50-State Overview of Merchant Cash Advance (MCA) Laws

Merchant Cash Advances (MCAs) are a widely used financing tool, but regulations governing them vary significantly by state. Some states have enacted strict consumer protection laws, while others allow MCAs to operate with minimal oversight. Below is a summary of MCA regulations across the 50 states.

States with Strong MCA Regulations

1. California – Requires MCA providers to disclose annual percentage rates (APRs) and total repayment amounts under the Commercial Financing Disclosure Law.
2. New York – Imposes strict disclosure requirements and limits the use of Confessions of Judgment (COJs) against out-of-state borrowers.
3. New Jersey – Enforces fair lending practices and consumer protection laws applicable to MCA transactions.
4. Maryland – Requires MCAs to comply with licensing requirements for commercial lenders.
5. Connecticut – Limits aggressive collection tactics and mandates lender registration.
6. North Carolina – Prohibits excessive interest rates and enforces fair contract terms.

States with Moderate MCA Regulations

1. Illinois – Requires enhanced transparency but does not classify MCAs as loans.
2. Washington – Implements business lending disclosure laws but allows COJs under certain conditions.
3. Virginia – Mandates lender registration and transparency requirements.
4. Florida – Regulates MCA contracts but permits COJs within the state.
5. Texas – Enforces state usury laws but exempts MCA agreements classified as sales transactions.
6. Pennsylvania – Regulates predatory lending but has no specific MCA legislation.
7. Massachusetts – Prohibits deceptive MCA marketing practices.
8. Michigan – Requires MCA companies to follow fair lending guidelines.
9. Tennessee – Limits excessive fees but does not regulate COJs.

States with Minimal MCA Regulations

1. Georgia – Allows MCAs to operate without licensing requirements.
2. Ohio – Does not classify MCAs as loans, leaving them largely unregulated.
3. Arizona – No specific laws governing MCA agreements.
4. Missouri – Few consumer protections for MCA transactions.
5. Indiana – Limited oversight on business financing agreements.
6. Kentucky – No established MCA lending laws.
7. South Carolina – Minimal protections for business borrowers.
8. Alabama – Does not regulate MCA providers.
9. Nevada – Allows unrestricted MCA transactions.
10. Montana – No specific MCA regulations.

States with No Significant MCA Regulations

1. Alaska – No state laws governing MCAs.
2. Hawaii – No licensing requirements for MCA lenders.
3. Idaho – No disclosure or transparency mandates.
4. Wyoming – Permits MCAs without registration.
5. North Dakota – No established MCA protections.
6. South Dakota – No limits on interest rates or COJs.
7. Nebraska – Few consumer protection measures.
8. Oklahoma – No licensing requirements.
9. Arkansas – No transparency mandates.
10. Louisiana – No specific MCA laws.
11. Mississippi – Largely unregulated.
12. Minnesota – No required disclosures.
13. Wisconsin – No MCA-specific legal framework.
14. Iowa – Few lending restrictions.
15. West Virginia – No formal MCA regulations.
16. Rhode Island – No oversight on MCAs.
17. Delaware – Permits MCA transactions without restrictions.
18. Vermont – No explicit MCA protections.
19. New Hampshire – No licensing requirements.
20. Maine – No legal framework for MCAs.
21. Colorado – No specific MCA disclosure laws.
22. Kansas – No licensing mandates.
23. Utah – No regulation on business cash advances.
24. New Mexico – No laws restricting MCA practices.
25. Oregon – No formal protections for business borrowers.

The regulations and laws for Merchant Cash Advances vary widely by state. Business owners should carefully review their state’s laws before entering an MCA agreement, as some jurisdictions offer strong protections while others provide little oversight. As the MCA industry matures more states may introduce consumer protection measures to prevent predatory lending practices.