One Nation, One Rate: The Case for a Universal Disclosure Standard in Business Finance

If you are a business owner shopping for working capital, your legal right to understand what you are actually paying for depends almost entirely on which state your business operates in. Not your credit profile. Not the lender. Your zip code. That is the absurd — and consequential — truth at the core of today's merchant cash advance and alternative lending disclosure landscape.

Only two states have enacted legislation that truly demands an apples-to-apples comparison: California and New York. Every other state either requires partial disclosure with glaring loopholes, or no meaningful transparency at all. The product at the center of the debate — sales-based financing that is not technically a loan — has exploited this gap for years.

The argument is not that MCA and sales-based financing is predatory by nature. The argument is that opacity is predatory by design. Any financing product — regardless of structure, factor rate, or cost — should be disclosed in a common, universal language that every business owner can understand and compare. That language is effective APR.

A federal TILA-equivalent for commercial finance — a single national standard requiring every alternative lending product to disclose an effective annualized rate — would not cap rates. It would not eliminate MCA. It would not punish lenders for lending to high-risk borrowers. It would simply require every party to speak the same language. As a licensed business loan broker, Liberty Capital Group has advocated for this transparency precisely because it separates ethical operators from those who profit from confusion.

The reform we advocate is not regulatory overreach — it is regulatory consistency. Consumer mortgages, auto loans, and credit cards already operate under standardized federal disclosure law (TILA/Regulation Z). Business owners, who are typically sophisticated commercial actors, deserve the same baseline floor of information. The standard should be universal across all products, all states, all deal sizes. Then let the market compete on merit.

National disclosure is only half the equation. The other half is broker commission transparency — a topic the industry has consistently avoided but cannot afford to ignore if it wants to survive meaningful federal regulation.

The current reality: commissions on MCA deals are largely unregulated, undisclosed, and frequently inversely proportional to the borrower's ability to bear them. The higher the risk profile — the lower the credit, the more desperate the need — the higher the yield spread available for brokers to capture. This creates a structural incentive misalignment at the exact moment a vulnerable business owner most needs objective guidance.

The solution is a tiered, disclosed commission framework that mirrors the risk-reward structure of the deal itself — with full transparency to the borrower:

States with APR disclosure requirements show measurable differences in market behavior compared to those without. The data presents a mixed and instructive picture — one that challenges both the "disclosure fixes everything" and the "regulation destroys markets" arguments:

But here is where the story gets complicated — and important. In New York, the 2023 Commercial Finance Disclosure Law and subsequent enforcement did not just improve transparency. It also materially reduced the availability of funding for the highest-risk borrowers. Lenders withdrew products. Approval rates dropped. Business owners who previously had access to some capital were left with none.

This is the argument that regulators, consumer advocates, and mainstream financial media consistently miss: for the vast majority of MCA borrowers, the alternative to a 60–120% effective APR advance is not a 12% bank loan. It is nothing.

When a restaurant owner in Mississippi needs $80,000 to replace kitchen equipment after a fire and their bank says no, their local credit union says no, and the SBA approval timeline is 90 days, the MCA is not the problem. The MCA is the solution — the only solution available. Eliminating that solution through heavy-handed regulation does not protect the business owner. It eliminates their business.

The economic harm of over-regulation is not theoretical. It is playing out in real time in markets where lender exits have followed strict MCA disclosure mandates. When lenders stop lending in a category, the businesses that depended on that category do not become safer — they become unfunded. They wither. They close. The employees they would have hired go unhired. The communities they would have served remain underserved.

Commercial transactions are categorically different from consumer transactions. Business owners are — and should be treated as — sophisticated parties capable of evaluating risk, understanding trade-offs, and making decisions in their own interest. The appropriate regulatory framework for commercial lending is not consumer protection paternalism. It is transparency with access preserved.

Risk-based pricing is not exploitation — it is economics. A lender who deploys capital into a distressed, cash-flow-negative business with a 580 FICO, unresolved tax liens, and six months of irregular bank statements is taking on real, measurable risk. The rate reflects that risk. If the rate is capped to a level that does not justify the risk, the lender does not lower their rates — they exit the market. The business owner loses, and so does the economy.

The goal is not a regulated industry that looks like a traditional bank. The goal is an industry where every actor — lender, broker, and borrower — operates with full information and equal standing. Here is what that looks like in practice:

This framework protects business owners without punishing the lenders and brokers who serve markets that traditional finance abandoned decades ago. It creates a level playing field where price competition replaces opacity as the primary differentiator. It allows a truly informed borrower to decide for themselves whether the cost of capital is worth the opportunity it unlocks — as it should be.

The experienced business loan brokers who will thrive in a transparent market are the ones operating ethically today. Disclosure reform does not threaten the legitimate alternative lending industry. It makes the case for it — permanently.

Every other major financial transaction that a business owner is likely to encounter in their life — buying commercial real estate, securing a mortgage, placing a securities trade — requires the person on the other side of the table to hold a license, submit to a background check, register with a regulatory body, and display their credentials in every advertisement. Business lending and MCA brokering requires none of the above. That is not a gap. That is a systemic failure with real victims.

Today, any individual — regardless of criminal history, prior fraud convictions, financial sanctions, or complete absence of lending knowledge — can call themselves a "business funding advisor," a "capital consultant," or an "ISO partner" and legally approach your business with a financing offer. They can collect your bank statements, your tax returns, your EIN, and your personal financial history, and then shop that information to dozens of lenders simultaneously — or sell it outright as a lead. There is no national registry. There is no background requirement. There is no brokerage they must belong to. There is nothing standing between a bad actor and your business's most sensitive financial data except your own instincts.

The real estate parallel is not just instructive — it is the model. A real estate agent in California cannot run an ad on Zillow, Google, or anywhere else without displaying their license number and the name of their supervising brokerage. This single requirement eliminates the anonymous, unaccountable lead-generating middleman from the legitimate market. Apply the same standard to commercial lending, and you solve multiple crises simultaneously.

Extending NMLS — the Nationwide Multistate Licensing System already used to regulate mortgage loan originators — to cover all commercial lending brokers and ISOs is not a novel regulatory invention. The infrastructure already exists. The political will is the missing ingredient. Here is the four-step path: