Commercial Financing Disclosure Law — 2026 State-by-State Tracker
Commercial financing disclosure law (CFDL) is the regulatory framework requiring MCA, factoring, and small-business loan providers to disclose APR-equivalent and other standardized terms at point of sale. California started the wave in 2018 (SB 1235, effective 2023). New York followed (CFDL 2023). New Jersey, Utah, Virginia, and Georgia have enacted variants. Several more states have legislation pending.
This page is the operator-facing reference: what's in force, what's pending, what each state requires specifically, and what the practical compliance posture looks like for MCA brokers, ISOs, and direct funders operating across multiple states.
What You Get
- Enacted States Map: CA, NY, NJ, UT, VA, GA — effective dates, scope, and unique requirements per state
- Pending Legislation Tracker: States with active CFDL legislation in committee or floor vote
- APR-Equivalent Calculation: Standard formula, factor-rate-to-APR conversion, term assumptions across states
- Broker Registration Requirements: Where brokers must register separately from funders, exemption thresholds
- Enforcement Posture: Which state AGs have brought enforcement actions, what penalties have been assessed
Why CFDL Matters for MCA Unit Economics
CFDL changes the merchant-facing conversation. Before disclosure laws, a 1.32 factor on $50K over 6 months sounded like '$16,000 in cost.' After disclosure, the same deal reads as '71% APR-equivalent.' The number is the same; the framing is dramatically different. Merchants who would have signed at the factor-rate framing often hesitate at the APR-equivalent framing — and that hesitation is exactly the consumer-protection goal of the legislation.
Operators who treat CFDL as a compliance burden tend to lose more deals than operators who treat it as a sales process redesign. The shops that have adapted best build the APR-equivalent comparison into the sales conversation early, position MCA correctly against SBA and term loan alternatives (where applicable), and qualify out merchants for whom MCA economics genuinely don't work. The pipeline shrinks but the funded-deal quality improves.
What 2026 Federal Action Could Look Like
Federal commercial financing disclosure legislation has been proposed multiple times (Senate Banking Committee, House Financial Services) but not enacted. The CFPB has signaled APR-equivalent comparison as the consumer-protection norm for small-business financing, and rulemaking under Dodd-Frank Section 1071 (small-business loan data collection) is now in force. The federal direction is clear even if the timeline remains uncertain.
Practical operator stance: build the disclosure framework to satisfy the strictest state requirements (currently NY/CA), deploy it nationally, and treat the marginal state-by-state variations as documentation overhead rather than operational changes. The shops that built state-by-state disclosure matrices are spending more on compliance than the shops that built once for the strictest state and deployed everywhere.
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Frequently Asked Questions
What is commercial financing disclosure law?
Commercial financing disclosure law (CFDL) is state legislation requiring commercial finance providers (MCA, factoring, term loans, lines of credit) to disclose standardized terms — including APR-equivalent — at point of sale, similar to consumer Truth-in-Lending Act disclosures. The goal is enabling apples-to-apples comparison across financing products.
Which states have commercial financing disclosure laws?
As of 2026: California (SB 1235), New York (CFDL), New Jersey, Utah, Virginia, and Georgia have enacted CFDL frameworks. Several more states have legislation pending (varies by session).
What does APR-equivalent disclosure mean for MCA?
MCA factor rates must be converted to APR-equivalent using a standardized formula (APR = ((factor)^(1/years_held) − 1) × 100) and disclosed in writing at point of sale. A 1.32 factor over 6 months computes to roughly 71% APR-equivalent — that's the number that goes on the disclosure form.
Do brokers have separate disclosure obligations?
In most CFDL states, the disclosure obligation runs to the funder, but brokers handling the sales conversation are typically required to deliver the funder's disclosure to the merchant before signing. Some states (NY, CA) have separate broker registration or conduct requirements.
What are the penalties for CFDL non-compliance?
Penalties vary by state. California allows civil penalties up to $2,500 per violation. New York allows penalties up to $10,000 per violation. Multiple violations and patterns of conduct can trigger state AG enforcement with materially larger settlements.
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