Merchant Cash Advances Are Still The Wild Wild West, Despite Regulatory Efforts.

Welcome to another thrilling installment of “Will the MCA Industry Finally Be Held Accountable?” Merchant Cash Advance Regulations Spoiler alert: It’s complicated. Over the past year, lawmakers, regulators, and judges have been tightening the noose around the merchant cash advance (MCA) world, and let’s just say—some funders are sweating. Between new state laws requiring actual (gasp) disclosure, federal regulatory action, and lawsuits exposing sky-high APRs disguised as “advances,” the MCA industry is starting to look a little less like the financial frontier and a little more like a regulatory punching bag.

For years, MCAs have operated in a delightful legal gray area. “It’s not a loan!” they insisted. “It’s a purchase of future receivables!” Translation: “We take your money at an alarming rate, but legally, we don’t have to call it interest.”

But state governments have finally caught on. Since 2023, a wave of states—including California, New York, Florida, and more—have passed laws forcing MCAs to provide real, standardized disclosures (cue dramatic music). That means no more hiding finance charges in the fine print. California’s SB 1235 and New York’s new rules now demand MCAs reveal the actual cost of their advances, complete with estimated APRs. Florida took it up a notch by adding $50,000 fines for shady practices—because apparently, just saying “Don’t deceive people” wasn’t enough.

Meanwhile, New Jersey is trying (again) to pass its own law, proving that transparency in business financing is about as welcome as pineapple on pizza in some circles. Federal regulators are also circling, with the Consumer Financial Protection Bureau (CFPB) deciding that MCAs are loans for reporting purposes. (Cue the sound of 1,000 MCA funders groaning in unison.)

The past year has seen some pretty brutal legal reckonings. The biggest? New York Attorney General Letitia James slapped Yellowstone Capital with a $1.175 billion judgment for disguising high-interest loans as MCAs. Apparently, debiting fixed daily payments from merchants’ accounts regardless of revenue is not how an “advance” is supposed to work. Who knew?

Then there’s the Mike Lindell vs. The MCA Industry Saga—a real-life soap opera. The MyPillow CEO found himself battling MCA funders over sky-high interest rates (allegedly 409% APR), leading to dueling lawsuits. One side claims he defaulted; he claims they tricked him into predatory deals. Regardless of where you stand, one thing is clear: When even high-profile business owners are getting caught in the MCA quicksand, something is very, very wrong.

If you thought lawsuits were bad, wait until you hear what federal regulators have been up to. The FTC permanently banned an MCA funder for threatening small businesses, including—no joke—actual physical violence. And in February 2025, a federal court upheld the CFPB’s ruling that MCAs count as credit under lending laws. That’s a big deal because it means MCA providers might soon have to follow the same fair lending rules as traditional lenders. (Somewhere in an MCA boardroom, a lawyer just fainted.) ) These new legal actions, combined with state laws mandating clearer disclosures, signal a major shift in how the MCA industry is regulated in 2024–2025.

So, what does this Merchant Cash Advance Regulations crackdown mean for small business owners? Hopefully, fewer predatory deals and more transparency. But that doesn’t mean funders won’t keep looking for new loopholes. The MCA industry is like a hydra—cut off one shady practice, and three more grow in its place.

While the MCA industry isn’t going anywhere anytime soon, the days of completely unchecked lending (oops, we mean “advancing”) are fading fast. Regulators and courts are catching on, and business owners are getting smarter.

That’s why we created “Breaking FREE from business debt: A Practical Guide To Financial Recovery and Growth” to help you break free from the unfair MCA practices.

👉 Download your FREE copy now and arm yourself with the knowledge to outsmart predatory funders before they outsmart you.