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

What Is New York's Commercial Financing Disclosure Law?

New York has a commercial financing disclosure law. It requires many providers of business financing, including many merchant cash advance companies, to give you a standardized written disclosure before you sign. The purpose is straightforward: to let you compare offers on what they actually cost rather than on how they are marketed.

The disclosure covers the amount of funding provided, the total you will repay, the total dollar cost, how and how often payments are taken, and whether paying early changes what you owe. New York's disclosure also includes an estimated annual percentage rate (APR), which puts the cost of very different products on a common yearly scale.

Which Funding Types Are Covered?

The law applies to many kinds of commercial financing, including many merchant cash advances, but some transactions are exempt. The simplest way to find out whether your offer should come with the state disclosure is to ask the funder in writing. If the answer is unclear, the New York Attorney General's office, the state's financial regulator, or a business attorney can tell you what currently applies.

Merchant Advance Finder is a free matching service that connects business owners with vetted funding partners. It does not provide funding or make credit decisions, but it can help you gather more than one offer, and a disclosure is far more useful when you have a second one to set beside it.

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Why This Law Matters for Your Business

Before standardized disclosures, comparing a merchant cash advance with a term loan was close to impossible. One offer might quote a factor rate of 1.25 on $10,000, meaning $12,500 repaid. Another might quote a yearly interest rate. A third might quote only a daily payment. Each number could be accurate, and none of them could be compared directly with the others.

A standardized disclosure puts the same core figures on every covered offer, and that changes what you can see. Illustrative example: one offer costs $2,500 on $10,000 repaid over 12 months, and another costs $1,800 on $10,000 repaid over 6 months. The second offer costs less in dollars, but it has the higher estimated APR, because you pay it back in half the time with payments nearly twice as large. Seeing both facts at once lets you decide which schedule your cash flow can carry.

The disclosure also makes it harder for costs to hide. Because the core numbers are on the page before you sign, you are not relying on a sales call to learn what the deal will cost, and you have something concrete to check the contract against.

What Information Must Your Funding Offer Disclose?

Here is what to look for on a New York disclosure, and how to use each item.

Total Amount of Financing

This line shows the funding provided. If fees are taken out of the proceeds, the money that reaches your account can be lower than the headline figure in the offer, so ask how much you will actually receive and compare offers on that number. For a merchant cash advance, the funding is the purchase price the funder pays for a share of your future receivables.

Total Dollar Cost of Financing

The dollar cost is what you pay beyond the funding. Illustrative example: if you receive $10,000 and repay $12,500, the total dollar cost is $2,500. It is the most concrete number on the page, and on a fixed-payback deal it does not change with how fast you repay.

Estimated Annual Percentage Rate (APR)

The estimated APR expresses the cost as a yearly rate. For fast-repaying products such as merchant cash advances, it is usually much higher than the APR on a term loan, because a similar dollar cost is paid over a much shorter period. For sales-based products, the APR rests on assumptions about your future sales, so ask the funder what it assumed.

Repayment Amount and Schedule

You will see the total repayment and how and how often payments are taken: a fixed daily or weekly debit, a monthly payment, or a percentage of your sales. Frequency matters as much as size. Five daily debits a week can feel very different from one monthly payment, even when the totals are the same.

Paying Early

The disclosure also addresses whether paying early changes what you owe. On some factor-rate deals the full cost is due no matter when you pay; on others, an early payoff earns a discount. If you expect a cash influx, this line can decide which offer is cheaper.

Fees and Charges

Alongside the disclosure, ask for a written list of every fee, including origination, documentation, late, and returned-payment fees, and check that the funding amount reflects any fee taken from the proceeds. If a fee appears in the contract that you were never told about, ask about it before you sign.

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How the Disclosure Works in Practice

Here are two illustrative examples. The numbers are hypothetical and simplified to show how the pieces fit together; they are not quotes or typical rates.

Example one: a working capital loan. Say you are matched with a funding partner and offered a term product that works out like this:

• Funding provided: $50,000
• Total repayment: $58,000
• Total dollar cost: $8,000
• Payments: 52 weekly debits of about $1,115
• Estimated APR: roughly 30 percent

Notice that the APR is far above 16 percent, the figure you get by dividing $8,000 by $50,000. That is because you pay the balance down every week, so on average you have the use of only about half the money over the year.

Example two: a merchant cash advance. Now suppose the offer is structured as an advance instead:

• Funding provided: $20,000
• Total repayment: $25,000 (a 1.25 factor rate)
• Total dollar cost: $5,000
• Payments: $200 debited each business day, about 125 payments if sales hold steady
• Estimated APR: far higher than the loan's, because the money comes back in roughly six months

The advance costs fewer dollars than the loan, but more for each dollar received: $5,000 on $20,000 in about six months, compared with $8,000 on $50,000 over a year. That difference is exactly what the estimated APR captures, and it is why you should read the dollar cost and the APR together.

Practical Tips for Reading Your Disclosure

• Start with the total dollar cost. It is concrete, and for short-term funding it is often easier to weigh against what the money will earn you than the APR.
• Use the estimated APR to compare across products. A higher APR on a short deal can still mean fewer total dollars than a lower APR on a long one, so look at both numbers together.
• Check the payment schedule against your deposits. Daily or weekly debits should line up with how money actually comes into your account.
• Ask about the term. For fixed-term products, confirm the number of payments. For sales-based products, ask how the funder estimated the repayment period and what happens if sales slow.
• Look beyond the summary. Personal guarantees, liens, default terms, and any confession of judgment are in the contract. A confession of judgment can let a funder get a court judgment quickly if you default, and several states restrict them, so ask an attorney before signing an agreement that includes one.
• Ask questions in writing. If anything is unclear, such as how the APR was estimated or which fees are included, ask the funder to explain in writing and keep the answer.

Common Mistakes to Avoid

• Looking at only one number. The dollar cost and the APR tell different stories. A lower APR on a longer term can still cost more in total dollars.
• Assuming every document reads the same way. The core items are standardized, but layouts and contracts still differ. Read every line.
• Ignoring cash flow. A payment that looks affordable in an average month can hurt in a slow one, especially for a seasonal business.
• Rushing to sign. A funder that pushes you to sign today, before you have read the disclosure, is showing you a red flag.
• Not keeping copies. Save the disclosure, the signed agreement, and every message about the offer. If there is a dispute later, you will have a record of what you were shown.

What If a Funder Doesn't Comply?

If you did not receive a disclosure, or the deal you signed looks different from what you were shown, start by keeping copies of every document and message. Ask the funder in writing to explain the difference. You can report deceptive practices to the New York Attorney General's office or the FTC, and a business attorney can tell you what options you have.

The best protection comes earlier, though: do not sign until you have the disclosure in hand and every number on it makes sense to you.

Final Thoughts: Use Disclosures to Your Advantage

New York's disclosure law takes much of the guesswork out of comparing funding offers, but it cannot make the decision for you. Read the disclosure, compare at least two offers on dollar cost, estimated APR, and payment terms, and choose the one your cash flow can carry comfortably.

Before you apply, gather recent bank statements, your latest tax return, and basic business documents so offers arrive faster. Funders will look at your revenue, time in business, and credit, and approval is never assured. Remember that funding is a tool, not a fix for deeper financial problems. If you want real offers to compare, Merchant Advance Finder can match you with vetted funding partners for free, with no obligation.