NY Commercial Financing Disclosure Law (CFDL)
The New York Commercial Financing Disclosure Law (CFDL) is a 2020 statute requiring providers of commercial financing including MCA to provide standardized disclosures to merchants — including APR-equivalent metrics, total cost of capital, and prepayment terms — fundamentally reshaping merchant-facing MCA documentation in NY.
Why This Matters
The CFDL transformed MCA disclosure obligations in New York. Required disclosures include: the total amount of capital provided, total amount payable, finance charges, APR equivalent, payment amounts and frequency, and prepayment terms. Disclosures must be provided in standardized format before merchant signature. The law applies to all commercial financing under $2.5M provided to NY businesses, regardless of provider location. Implementation has reshaped MCA agreement templates and broker training. Other states have followed: California (SB 1235), Utah, Virginia, and others have enacted similar disclosure frameworks.
Frequently Asked Questions
Frequently Asked Questions
Does CFDL apply to out-of-state MCA funders?
Yes — CFDL applies based on where the merchant is located, not where the funder is based. Any commercial financing under $2.5M provided to a NY merchant triggers CFDL disclosure obligations regardless of funder state of origin or organization.
What's the penalty for CFDL non-compliance?
Civil penalties of $2,000 per violation up to $10,000 maximum per transaction, with separate enforcement actions possible. Class-action exposure for systemic non-compliance. The Department of Financial Services (DFS) actively monitors for compliance and pursues enforcement against violators.