What it means for you
For an MCA offer under $1 million, you should get a disclosure of the financing amount, the disbursement amount, the finance charge, the total repayment, the estimated payment period, other fees, early payoff costs and any broker compensation, and you sign it before the application is finalized. A funder or broker may not set up automatic debits from your bank account unless it holds a first-priority perfected security interest in that account. Texas does not require an APR.
- Law
- Commercial sales-based financing law (HB 700)
- Citation
- Tex. Fin. Code ch. 398; 7 Tex. Admin. Code ch. 86, subch. C
- Enacted
- 2025-06-20
- Effective
- 2025-09-01
- Regulator
- Texas Office of Consumer Credit Commissioner (OCCC)
- Who it covers
- Providers and brokers of commercial sales-based financing, such as merchant cash advances repaid from a share of sales, offered to recipients in Texas, including over the internet.
- Registration
- Providers and brokers must register with the OCCC through NMLS. Applications open September 1, 2026, and anyone already in business must register by December 31, 2026. Under OCCC rules the initial fee is $1,000 and the annual renewal fee is $1,000.
- Brokers
- Brokers must register with the OCCC, keep copies of disclosures they give you and follow the automatic-debit limit. The provider's disclosure must say whether it pays the broker directly for your deal and, if so, how much.
What must be on the disclosure
- Total amount of the financing
- Disbursement amount
- Finance charge
- Total repayment amount
- Estimated period for payments to equal the total repayment amount
- Payment amounts, fixed or with a description of how variable payments work
- Other potential fees and charges not in the finance charge
- Any finance charge due if you pay off or refinance early
- Any added fees due if you pay off or refinance early
- Collateral requirements or security interests
- Whether the provider pays a broker directly for the offer, and the amount
What a Texas MCA offer must show
The provider gives the disclosure in writing at or before the time it extends a specific offer, and gets your signature before finalizing the application. It covers the financing and disbursement amounts, the finance charge, the total repayment amount, the estimated payment period, the payment amounts, other fees, early payoff charges, collateral and any broker compensation the provider pays.
OCCC rules require the contract to include a notice with the OCCC's contact details and how to file a complaint. The OCCC did not adopt a model disclosure form.
Automatic debits and confessions of judgment
A provider or broker may not set up automatic debits from your deposit account unless it holds a validly perfected security interest in that account under Chapter 9 of the Business and Commerce Code, with first priority over all other claims. OCCC rules treat debits as automatic if they are authorized in advance to happen more than once, and they count more than one prewritten check.
A commercial sales-based financing contract that contains a confession of judgment or similar provision is void and unenforceable.
Registration with the OCCC
The OCCC adopted its rules in June 2026 under Title 7, Chapter 86, Subchapter C of the Texas Administrative Code. The initial registration fee is $1,000 and the annual renewal fee is $1,000.
Violations carry a civil penalty of $10,000 for each violation. The law creates no private right of action.
What the Texas law does not do
- It does not require an estimated APR.
- It bars the Finance Commission from setting a maximum APR, finance charge or fee.
- It does not let you sue under the law itself.
- Its disclosure duty does not apply to offers of $1 million or more.
This page is general information, not legal advice.
Who is exempt
- Banks, out-of-state banks, bank holding companies, credit unions and their subsidiaries and affiliates
- 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, and leases
- Financing of $50,000 or more with motor vehicle dealers or rental companies
- Financing for products or services the person or an affiliate makes, licenses or distributes
Questions
When do Texas MCA funders and brokers have to register?
Registration runs through NMLS starting September 1, 2026, and businesses already operating must register with the OCCC by December 31, 2026.
Can a Texas funder take daily ACH payments from my account?
Only if it holds a validly perfected, first-priority security interest in your deposit account. Without that, a provider or broker may not set up automatic debits, which OCCC rules define to include recurring pre-authorized debits and multiple prewritten checks.
Does Texas require an APR on MCA offers?
No. The disclosure covers dollar amounts and payment terms, and the law bars the Finance Commission from capping the APR, finance charge or fees.
Is a confession of judgment allowed in a Texas MCA?
No. A commercial sales-based financing contract that contains a confession of judgment or similar provision is void and unenforceable.
Sources
- H.B. 700 (89th Legislature), enrolled text — Texas Legislature Online (checked 2026-09-30)
- H.B. 700 bill analysis — Texas Legislature Online (checked 2026-09-30)
- Texas Finance Code Chapter 398: Commercial Sales-Based Financing — Texas Legislature (checked 2026-09-30)
- Commercial Sales-Based Finance (CSBF) registration — Texas OCCC (checked 2026-09-30)
- Adopted new rules, 7 TAC Chapter 86 (commercial sales-based financing), issued June 19, 2026 — Texas OCCC (checked 2026-09-30)
- OCCC recent and upcoming rules — Texas OCCC (checked 2026-09-30)
- TX HB 700 (2025) bill status: signed June 20, 2025 — LegiScan (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.