Sales-based financing is how several state laws describe merchant cash advances and revenue-based financing. New York and Virginia use the same definition: a transaction repaid over time as a percentage of sales or revenue, in which the payment amount may increase or decrease with the volume of sales or revenue.
The label matters because it triggers state rules. In New York, covered sales-based financing offers must show an estimated APR among other disclosures. Virginia requires sales-based financing providers and brokers to register with its State Corporation Commission and makes confession of judgment clauses in these contracts unenforceable.
If a contract calls itself a purchase of receivables but its payments never adjust to your sales, ask why, since payments that move with sales are the heart of the definition. This is general information, not legal advice.
Sources
- N.Y. Financial Services Law § 801. Definitions — New York State Senate (checked 2026-09-30)
- Code of Virginia § 6.2-2228 (definitions, sales-based financing) — Virginia General Assembly (checked 2026-09-30)
- Code of Virginia § 6.2-2230 (registration of providers and brokers) — Virginia General Assembly (checked 2026-09-30)
- Code of Virginia § 6.2-2234 — Virginia General Assembly (checked 2026-09-30)
- 23 NYCRR Part 600: Commercial finance disclosure regulation (text) — New York State Department of Financial Services (checked 2026-09-30)