Is a merchant cash advance legal in Texas?

Yes. A merchant cash advance is structured as a purchase of your future receivables, not a loan, so Texas usury caps on loans generally do not apply. As of September 1, 2025, Texas does regulate this market under House Bill 700, which requires written cost disclosures for sales-based financing under $1 million and registration of providers and brokers with the Office of Consumer Credit Commissioner (OCCC). The product is legal, but providers now have real compliance obligations.

What does Texas HB 700 require MCA providers to disclose?

For commercial sales-based financing transactions under $1 million, HB 700 requires the provider to deliver a written disclosure and obtain your signature before finalizing. The disclosure must state the total amount of financing, the amount disbursed, the finance charge, the total repayment amount, payment amounts and terms, all other fees, and any security interest. If a provider can't or won't put these numbers in writing before you sign, treat it as a red flag.

Can a Texas MCA company use a confession of judgment against me?

Texas law (Finance Code 342.504) bars confessions of judgment on consumer loans, but commercial agreements are treated differently, and Texas courts can be asked to domesticate a judgment that was validly entered in another state under full faith and credit. Read any clause that mentions confession of judgment, consent to jurisdiction in another state, or a power of attorney carefully, and have a Texas attorney review it before signing.

Who regulates merchant cash advances in Texas?

The Texas Office of Consumer Credit Commissioner (OCCC) administers and enforces HB 700, with rulemaking by the Finance Commission of Texas. Providers and brokers of sales-based financing must register with the OCCC by December 31, 2026. The Texas Attorney General can also pursue deceptive-practices claims. There is no private right of action under HB 700, so the practical enforcement path runs through the OCCC.

How fast can a Texas business get MCA funding?

Most MCA decisions in Texas come back within 24 to 48 hours, with funds wired in one to five business days once you submit three to six months of business bank statements. That speed is the main reason Houston, Dallas, San Antonio and Austin owners use MCAs to cover payroll, inventory, fuel, or equipment gaps — but speed is also why the cost is high, so compare offers before you sign.

Texas Merchant Cash Advance: 2026 Rules & Funding Guide

If you run a business in Texas and you need cash this week — to make payroll at a Houston restaurant, cover fuel and repairs on a Dallas trucking fleet, or buy materials for a San Antonio construction crew — a merchant cash advance (MCA) is one of the fastest options available. It’s also one of the most expensive, and as of 2025 Texas has new rules about how these deals must be disclosed.

This guide is written for Texas owners specifically: what changed under the new state law, who regulates MCAs here, what they actually cost, and how to vet a provider before you sign. MCA Guide is an independent matching service — not a lender — so the goal here is to help you decide clearly, not to push a product.

What changed in Texas: HB 700 (effective September 1, 2025)

For years, Texas had lighter commercial-financing regulation than states like New York or California, which means MCA contracts here historically came with fewer mandated disclosures. That changed with House Bill 700, the Texas commercial sales-based financing disclosure and registration law, which took effect September 1, 2025.

Here’s what HB 700 means for you as a borrower:

Written, signed cost disclosure. For sales-based financing transactions under $1 million, the provider must give you a written disclosure and obtain your signature before the deal is finalized. The disclosure has to spell out the total amount financed, the amount actually disbursed to you, the finance charge, the total repayment amount, the payment amounts and terms, all other fees, and any security interest.
Provider and broker registration. Providers and brokers of sales-based financing must register with the Texas Office of Consumer Credit Commissioner (OCCC) by December 31, 2026, and renew annually.
Limits on auto-debit. The law restricts a provider’s ability to automatically debit your deposit account to collect unless it holds a perfected first-lien security interest in that account.
Real penalties. Violations carry civil penalties (reported at up to $10,000 per violation), enforced by the OCCC. Note there is no private right of action — you can’t directly sue under HB 700 — so your recourse runs through the regulator and through general Texas deceptive-practices law.

The practical takeaway: a legitimate Texas MCA provider should now hand you a clean, signed disclosure with the total dollars you’ll repay stated plainly. If a provider dodges that, walk away.

Exemptions matter too: banks, credit unions, their affiliates, and certain Farm Credit lenders are exempt, and there are carve-outs for larger commercial agreements. Most independent MCA funders you’ll encounter online are not exempt.

Is an MCA even a “loan” in Texas?

Legally, no — and that distinction is why the product exists. An MCA is structured as the purchase of a portion of your future sales (your receivables) at a discount, not as a loan with interest. Because it isn’t a loan, Texas usury limits on interest rates generally don’t apply, which is how providers can charge the equivalent of triple-digit annualized costs.

That’s not a loophole to fear so much as a reason to read carefully. You’re not protected by interest-rate caps here — you’re protected by the disclosure requirements under HB 700 and by your own diligence. (For a deeper comparison of these products against traditional financing, see our guide on MCA vs. bank loans.)

What an MCA actually costs in Texas

MCA pricing doesn’t use APR by default — it uses a factor rate. Here’s the mechanics:

Factor rate: typically 1.1 to 1.5. Borrow $50,000 at a 1.4 factor and you repay $70,000 — a $20,000 cost, regardless of how fast you pay it off.
Holdback: the provider collects a fixed percentage of daily or weekly deposits, often 8%–20%, until the full repayment amount is met.
Term: usually 3 to 18 months. Because most MCAs are fixed-cost, paying early doesn’t save you money the way it would on a bank loan.

A 1.4 factor over a few months can translate to an effective APR well into triple digits. That can still be the right call for a short, high-return need — buying inventory you’ll flip quickly, or grabbing a job that requires materials up front — but it’s a poor fit for long-term or low-margin uses. Run your own numbers with our factor rate guide and our breakdown of true MCA costs before committing.

Ready to see real numbers for your business instead of estimates? You can get matched with funding offers for free at /apply — no obligation, and you compare the disclosures side by side.

Qualifying as a Texas business

MCA underwriting leans on revenue, not credit, which is why it’s accessible to many Texas owners who’d be declined by a bank. Typical requirements:

Monthly revenue: roughly $10,000+ in gross deposits, verified by bank statements.
Time in business: 3–6 months minimum; 12+ months unlocks better terms.
Credit: many providers fund scores in the 500s. Stronger credit lowers your factor rate. See getting an MCA with bad credit and our full qualification checklist.
A Texas business bank account with steady deposit activity.

Texas’s biggest small-business sectors — construction, accommodation and food service (restaurants), health care, transportation and trucking, and energy-services firms — tend to have exactly the lumpy, seasonal, deposit-heavy cash flow that MCA underwriting is built around. With more than 3 million small businesses statewide according to SBA Office of Advocacy estimates (second only to California), Texas is one of the most active MCA markets in the country, which means more providers competing — and more reason to comparison-shop.

How to vet a Texas MCA provider

Because Texas doesn’t cap MCA pricing, vetting is on you. Specifically for Texas in 2026:

Demand the HB 700 disclosure. Get the signed written disclosure with the total repayment amount before you sign anything. This is now your legal right on deals under $1 million.
Check for OCCC registration. Providers and brokers should be registering with the Texas OCCC. Ask where they stand.
Read the auto-debit and security-interest terms. HB 700 limits automatic account debits without a first-lien security interest.
Scan for confession-of-judgment / out-of-state jurisdiction clauses. These are heavily restricted in some states; in commercial Texas deals they need a careful read. Don’t sign one blind.
Avoid stacking. Taking a second or third MCA on top of an existing one (“stacking”) is how Texas owners spiral. If a broker pushes a second advance to pay the first, that’s a warning sign.

Our provider-selection guide walks through the contract clauses to flag line by line.

Legit alternatives to consider first

An MCA shouldn’t be your default — it should be the tool you reach for when speed genuinely outweighs cost. Before signing, weigh:

SBA and bank loans — far cheaper if you can wait and qualify.
Business line of credit — revolving, lower cost, only pay for what you draw.
Invoice factoring — strong fit for trucking and construction firms in Texas that invoice on net-30/60 terms; you advance against receivables you’ve already earned.
Equipment financing — for trucks, kitchen build-outs, or job-site machinery, the equipment itself is the collateral, lowering your rate.

If your need isn’t truly urgent, one of these usually beats an MCA on total cost.

The bottom line for Texas owners

A merchant cash advance can put cash in your account in days, which is why so many Texas businesses use them to bridge real gaps. The 2025 arrival of HB 700 gives you something you didn’t reliably have before: a legal right to a clear, signed, written breakdown of what the deal will cost you — and a regulator, the OCCC, standing behind it. Use that. Make the provider show you the total repayment number, compare it against cheaper alternatives, and never stack advances to survive.

When you’re ready to compare real, disclosed offers from multiple funders without commitment, start your free funding match at /apply. MCA Guide is an independent matching service, not a lender, and there’s no cost to see what you qualify for.