Is a merchant cash advance legal in my state?

No state on the list has banned merchant cash advances. The regulation that exists is about process, not prohibition.

What varies

Why nobody caps the price

Usury statutes are built with exemptions that a business advance walks through. New York's General Obligations Law § 5-521 bars a corporation from raising the usury defence at all, leaving only a criminal usury argument under Penal Law § 190.40. Size thresholds lift the cap on larger deals. And usury applies to loans — Louisiana settled the point by statute, providing that amounts charged in a revenue-based financing transaction are not interest and that the transaction is not one for the use, forbearance or detention of money.

Whether a particular advance in a particular state is a loan in substance is a fact-specific question that gets litigated. It is not one an article can answer about your contract.

The disclosure states do not all give you the same thing

Being in a covered state is the start of the question rather than the end of it, because the regimes differ on three axes.

So two businesses in two disclosure states, offered the same money by the same funder, can end up holding quite different pieces of paper.

A choice-of-law clause is not a safe assumption

Sales-based financing contracts routinely select another state's law and another state's courts. Whether that displaces a disclosure duty owed to a recipient located where you are is a different question from which law governs the contract, and it is not one to settle by reading the clause. Some of these statutes attach the duty to the provider's conduct toward a business in the state rather than to the contract's governing law.

What you can do without a lawyer is notice it. Read the governing law and venue clauses, and ask the funder in writing whether it considers your transaction covered by your state's commercial financing law and, if not, why not. The answer, or the absence of one, is worth more than the clause.

Ask for the same figures wherever you are

The disclosure states converged on roughly the same list. There is nothing stopping you asking for it in a state that requires none of it:

1. Total amount of financing.
2. Amount actually disbursed to your account after every deduction.
3. Total amount repayable.
4. Total dollar cost, and what it is measured against.
5. Payment amount, frequency, and the number of payments expected.
6. The revenue assumption behind that number, and what happens to the payment if revenue falls.
7. Whether prepayment reduces the total, and by how much.

A funder that provides all seven in writing has told you the price. One that provides four of them has told you something else.

Registration is not an endorsement

Several states put providers or brokers on a register — Utah, Virginia, Connecticut, Missouri and Texas among them, with California licensing finance lenders and brokers under the California Financing Law. Checking the register before you sign is worth the ten minutes, because an unregistered provider operating in a registration state is a fact worth knowing.

It tells you nothing about price. None of these states caps what a sales-based financing transaction may cost, and Texas's statute says in terms that the Finance Commission may not set a maximum. A registered, fully disclosing, entirely lawful transaction can still be the most expensive money you will ever take.

The question worth asking instead

Not "is this legal" but "what does it cost, over what period, and what happens if revenue falls".

Get in writing: the amount actually disbursed to your account, the total you repay, the expected duration and the sales assumption behind it, what happens to your payment if sales drop, and whether early payoff saves anything. On most advances it does not, and that changes what a short term is worth.

Then compare like with like. A factor rate has no time dimension. Illustrative only — a 1.35 factor on $50,000 is $17,500 of cost whether repaid in five months or eighteen, and those are not the same transaction.

If you are in a disclosure state, the sheet gives you some of this. If you are not, you have to ask, and a funder's willingness to answer in writing is itself information.

This is general information and not legal advice for your situation.