HB 700 vs SB 1235 compares two of the most important MCA Loan Disclosure Laws shaping how Merchant Cash Advance providers must operate in Texas and California. Merchant Cash Advances (MCAs) have become a popular but risky way for small businesses to access fast capital. To combat hidden costs and confusing repayment terms, states are introducing laws that force lenders to disclose clearer, standardized information.
Both HB 700 in Texas and SB 1235 in California share a common purpose: bringing transparency to MCA contracts. Still, they differ in how disclosures are structured and the level of protection they provide to small business owners.
What Is Texas HB 700?
Texas HB 700 is one of the newest MCA Loan Disclosure Laws. It requires MCA providers and certain commercial finance companies to present clear, written details of financing before a business owner signs.
This includes:
-
Total repayment amounts
-
Breakdown of fees and costs
-
Specific payment terms
By putting numbers on the table upfront, HB 700 helps Texas business owners avoid surprises and make better financing decisions.
What Is California SB 1235?
California SB 1235 set the precedent for MCA Loan Disclosure Laws across the country. Enacted in 2018 and fully implemented in 2022, it requires MCA companies, factoring firms, and online lenders to provide standardized, consumer-style disclosures.
Borrowers in California now see:
-
APR-style cost comparisons
-
Total repayment obligations
-
Payment frequency and method
This ensures small businesses receive the same kind of clarity that consumers expect with credit cards or mortgages.
HB 700 vs SB 1235 — MCA Loan Disclosure Laws — Key Differences
| Feature | HB 700 (Texas) | SB 1235 (California) |
|---|---|---|
|
Year Passed |
2023 |
2018 (regulations in 2022) |
|
Scope |
MCA providers + certain commercial financers |
MCA providers, factoring companies, online lenders |
|
Disclosure Focus |
Repayment amounts, fees, payment terms |
Repayment amounts, fees, payment terms |
|
Borrower Protection |
Plain-language summaries |
Standardized consumer-style disclosures |
|
Impact |
Brings Texas in line with MCA Loan Disclosure Laws |
Pioneering model for nationwide regulation |
Why MCA Loan Disclosure Laws Matter
For years, MCA contracts have left small businesses trapped in daily ACH withdrawals, stacked loans, and crushing debt. MCA Loan Disclosure Laws like HB 700 and SB 1235 aim to change this by requiring transparency and plain-language disclosures.
These laws don’t eliminate the risks of MCA financing, but they give business owners stronger tools to evaluate offers and protect cash flow.
The Bigger Picture
With Texas and California leading the way, other states are moving toward their own MCA Loan Disclosure Laws. This growing trend signals a nationwide shift toward accountability and fairness in the commercial lending industry.
For any business currently carrying MCA debt—or considering new financing—understanding these laws is essential to making informed, long-term financial decisions.
Bottom Line:
-
HB 700 (Texas) provides plain-language details of repayment, fees, and terms.
-
SB 1235 (California) pioneered standardized, APR-style disclosures.
-
Both highlight the critical role of MCA Loan Disclosure Laws in protecting small business owners.
Debt Consultants Group Insight
At Debt Consultants Group, we track borrower protection laws like California SB 1235 and Texas HB 700 so you don’t have to. If you’re overwhelmed by stacked MCA loans, these laws may provide leverage points to reduce, consolidate, or challenge what you owe.
MCA Loan Disclosure Laws —Frequently Asked Questions (FAQs)
MCA Loan Disclosure Laws are state-level regulations that require Merchant Cash Advance providers and other commercial lenders to clearly disclose the true cost of financing. These laws aim to protect small businesses from hidden fees, confusing repayment terms, and predatory lending practices.
Texas HB 700 forces MCA providers to provide plain-language disclosures, including repayment amounts, fees, and terms. This allows business owners to better understand the total cost of financing before signing a contract.
California SB 1235 goes further by requiring APR-style disclosures, giving borrowers a way to compare MCA financing costs to other types of credit, such as credit cards or bank loans.
Without disclosure laws, many MCA contracts are confusing and filled with hidden fees. These laws increase transparency, helping business owners make more informed decisions and avoid predatory agreements.
No. MCAs can still carry high costs and daily repayment obligations that strain cash flow. However, disclosure laws provide clearer information so borrowers can spot red flags and weigh alternatives.
Yes. While Texas and California are leading the way, other states like New York and Virginia have introduced similar laws. The trend is spreading as regulators push for greater accountability in small business financing.
If you’re struggling with multiple MCA contracts, disclosure laws may not retroactively change your agreements. However, you can explore debt relief options, negotiate settlements, or consult with professionals who specialize in MCA debt resolution.
Related Posts
Utah SB 183 — The MCA Loan Disclosure Law Protecting Small Business Owners
Utah SB 183 is the state’s answer to the rising demand for MCA Loan Disclosure Laws. These rules are designed
Virginia HB 1027 — The MCA Loan Disclosure Law Every Small Business Should Know
HB 1027 is Virginia’s step toward stronger MCA Loan Disclosure Laws, designed to protect small businesses from the hidden costs