What is a commercial financing disclosure law?
It is a state law that requires certain providers of business financing to give you a standardized written summary of cost and terms before you sign. Consumer loans have long come with required disclosures. These laws extend a similar idea to small business financing, which historically came with far less standardized information.
The goal is comparison. Business funding comes in many shapes, from term loans priced with interest rates to sales-based products priced with factor rates, and without a common format it is hard to tell which offer costs more. A disclosure puts key numbers in one place.
These laws do not cap prices, approve applications or make an offer a good deal. They make the cost visible. This is general information, not legal advice. Check the state's official site for current requirements.
What does a disclosure typically show?
Requirements vary by state, but disclosures commonly show the total amount of financing, the amount you actually receive after fees, the total you will repay, the payment amount and frequency, and how prepayment is treated. Some states also require an estimated annualized cost figure so different products can be compared on a similar basis.
- Amount financed and disbursed: what reaches your account after deductions.
- Finance charge or total cost: the dollar cost of the funding.
- Total repayment: everything you will pay back.
- Payment schedule: amount, frequency and estimated term.
- Prepayment terms: whether repaying early lowers the cost.
- Estimated annualized rate: required in some states.
| Item | What it tells you | Question to ask |
|---|---|---|
| Amount disbursed | Cash you actually receive | What is deducted, and why? |
| Total repayment | Everything you will pay back | Is this fixed or does it change? |
| Payment schedule | How much and how often | Does this fit my slowest month? |
| Prepayment terms | Whether early repayment saves money | Is any cost forgiven if I repay early? |
| Estimated annualized rate | Cost on a yearly basis, where required | How does it compare to other offers? |
Which states have adopted these rules?
States that have adopted commercial financing disclosure rules include California, New York, Utah, Virginia, Florida, Georgia, Connecticut, Kansas, Missouri, Louisiana and Texas. Other states have considered similar bills. Laws are amended and new ones pass, so treat any list as a starting point and confirm with the state's official site.
Our state guides explain what owners in each of these states typically fund and how the rules fit in: California, New York, Utah, Virginia, Florida, Georgia, Connecticut, Kansas, Missouri, Louisiana and Texas. See all guides on the states page.
Do these laws apply to merchant cash advances?
Many of them do. Several states wrote their rules to cover sales-based financing, which includes many merchant cash advances and revenue-based products, alongside loans, lines of credit and some leases. Each law defines which transactions are covered, and most include exemptions, for example for certain banks, very large transactions or specific product types.
Because coverage depends on how the law defines a transaction, the same product can be covered in one state and not in another. If you are unsure whether an offer is covered, ask the provider and check the official state source. For how sales-based pricing works, read factor rate vs. interest rate and our revenue-based financing page.
Do some states also require providers to register?
Yes. Some states pair disclosure requirements with registration, meaning covered providers, and in some cases brokers, must register with a state agency. A few also address practices such as certain fees or automatic debits. Registration is not an endorsement, but it does give the state a record of who is offering financing.
If your state requires registration, you can usually check a provider's status through the official state agency. Registration rules, like disclosure rules, change over time, so look up the current requirements rather than relying on older articles.
What if your state has no disclosure law?
You can still ask for the same information. A reputable provider should be willing to put the amount you receive, total repayment, payment amount and frequency, fees and prepayment terms in writing before you sign. If a provider will not show total cost in writing, treat that as a reason to slow down.
Use a simple checklist for every offer, whatever state you are in. Our guide to comparing funding offers walks through it, and How It Works explains what you see at each step when you apply with 50 States Funding.
Frequently asked questions
Are banks exempt from these laws?
Many state commercial financing disclosure laws exempt certain regulated depository institutions such as banks and credit unions, but exemptions differ by state and can be narrow. Check the specific law's exemptions on the official state site. This is general information, not legal advice.
Does a disclosure mean the offer is fair?
No. A disclosure shows cost information in a standard format, but it does not cap prices or judge whether the offer suits your business. Use it to compare offers and to test whether the payment fits your cash flow before you sign.
Which state's law applies if I operate in several states?
Laws generally define which transactions they cover, often based on where the business is located or principally operates. If you operate across state lines, the answer can be complicated. Ask the provider and consult an attorney if it matters to your decision.
Where can I find the current rules for my state?
Start with the state's official financial regulator or attorney general website, which typically publishes the law, any regulations and guidance for businesses. Laws and effective requirements change, so check the official source rather than relying on summaries, including this one.
Is this legal advice?
No. This article is general information about a type of state law, written for business owners. It does not describe every requirement or exemption. For advice about a specific agreement or situation, consult an attorney licensed in your state.
See the costs before you decide
Apply once and review offers with the terms in writing.
Updated September 14, 2026 · 50 States Funding Team