What it means for you
If your business is run from New York, an MCA offer of $2.5 million or less should come with a table showing the funding provided, the finance charge, the estimated total payments, the estimated term and an estimated APR. You sign the disclosure before the application goes further. The law requires the cost to be shown; it does not cap it.
- Law
- Commercial Finance Disclosure Law
- Citation
- N.Y. Fin. Serv. Law §§ 801–812; 23 NYCRR Part 600
- Enacted
- 2020-12-23
- Effective
- 2023-08-01
- Regulator
- New York State Department of Financial Services (DFS)
- Who it covers
- Commercial financing offered to a business principally directed or managed from New York, including sales-based financing (merchant cash advances), closed-end loans, open-end credit and factoring. Anyone who extends a specific offer is a provider, including a person who solicits and presents offers on behalf of a funder, so brokers who present offers are covered.
- Registration
- None under this law. Providers of sales-based financing that estimate the APR with the opt-in method must file an annual report with DFS by April 30 (first due in 2025).
- Brokers
- A broker must pass the funder's disclosure to you unaltered before communicating the offer, unless the funder confirms it gave it to you directly. When a broker is involved, the provider must tell you in writing how, and by whom, the broker will be paid.
What must be on the disclosure
- Total amount of financing, and the disbursement amount if different
- Finance charge
- Estimated annual percentage rate (APR)
- Total repayment amount (disbursement amount plus finance charge)
- Estimated term
- Payment amounts and frequency, based on projected sales
- Other potential fees not in the finance charge, such as draw, late payment and returned payment fees
- Prepayment and refinancing terms, including any added finance charge or fees
- Collateral requirements or security interests, if any
What a New York MCA offer must show
DFS sets the layout. For a merchant cash advance the table covers the funding provided, the estimated APR, the finance charge, the estimated total payment amount, the estimated payment, the payment terms, the estimated term, prepayment terms and any collateral requirements.
MCA payments move with sales, so the APR and term are estimates. The provider bases them on your historical sales or, under the opt-in method, on its own sales projection. Opt-in providers report their estimated and actual APRs to DFS every year by April 30.
You sign the disclosure before the application can go further, and an electronic signature counts. The rules apply when your business is principally directed or managed from New York.
Broker duties under the New York rule
Under 23 NYCRR 600.21, a funder that gives a broker an offer must also give the broker compliant disclosures. The broker must send them to you unaltered before communicating the offer, unless the funder confirms it delivered them to you directly.
When a broker is involved, the provider must tell you in writing how, and by whom, the broker will be compensated. The rule does not make the broker responsible for checking the funder's numbers. See how brokers get paid.
Confessions of judgment in New York courts
Chapter 214 of the Laws of 2019 amended CPLR 3218. A confession of judgment affidavit may be filed only with the clerk of the county where the affidavit says the defendant lived when it was signed, or where the defendant lives at the time of filing. It applies to affidavits filed on or after August 30, 2019.
A business with no New York residence has no such county, so this route to a New York judgment is closed to it. Government agencies enforcing civil or criminal law are exempt. See confessions of judgment.
What the New York law does not do
- It does not limit the factor rate, fees or APR. It requires the cost to be disclosed.
- It does not require MCA providers or brokers to register or hold a license.
- It does not cover deals over $2.5 million, bank financing, financing secured by real estate or UCC leases.
- It does not decide whether a given MCA is really a loan. The New York Attorney General has sued funders, including Yellowstone Capital, alleging that MCAs were disguised loans at illegal interest rates.
DFS enforces the law and can impose civil penalties of up to $2,000 per violation, or $10,000 per willful violation, and order restitution.
This page is general information, not legal advice.
Who is exempt
- Financial institutions, such as banks
- Technology service providers to exempt entities that have no interest in the financing
- Lenders regulated under the federal Farm Credit Act
- Financing secured by real property
- Leases as defined in the Uniform Commercial Code
- A person or provider making no more than 5 commercial financing transactions in New York in 12 months
- Individual transactions over $2.5 million
- Certain financing of $50,000 or more for vehicle dealers, vehicle rental companies and their affiliates
Questions
Does the New York law cover merchant cash advances?
Yes. It covers sales-based financing, defined as financing repaid over time as a percentage of sales or revenue, where the payment can rise or fall with sales. It applies to offers of $2.5 million or less to businesses principally directed or managed from New York.
Is the APR on a New York MCA disclosure exact?
No. It is an estimate, because MCA payments can change with sales. The provider uses your historical sales or, under the opt-in method, its own projection, and opt-in providers report estimated and actual APRs to DFS each year.
Who enforces the New York disclosure law?
The Department of Financial Services. It can impose civil penalties of up to $2,000 per violation, or $10,000 per willful violation, and can order restitution or an injunction.
Can a funder enter a confession of judgment against my out-of-state business in New York?
Not under CPLR 3218 as amended in 2019. The affidavit can be filed only in the New York county where the defendant lived when signing or lives at filing, and a business with no New York residence has no such county. Agencies enforcing civil or criminal law are the exception.
Sources
- Financial Services Law Article 8: Commercial Finance Disclosure Law — New York State Senate (checked 2026-09-30)
- Financial Services Law § 801: Definitions — New York State Senate (checked 2026-09-30)
- Financial Services Law § 802: Exemptions — New York State Senate (checked 2026-09-30)
- Financial Services Law § 803: Sales-based financing disclosure requirements — New York State Senate (checked 2026-09-30)
- Financial Services Law § 809: Required signature — New York State Senate (checked 2026-09-30)
- Financial Services Law § 812: Penalties — New York State Senate (checked 2026-09-30)
- 23 NYCRR 600: Disclosure requirements for certain providers of commercial financing transactions — NY DFS (checked 2026-09-30)
- Small Business Financing Providers (annual opt-in reports) — NY DFS (checked 2026-09-30)
- Superintendent Adrienne A. Harris adopts updated regulation for disclosure requirements for commercial financing (February 1, 2023) — NY DFS (checked 2026-09-30)
- New York State Register, February 1, 2023: Notice of Adoption DFS-42-21-00011-A (compliance 6 months after effective date) — New York Department of State (checked 2026-09-30)
- 23 NYCRR 600.21: Duties of financers and brokers — Cornell LII (NYCRR text) (checked 2026-09-30)
- 23 NYCRR 600.24: Applicability — Cornell LII (NYCRR text) (checked 2026-09-30)
- Senate Bill S5470B (2019-2020), Chapter 369 of 2020 — New York State Senate (checked 2026-09-30)
- Senate Bill S898 (2021), Chapter 61 of 2021 — New York State Senate (checked 2026-09-30)
- Senate Bill S6395 (2019), Chapter 214 of 2019: judgment by confession — New York State Senate (checked 2026-09-30)
- CPLR 3218: Judgment by confession — New York State Senate (checked 2026-09-30)
- Attorney General James sues large-scale predatory lending operation targeting small businesses (March 5, 2024) — New York State Attorney General (checked 2026-09-30)
- Attorney General James announces $1 billion settlement with predatory lender Yellowstone Capital (January 22, 2025) — New York State Attorney General (checked 2026-09-30)
Last reviewed 2026-09-30. General information, not legal advice. Laws and regulations change; confirm with the regulator or an attorney.