Key takeaways
- New York's Commercial Finance Disclosure Law is a transparency rule — it standardizes cost and term disclosures rather than capping rates or banning products.
- Covered products commonly include merchant cash advances, commercial term loans, and lines of credit, subject to thresholds and exemptions that can change.
- Required fields typically include amount financed, total repayment, total cost of financing, payment size and frequency, term, prepayment terms, and an annualized rate.
- For a product with no fixed term, such as an MCA, the annualized rate is an estimate built on a projected repayment period that shifts with sales volume.
- The disclosure is generally provided when a specific offer is made, before signing — often with a required acknowledgment of receipt — and DFS enforces compliance.
- Two offers can carry a similar total dollar cost yet very different annualized rates when repayment periods differ, which is exactly what standardized disclosure reveals.
- MCA relief / reverse consolidation lowers the daily or weekly payment to ease cash flow; it does not pay off or buy out existing advances.
Why New York created a disclosure standard
Consumer credit — credit cards, mortgages, auto loans — has carried standardized cost disclosure for decades, so a shopper can read an APR and compare lenders directly. Small-business financing sat outside that framework. An owner weighing a merchant cash advance against a term loan often had no consistent way to tell which was more expensive, because each provider quoted cost in its own vocabulary: a factor rate of 1.30 from one, a monthly fee from another, a discount on future receivables from a third.
New York's law closes that gap at the moment it matters — when the offer is made. Covered providers must present the key terms in a fixed format so two or more offers can be compared field by field. The law generally sets no rate ceiling and prohibits no product; its lever is disclosure. Because the specific fields, formatting, and dollar thresholds are defined by DFS regulation and have been adjusted since the statute was enacted, the exact requirements can differ from summaries written even a year or two ago. Confirm the current version before treating any one rule as settled.
Which financing is typically covered
The law reaches a range of small-business financing, not just conventional loans. Coverage generally turns on the product type and the size of the financing, with specific exemptions and dollar thresholds. The table below is an illustrative, general summary; treat the categories and cutoffs as orientation and verify them against the current statute and regulations.
| Product type | Commonly covered? | Notes (general) |
|---|---|---|
| Merchant cash advance (MCA) | Often yes | A frequent focus — factor-rate pricing is the hardest to compare |
| Commercial term loan | Often yes | Fixed amount repaid over a set term |
| Business line of credit | Often yes | Disclosure may rest on stated draw and repayment assumptions |
| Factoring / accounts-receivable financing | Sometimes | Treatment depends on how the deal is structured |
| Financings above a set dollar threshold | Often excluded | Large transactions above a stated amount are commonly exempt |
| Loans from certain regulated depository institutions | Often exempt | Banks and similar chartered lenders are frequently carved out |
The thresholds and exemptions are the details most likely to have shifted since you last read about them, so confirm the current numbers rather than relying on this table alone.
The exact fields a disclosure must show
The core of the law is a set of standardized fields the provider must present up front. The precise labels and calculation methods are fixed by regulation, but the fields are built to answer four plain questions: How much money do I actually receive? How much will I repay in total? On what schedule? And what does that cost as an annualized rate?
Expect to see the amount financed (the money that reaches you after any fees deducted at funding), the finance charge or total cost of the financing, the total repayment amount, the payment size and frequency, the term, any prepayment terms or fees, and an annual percentage rate or comparable annualized metric. For a product with no fixed term — a merchant cash advance repaid as a percentage of daily sales — the annualized figure is calculated from an estimated repayment period that the disclosure should flag as an estimate.
That flag is the field to read most carefully. On a receivables-based advance the real payoff timeline moves with your sales volume, so the annualized rate is a projection, not a locked number. A slower month stretches the term and changes the effective cost. Read the repayment assumption behind the rate, not just the headline percentage.
How a disclosure lets you compare two real offers
The practical payoff of the law is apples-to-apples comparison. The example below is illustrative only — the figures are round, made-up numbers chosen to show how standardized disclosure exposes a difference the raw quotes would hide. They are not quotes or an offer of terms.
| Disclosure field | Offer A — term loan (example) | Offer B — MCA (example) |
|---|---|---|
| Amount financed | $50,000 | $50,000 |
| Total repayment | $62,000 | $65,000 |
| Total cost of financing | $12,000 | $15,000 |
| Payment | $1,722 monthly | $620 per business day |
| Estimated term | 36 months | ~5 months (estimated) |
| Annualized rate (est.) | For example, ~15% | For example, ~60%+ |
Notice that the two total dollar costs are close — $12,000 versus $15,000 — yet the annualized rates are worlds apart, because Offer B repays that cost in roughly five months rather than three years. Judged on total dollars alone, the MCA looks only slightly pricier; judged on annualized rate, it is far more expensive per month you hold the money. Standardized disclosure is what surfaces that gap at a glance. For context on our own products: financing starts at a $10,000 minimum, applicants with a FICO score of 500 or higher can be considered, approvals are commonly issued within 24 to 48 hours, and no financing is ever guaranteed.
Who is responsible, and when you get the disclosure
Responsibility generally rests on the provider extending the financing, and in some situations on a broker or other party arranging the deal. The disclosure is typically required at the time a specific offer is made — attached to the offer itself, not disclosed after signing — so you can review the numbers while the decision is still open and walk away or negotiate.
Some frameworks also require you to sign an acknowledgment that you received the disclosure, which creates a record that the figures were presented. Enforcement generally sits with the state financial regulator, which can pursue penalties for non-compliance. The single most useful thing to know as a borrower: you are entitled to see these standardized numbers before you commit, and if a provider does not put them in front of you, you can ask for them and treat their absence as a warning sign.
Using disclosure for MCA relief and refinancing decisions
Standardized disclosure earns its keep when your business already carries one or more advances and you are weighing what to do next. With the total cost and annualized rate of a new offer sitting in the same format as your current obligations, it is far easier to tell whether a change genuinely improves your position or just reshuffles it.
One option owners consider is MCA relief, sometimes called reverse consolidation, and it is worth being precise about what it does. It works by lowering your daily or weekly payment to ease cash-flow pressure — it does not pay off or buy out your existing advances, and those balances remain owed. Disclosure figures let you weigh the real trade-off: a smaller near-term debit against the total cost over time. Compare the total repayment and the annualized rate across your options, not just the size of the daily payment, so a lighter debit today doesn't quietly cost you more overall.
Frequently asked questions
Does the New York disclosure law limit how much a lender can charge?
Generally no. The law requires standardized cost and term disclosures so borrowers can compare offers; it does not cap rates or ban products. Any rate limits that apply come from other laws. Verify current rules with the New York Department of Financial Services.
Does it apply to merchant cash advances?
MCAs are frequently among the covered products, precisely because their factor-rate pricing is otherwise so hard to compare. Coverage depends on the product type and financing size, and thresholds and exemptions can change, so confirm the current requirements before relying on them.
What exactly must the disclosure include?
Typically the amount financed, total repayment, total cost of the financing, payment amount and frequency, term, prepayment terms, and an annualized rate. The precise fields and calculation methods are set by DFS regulation and can be updated over time.
When do I receive the disclosure?
Usually at the moment a specific offer is made, before you sign, so you can review the standardized numbers while the decision is still open. Some frameworks also require you to acknowledge receipt. If you are not shown these figures, ask for them.
How does disclosure help if I already have an advance?
It lets you compare a new offer's total cost and annualized rate against your current obligations in the same format. If you are considering MCA relief or reverse consolidation, remember it works by lowering your daily or weekly payment to ease cash flow — it does not pay off or buy out existing advances.
Is the rule the same in every state?
No. Several states have enacted commercial financing disclosure laws, but the covered products, thresholds, required fields, and effective dates differ, and the rules change over time. Verify the current requirements for the specific state and consult a qualified attorney for your situation.
