Florida also requires that brokers not make misrepresentations about the offer, which is a useful standard to hold any intermediary to.

The disclosure must reflect the actual offer. If the funded amount, the fees or the payment schedule change before closing, a revised disclosure is required in California and New York. Keep the version you sign; it is your record of what was promised.

How to use it when comparing offers

Put two disclosures side by side and read three lines: total dollar cost, annual percentage rate where shown, and payment amount and frequency. The first two tell you which offer is cheaper. The third tells you which one your cash flow can carry. An advance with a lower total cost but a daily payment may still be the wrong offer for a business with monthly customer payments.

Watch the estimated term on sales-based products. A provider that assumes your receipts will stay at last quarter’s peak will show a shorter term and a higher APR; one that assumes an average will show a longer term and a lower APR for the same factor. Neither is wrong, but the total cost line is the same either way, which is why it is the more reliable comparison.

If a provider in a covered state does not deliver a disclosure, or delivers one that omits fees you were told about, ask for a corrected form. Reputable funders comply as a matter of routine. A refusal is a strong signal about how the rest of the relationship will go.

What the laws mean for brokers and for AIDBIZ

Several of these laws regulate brokers as well as providers. Florida and Connecticut require brokers to avoid misrepresentations and, in some cases, to register. Virginia and Utah require sales-based financing providers and brokers to register with the state. New York and California place the disclosure duty on the provider but expect brokers to pass it through unchanged.

AIDBIZ is not a lender. When a funding partner issues an offer to a business in a covered state, the partner’s disclosure comes with it, and we do not alter it. We also present every offer with the same four numbers regardless of state: amount deposited, total payback, payment amount and frequency. If you receive an offer through us without those figures, ask us for them.

Payment estimator

See what a disclosure would show at your amount

Estimated payment, total payback and annualised basis at published market ranges. A state disclosure form shows the same figures for the specific offer in front of you.

Merchant cash advance: $40,000 at market range
Scenario	Estimated payment	Total payback	Basis
Lower end of range	$243 / business day	$46,000	1.15x
Midpoint	$279 / business day	$52,800	1.32x
Upper end of range	$315 / business day	$59,600	1.49x

How it works

Using disclosure rights in practice

Check whether your state is covered

Coverage follows the location of your business, not the funder. Confirm the threshold for your financing amount.

Ask for the disclosure with the offer

It must arrive before you sign. Request a revised one if terms change.

Compare the three lines

Total cost, annualised rate where shown, and payment amount with frequency.

Keep the signed version

It is your evidence if the debits differ from the schedule.

Report problems

California’s DFPI and New York’s DFS take complaints about missing or false disclosures.

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Common questions

Questions readers ask next.

Does California SB 1235 apply to merchant cash advances?

Yes. It covers sales-based financing, factoring, lease financing and other commercial financing up to $500,000 to recipients in California, with exemptions mainly for banks and very large deals.

What does the New York CFDL require?

For commercial financing up to $2.5 million to New York recipients, a disclosure of the amount financed, finance charge, APR, total repayment, term and payment schedule, delivered before the contract is signed.

My funder is in another state. Does my state’s law still apply?

Yes. These laws follow the location of the business receiving the financing, so an out-of-state funder must disclose under your state’s rules.

Do the laws cap interest or factor rates?

No. They require disclosure, not price limits. Usury laws, where they apply to business lending, are separate and vary by state.

Is the APR on a merchant cash advance disclosure accurate?

It is an estimate based on projected receipts and the provider’s method, which the form must explain. The total cost line is exact; the APR moves with the estimated term.

Which states do not have a disclosure law?

Most states still have none, including large markets such as Texas, Illinois, Pennsylvania, Massachusetts, Colorado and Washington as of this writing. Borrowers there should ask for the same four numbers voluntarily.

Are banks covered?

Generally exempt. The laws target non-bank commercial financing providers, which is where the disclosure gap existed.

What if I signed without a disclosure in a covered state?

The contract is usually still enforceable, but the provider may face penalties. Keep your records and consider a complaint to the state regulator; consult counsel if the terms differ from what you were told.