New York Disclosure Laws: What Your Small Business Funding Offer Must Tell You

Why New York's Disclosure Laws Matter for Your Business

Running a small business in New York means juggling payroll, inventory, rent, and growth while keeping a close eye on cash flow. When you need funding, the last thing you want is a cost you did not see coming. New York's commercial financing disclosure law is designed to prevent that. It requires many providers of business financing to give you a standardized written disclosure before you sign, laying out the cost and terms of the offer in a consistent format.

The goal is transparency similar to what consumers get with personal loans. Instead of trying to decode a factor rate or a list of fees on your own, you see the core numbers presented the same way from one provider to the next, which makes it far easier to compare offers side by side and choose the one that fits your business. The details of the law can change, so for questions about a specific offer, check with the New York Attorney General's office, the state's financial regulator, or an attorney.

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What the Law Covers and Common Types of Funding

New York's law applies to many commercial financing products, including many merchant cash advances, though some transactions are exempt. Whether a particular deal comes with the standardized disclosure depends on its details, so if you are not sure, ask the provider directly, and if the answer is no, ask why.

Whichever product you are offered, it helps to know how it is typically priced and repaid:

• Merchant cash advances: a lump sum in exchange for a share of future sales or receivables, usually collected through daily or weekly debits.
• Term loans: a lump sum repaid in fixed installments.
• Business lines of credit: flexible borrowing up to a set limit, with interest on what you draw.
• Equipment financing: loans or leases for purchasing equipment, often secured by the equipment.
• Invoice factoring and receivables financing: selling or borrowing against unpaid invoices for immediate cash.

Whatever the product, you can ask for the key cost information in writing, and a provider that is confident in its offer should be willing to give it to you.

What the Disclosure Must Include

The heart of the law is the standardized disclosure itself. For a covered transaction, it addresses the items below. Here is what each one means for you.

Total Amount Financed

The disclosure shows the amount of funding provided. Pay close attention to whether any fees are deducted before the money reaches your account, because the amount you can actually use is what matters. If you are approved for $50,000 and a $2,000 origination fee is taken out, $48,000 reaches your account (illustrative).

Estimated Annual Percentage Rate (APR)

New York's disclosure also includes an estimated annual percentage rate. The APR expresses the cost of the financing as a yearly rate, which lets you compare products with very different structures on the same scale.

Because a merchant cash advance usually has no fixed payoff date, any APR for one is necessarily an estimate that depends on how long repayment is expected to take, so ask what repayment period the estimate assumes. A factor rate on its own ignores time entirely: a 1.2 factor on $10,000 means repaying $12,000, and the annualized cost of that deal depends heavily on how quickly the $12,000 is collected.

Total Repayment Amount

This is the grand total you will pay back, including all principal, interest or factor charges, and fees. If you receive $20,000 and will repay $24,000, the total repayment is $24,000. It can be an uncomfortable number to look at, but it is an honest one.

Total Dollar Cost

The total dollar cost shows, in dollars, what the financing costs you. As a check, subtract what actually reaches your account from the total repayment. It is the fastest way to compare two offers for the same amount of money.

Payment Method and Frequency

The disclosure addresses how payments are taken, such as automatic debits from your bank account or a share of card sales, and how often: daily, weekly, or monthly. For a merchant cash advance with daily debits, that payment is a number you will live with every business day, so compare it with your average daily deposits, not your best days. Also ask how long repayment is expected to take. For an advance, the term depends on your sales, so ask what estimate the funder used and what happens to the payment if sales slow.

Paying Early

The disclosure also addresses whether paying early changes the cost. With some products, paying early saves you money; with many merchant cash advances, the total repayment is fixed, so an early payoff saves nothing unless the agreement offers a discount. If early repayment matters to you, ask for the exact terms in writing.

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How the Costs Work: Illustrative Examples

These examples show how the numbers fit together. They are not real rates or offers, just illustrations. Daily payments assume about 21 business days per month.

Example 1: Term Loan

• Amount funded: $30,000, with no fees deducted
• Total repayment: $33,600 over 12 months
• Monthly payment: $2,800
• Total dollar cost: $3,600
• Estimated APR: roughly 21.5%

Put this next to a competing offer with a lower monthly payment but a longer term, and the total dollar cost and APR show you immediately which one costs more.

Example 2: Merchant Cash Advance

• Advance: $20,000 at a factor rate of 1.25
• Fee deducted up front: $1,000, so $19,000 reaches your account
• Total repayment: $25,000 ($20,000 x 1.25)
• Total dollar cost: $6,000 ($25,000 minus the $19,000 you received)
• Estimated repayment period: about six months of daily debits, roughly $198 per business day
• Estimated APR: roughly 115%

Notice how the up-front fee changes the picture. The factor rate suggests a 25% cost, but you pay $6,000 for $19,000 of usable money, and you pay it back in about half a year.

Example 3: Business Line of Credit

Picture a $50,000 line of credit at an illustrative 15% APR. If you drew the full amount and repaid it over 12 months, the monthly payment would be about $4,513 and the interest roughly $4,155. With a line, you generally pay interest only on what you draw, so a smaller draw costs proportionally less, but draw fees and maintenance fees can add to the total. Ask for both in writing.

What to Look for and What to Avoid

When you get your disclosure, take time to inspect it closely:

• Check the estimated APR, even on a merchant cash advance. An advance's APR often looks high next to a traditional loan, but it is the fairest way to compare products with different terms. A 40% APR advance costs more than a 20% APR term loan, although the advance may be easier to qualify for.
• Read the total repayment amount. If $10,000 costs $13,000 to repay, ask yourself whether the use of the money will earn you more than $3,000.
• Understand the repayment period. Short terms mean bigger daily or weekly payments. For a bakery with seasonal slumps, a six-month advance might be too aggressive; for a contractor with steady contracts, it might work fine.
• Ask about fees outside the summary. If a fee appears in the agreement, ask what it covers and how it affects the numbers on the disclosure.
• Ask questions before signing. If anything on the disclosure is unclear or does not match the agreement, do not sign until it is resolved.

Mistakes to Avoid with Your Disclosure

• Ignoring the APR on an advance. Some owners focus only on the factor rate because it is simpler, but the APR shows the true cost when the term is short. As an illustration, a 1.3 factor repaid through daily debits over about three months works out to an annualized cost of more than 200%.
• Not comparing multiple offers. A standardized disclosure makes side-by-side comparison easy. Get more than one offer and line up the total repayment and APR. The cheapest offer is not always the one with the lowest factor rate.
• Signing without checking the payment amount. Small differences add up. A $50 difference in a daily payment over about 126 business days, roughly six months, comes to $6,300.
• Assuming every APR estimate is built the same way. For an advance, the estimate depends on an assumed repayment period. Ask the provider how it arrived at the figure; if it cannot explain it, that is a red flag.
• Relying on verbal promises. If a representative says one thing and the documents say another, go by the documents, because they are what you sign.

Practical Tips for Using Your Disclosure Wisely

• Get your offer in writing. Request the disclosure and the full agreement before you sign anything. A reputable provider will give you both without hesitation.
• Know your cash flow. Use the payment schedule to test the offer against your average daily or weekly revenue, including slow periods.
• Ask about early repayment. If you expect to pay off early, get the exact payoff terms in writing, not just a verbal estimate.
• Read the rest of the agreement. Look for personal guarantees, default terms, and whether it includes a confession of judgment, which can let a funder get a judgment quickly if you default. Several states restrict them, so ask an attorney before signing an agreement that contains one.
• Keep a copy. Save the disclosure and the agreement. If questions come up later, you have the numbers you were shown.

How Apply for MCA Funding Helps

Apply for MCA Funding is a free matching service that connects New York business owners with vetted funding partners. We do not lend money or make credit decisions. When you fill out a short application, we match you with partners suited to your needs, and any offer you receive comes from them, so you can compare offers from more than one provider with the numbers in front of you.

A standardized disclosure turns a confusing offer into numbers you can understand, but only if you read it. Take the time to review each disclosure, compare your options, and ask questions. You are never obligated to accept an offer, and the right one will be clear before you sign. If you are unsure whether your deal is covered, the New York Attorney General's office or an attorney can help.