Last updated September 2026. This describes state law as we understand it today. It is general information, not legal advice. Rules change and they differ by state, so check your own situation with your own attorney.
Picture an owner with two offers on his desk and a simple question. Which one is cheaper.
Often he cannot tell, and neither can his bookkeeper. One offer led with a rate, the other led with a payment, and the two pieces of paper did not have a single field in common. That is not unusual. For most of this industry's history, comparing two funding offers meant comparing two documents written to be compared with nothing.
Texas has started fixing that, and the dates are worth knowing whether or not you are in Texas.
What the law actually does
Texas House Bill 700 added Chapter 398 to the state Finance Code. It covers sales-based financing, which is the legal term for funding repaid as a share of revenue or through a fixed payment with reconciliation.
Two dates matter.
September 1, 2025. The disclosure requirements and the restrictions on automatic debits took effect.
December 31, 2026. Providers and brokers who are not exempt have to be registered through NMLS, with renewal each year by January 31. Notably, that registration requirement applies regardless of how big the transaction is, and there is no exemption for small operators.
What has to be on the paper
For transactions under $1 million, before the agreement is finalised, a provider in Texas has to disclose:
| Field | What it answers |
|---|---|
| Total amount and the amount actually disbursed | What lands in your account, after anything taken off the top |
| Finance charge and total repayment amount | The number that matters. What you pay back in total |
| Estimated repayment period | How long you are carrying it |
| Payment amounts, fixed or variable | What leaves the account, and how often |
| Every additional fee | Draw fees, late fees, returned payment fees |
| Prepayment and refinancing terms | What it costs you to pay early or to renew |
| Collateral and security interests | What is pledged, and what gets filed publicly |
| Broker compensation | What anyone between you and the money is being paid |
There is one more piece that is easy to skim past. Automatic debits are prohibited unless the provider holds a perfected first-lien security interest in the deposit account being debited. That is a real constraint on how these products are collected, not a paperwork change.
And Texas removed sales-based financing from the account purchase transaction category for usury purposes, which is a quieter change with a long tail.
Texas is not alone, and the states do not agree
About a dozen states now require disclosures at the point of offer. California, New York, Virginia, Utah, Georgia, Connecticut, Florida, Kansas, Missouri, Texas and Louisiana all have something on the books, with more pending.
They do not ask for the same things. California and New York require an annualised rate figure. Texas, Florida and Georgia do not. Some cap the transaction size the rules apply to, some do not. Several require anyone brokering these deals to register or be licensed, with bonds attached.
So the honest summary for a business owner is this. Where you are incorporated changes what you are entitled to see, and none of it applies until someone puts a real offer in front of you. Advertising is not covered. The paperwork is.
Five lines to read on any offer, in any state
We are a funder. We make money when a business takes funding from us, so read this list knowing that. It is also the list we would want our own family reading before signing anything, which is why it is here.
1. The total repayment, not the rate. A factor rate of 1.3 means you pay back $130,000 on $100,000. Not 30% a year. $30,000, over whatever the term turns out to be. If the offer leads with a rate and hides the total, do the multiplication yourself.
2. The daily payment, against a normal week. A fixed amount comes out each business day. Take that number, multiply by the business days in a month, and put it next to your slowest month of deposits from last year. Not your average month. Your slowest.
3. Every fee that is not the funding. Origination or draw fees come off the top, so the amount you receive is smaller than the amount you are repaying against. Late fees and returned payment fees tell you what a bad week costs.
4. What early repayment does. In some structures, paying early saves you real money. In others it saves you nothing at all because the total is fixed on day one. These are completely different products and the offer will rarely tell you which one you are looking at. Ask directly.
5. The UCC filing, and the name on the agreement. A UCC is a public notice that someone has advanced against your receivables. It will be there, it is normal, and you can look it up yourself at your Secretary of State. While you are reading, check the name of the counterparty on the agreement. That is who you are actually contracting with, and it is worth knowing before you sign rather than after.
What I would tell an owner comparing offers this week
The hardest truth. If nobody will give you the total repayment number in writing, you do not have an offer. You have a pitch. Ask once, plainly, and watch what happens. That single question tells you more about who you are dealing with than anything on the website.
The strategic play. Put both offers on one page with the same four fields: amount received, total repayment, payment amount, and term. Most of the time the cheaper offer becomes obvious in about ninety seconds once the fields line up. That is the entire idea behind the disclosure laws, and you can do it yourself today without waiting for your state to catch up.
And the reassurance. Rules like this are good for businesses that were already showing the numbers. We show the funding amount, the term, the payment schedule, the total cost, and the name of the person handling your file before anything is signed. That did not change on September 1, 2025, and it will not change on December 31, 2026.
The bottom line
Texas is making the paperwork answer the question a business owner has always had to guess at. Other states already do, in their own way, and more are coming.
You do not have to wait for the law to reach you. Ask for the total repayment, the payment, and the term, in writing, on every offer you are looking at. Any funder worth working with will send it back the same day.
If you want a second set of eyes on what is in front of you, send it over. A person reads every file here, and we will tell you plainly what we would do.
Sources
- Texas Office of Consumer Credit Commissioner, commercial sales-based financing
- Mayer Brown, Texas commercial financing disclosure and registration law, June 2025
- Holland & Knight, Texas governor signs commercial sales-based financing legislation
- Venable, state commercial financing disclosure laws, recent developments, March 2026