Merchant Cash Advances in New York: The Disclosure Law

New York runs the second major commercial financing disclosure regime. The Commercial Finance Disclosure Law, in force since June 2023, requires providers to give you a standardized written disclosure before you commit to most commercial financing, and it explicitly covers the sales-based structure a merchant cash advance uses. The Department of Financial Services (DFS) enforces it.

California runs a parallel disclosure regime under SB 1235. The New York law exists because advance quotes lead with numbers that sound smaller than they are. A factor rate of 1.3 presents as “30 cents on the dollar” while the annualized cost runs 55-65% APR-equivalent on a six-month term, as our cost comparison shows. The disclosure makes the provider do that translation for you. On paper. In a standard format.

What the New York disclosure must contain

• The estimated APR, computed on the state’s standardized methodology.
• Total cost in dollars: every cent you repay above the amount funded.
• Payment mechanics: amounts, frequency, and whether collections are fixed or a percentage of sales.
• Prepayment terms: whether early payoff reduces the amount you owe, and by how much.
• Fees, including any charged at origination, at payoff, or on missed payments.

The requirement applies to offers at or under $2.5 million. That captures essentially every advance a small business will be offered. Providers that ignore it answer to DFS. Enforcement belongs to the regulator, not to private lawsuits. Your real protection is walking away from a bad offer, and comparing it against the tables on this site.

Using the disclosure in negotiation

Treat the disclosure as your baseline document. Put its estimated APR next to the factor rate in the pitch. Run both numbers through the factor rate to APR calculator and price the alternatives on our cost comparison: a credit-to-cash conversion or a 12% APR term loan prices at a fraction of an advance on the same base amount.

Keep the disclosure with your contract papers; you will need it at renewal. Check the prepayment line against your exit thinking. If there is any chance you will refinance the advance, the payoff example shows why the discount mechanics dominate that decision.

Limits of this page

This page summarizes the disclosure regime as of the date published. It is not legal advice. Regulations and interpretations move.

For a binding answer on a specific contract, read the disclosure itself. Then consult a New York-licensed attorney.