Merchant Cash Advance in Texas: 2026 Guide to HB 700, Costs & Lenders

Quick Answer: Texas House Bill 700 (effective September 1, 2025) requires merchant cash advance providers to disclose the total dollar cost, finance charge, repayment structure, and all fees in a written disclosure you must sign before financing is finalized — and bans confessions of judgment in these contracts. Unlike California and New York, HB 700 does not require providers to state an APR, so you should calculate it yourself. Providers and brokers must register with the Texas OCCC by December 31, 2026; each violation carries a $10,000 civil penalty. Texas does not cap MCA rates. With 3.5 million small businesses and a $2.7 trillion economy, Texas is one of the largest MCA markets in the country. Request the written HB 700 disclosure before you sign anything, and use the MCA calculator to convert the factor rate into an APR and verify the numbers.

---

Texas HB 700: What Changed on September 1, 2025

Texas was one of the last major commercial lending states without statutory MCA disclosure requirements. That changed on June 20, 2025, when Governor Greg Abbott signed House Bill 700, which took effect September 1, 2025.

HB 700 covers any commercial sales-based financing of $1 million or less offered to a Texas business — regardless of where the provider is incorporated or headquartered. A New York-based MCA company funding a Dallas restaurant is subject to Texas law the same as a Houston-based lender.

The Seven Required Disclosures

Before any MCA agreement under $1 million is finalized, the provider must deliver a written document — and obtain the business owner’s signature on it — disclosing:

Required Disclosure	What It Means in Practice
Total funds provided	The advance amount in plain dollars
Disbursement amount	What you actually receive after fees deducted at origination
Total repayment amount	The full amount you owe before early payoff
Payment structure	Daily/weekly; ACH or holdback; frequency and estimated dollar amounts
Finance charge and all fees	The finance charge plus every other fee — origination, maintenance, broker — in dollar terms
Collateral/security interest	Any UCC lien, blanket lien, or personal guarantee required
Broker compensation	The amount the provider pays a broker, disclosed if a broker is involved

Note what is not on this list: an APR. Unlike California’s SB 1235 and New York’s commercial financing law, Texas HB 700 does not require the provider to state an annual percentage rate. You get the dollar figures; converting them into an APR you can compare across offers is on you (the MCA calculator does this).

Critically, this disclosure must be delivered in writing and signed before financing is finalized. A sales call where a representative reads you numbers does not satisfy HB 700. If a provider cannot produce a written, signable disclosure, either they are not yet registered with the OCCC or they are operating in violation of Texas law.

COJ Ban Codified in Statute

Texas common law had long been hostile to cognovit notes (confessions of judgment), but HB 700 codifies the ban explicitly in the Texas Finance Code. A confession of judgment is a contract clause that allows a creditor to obtain a court judgment against a borrower without filing a lawsuit — bypassing your right to contest the debt in court.

Under HB 700, any commercial sales-based financing contract that contains a confession-of-judgment provision — or any similar provision — is void and unenforceable. If you see a COJ clause in an MCA contract offered to your Texas business, that clause is legally null — and its presence signals the provider is either uninformed of Texas law or operating deceptively.

Automatic Debit Restrictions

HB 700 imposes one of the strictest auto-debit rules in the country. A provider is prohibited from automatically debiting a Texas business’s deposit account unless it holds a perfected security interest in that account with first priority — and the law largely bars a business from even choosing to authorize automatic debits otherwise. This targets practices like “double debiting,” where a provider keeps withdrawing funds after repayment is complete or debits the same account twice for one payment period. It is a meaningful operational change: many MCA providers built their entire collection model on daily ACH debits, and HB 700 forces them to restructure how they take payment from Texas businesses.

OCCC Registration and Enforcement

All MCA providers and brokers operating in Texas must register with the Texas Office of Consumer Credit Commissioner (OCCC) by December 31, 2026, and renew that registration annually. A person may not act as a provider or broker for compensation in Texas without registering first.

Each violation of HB 700 carries a civil penalty of $10,000, enforced by the OCCC. Because the penalty is assessed per violation, a provider that omits the required disclosure across many deals — or inserts a banned confession-of-judgment clause into its standard contract — faces compounding exposure. If a provider skips the written disclosure, includes an illegal COJ clause, or debits your account without the required security interest, you can file a complaint with the OCCC at occc.texas.gov.

---

Texas’s Small Business Market

Texas has 3.5 million small businesses — 99.7% of all businesses in the state — employing approximately 4.9 million Texans (44.9% of total private-sector employment). Texas’s GDP reached $2.7 trillion in 2024, making it the second-largest state economy in the U.S. by output.

For context: roughly 1,232 new businesses are formed in Texas every day. That scale creates persistent demand for fast working capital that traditional banks — with their 2–4 week approval windows — often cannot serve.

Industries with the highest MCA demand in Texas:

Construction — Texas has roughly 400,000+ construction firms, among the largest small-business categories in the state. Contractors routinely face a gap between paying for materials and labor upfront and receiving owner payments 30–60 days later. MCAs bridge that gap without requiring real estate collateral. Typical advance range: $50,000–$250,000.

Restaurants and food service — Texas has more than 50,000 restaurants. The Hill Country BBQ circuit, Gulf Coast seafood shacks, and Tex-Mex chains in San Antonio and Houston all operate on thin margins with high card volume — exactly the profile that MCAs are built for. Seasonal hiring, equipment breakdowns, and lease renewals are the most common trigger events. Typical advance range: $20,000–$150,000.

Oil-and-gas services — Suppliers and field-service companies in the Permian Basin, Eagle Ford, and Haynesville Shale receive invoices that pay on 45–90 day cycles. MCAs provide working capital while waiting on payment from E&P operators. Typical advance range: $50,000–$300,000.

Professional and technical services — Texas has roughly 400,000 professional-services firms. Consulting, staffing, IT services, and engineering firms that bill on net-30 or net-60 terms use MCAs to cover payroll gaps between billing cycles. Typical advance range: $30,000–$150,000.

Retail — Texas retail (especially in Dallas-Fort Worth, Houston, and Austin metros) uses MCAs for pre-holiday inventory builds and bridging post-holiday slow periods. Typical advance range: $15,000–$100,000.

---

What an MCA Costs a Texas Business: Real Numbers

Under HB 700, your provider must disclose the total dollar cost and finance charge before you sign — but not an APR. The table below estimates the APR yourself so you can compare offers; verify it against your own disclosure using the calculator.

Advance Amount	Factor Rate	Total Repayment	Your Fee	Est. APR (6-month term)
$25,000	1.20	$30,000	$5,000	~40%
$25,000	1.35	$33,750	$8,750	~70%
$50,000	1.25	$62,500	$12,500	~50%
$50,000	1.40	$70,000	$20,000	~80%
$75,000	1.30	$97,500	$22,500	~60%
$100,000	1.30	$130,000	$30,000	~60%
$100,000	1.45	$145,000	$45,000	~90%
$150,000	1.35	$202,500	$52,500	~70%

APR estimates assume a 6-month repayment term. Actual APR depends on your daily revenue and holdback percentage. Because HB 700 does not require providers to state an APR, calculate it yourself from the disclosed dollar figures — the MCA calculator does this in seconds.

Factor rates for Texas businesses typically range from 1.15 to 1.50. Established businesses (2+ years, $25K+/month revenue, 620+ personal FICO) typically see offers starting at 1.15–1.25. Newer businesses or those with credit challenges should expect 1.35–1.50.

Use the MCA calculator to model your specific advance and factor rate before comparing offers.

---

MCA Providers That Fund Texas Businesses

All 24 providers in our directory fund Texas businesses. These are the ones with characteristics most relevant to TX borrowers:

Provider	Min FICO	Min Monthly Revenue	Factor Rate Range	Best For
Kapitus	625+	~$20,800/mo	1.10–1.50	Large advances, established TX businesses
Credibly	500	$15,000/mo	1.11–1.45	Credit-challenged TX borrowers; lower minimum
Fora Financial	500	$12,000/mo	1.18–1.48	Bad credit, fast funding under $500K
OnDeck	625	~$10,000/mo	1.10–1.50	Established TX businesses, fast same-day funding
Libertas Funding	600	$75,000/mo	1.10–1.35	High-revenue TX businesses (oil/gas services, contractors)
Forward Financing	500	$10,000/mo	~1.20–1.45	Smaller advances, newer TX businesses
Greenbox Capital	500	$10,000/mo	industry-standard	Construction, hospitality, seasonal businesses
Lendio	550+	$10,000/mo	varies	Comparing multiple HB 700-compliant offers at once

On Libertas Funding: Particularly relevant for Texas construction and oil-and-gas service businesses with high monthly revenue ($75K+ minimum). Their lower factor-rate range (1.10–1.35) and B2B-friendly underwriting make them worth applying to first if your monthly deposits clear $75K.

On using a marketplace: Lendio connects Texas borrowers to multiple lenders through one application — useful if you want to compare HB 700-compliant offers side by side without applying to each provider separately.

Before signing with anyone: Confirm the provider (and any broker) is registered with the Texas OCCC and can hand you a written, signable HB 700 disclosure. A provider that can’t or won’t is either not yet compliant or operating outside Texas law — either way, a reason to walk.

---

Five Things to Check Before Signing an MCA in Texas

Texas law gives you pre-signing protections under HB 700. Use them.

1. Request the written, signable HB 700 disclosure. You are legally entitled to a written disclosure — one you sign — stating total cost, finance charge, estimated payments, payment frequency, and all fees before financing is finalized. If a provider skips this step or refuses to provide it in writing, they are violating Texas law. File a complaint with the Texas OCCC at occc.texas.gov.

2. Calculate the APR yourself — Texas won’t make the provider state it. A 1.30 factor rate looks modest, but at a 6-month repayment pace that’s roughly 60% APR. HB 700 gives you the dollar cost but not an APR, so convert it with the MCA calculator. If the APR exceeds 100%, compare other options — a business line of credit, invoice factoring, or SBA Express loan — before signing.

3. Confirm there is a genuine reconciliation provision. A legitimate MCA should allow you to request a holdback reduction if monthly revenue drops significantly (typically 20–30%). This is what distinguishes a true revenue-based advance from a disguised fixed-payment loan. If the contract has no reconciliation clause, that is a significant warning sign.

4. Check for illegal COJ clauses. Any confession-of-judgment provision in a Texas MCA contract is void under HB 700 — but its presence tells you something about the provider’s posture. A legitimate operator writing Texas-compliant agreements will not include one.

5. Model your daily cash flow before agreeing. If daily card and bank deposits average $5,000 and holdback is 15%, you’re committing $750/day to repayment. Can you cover rent, payroll, materials, and operations on the remaining $4,250? Do this math before you sign. The MCA calculator can help model the scenario.

---

When an MCA Makes Sense for a Texas Business

An MCA is worth considering when:

• You need capital in 24–72 hours and cannot wait for bank (2–4 weeks) or SBA (30–90 days) approval
• A traditional loan is inaccessible due to credit score, collateral, or time-in-business requirements
• The use of funds generates returns exceeding the MCA fee — a restaurant replacing a failed walk-in cooler, a contractor bridging to a $200K owner payment, an oil-field services firm covering a supply order
• Your daily card or ACH deposit volume is consistent enough that the holdback won’t stall daily operations

An MCA is likely the wrong choice when:

• You’re funding ongoing operating losses — MCAs accelerate cash flow problems, not solve them
• You already have an open MCA — stacking two holdbacks often pushes daily deductions above 25–35% of gross revenue, which is operationally unsustainable for most businesses
• A cheaper alternative is accessible — Texas businesses with 12+ months of history and $10K+/month revenue frequently qualify for a business line of credit at significantly lower APR; see MCA alternatives, MCA vs. SBA loans, and the full alternatives comparison

For a full cost-benefit framework: Is a Merchant Cash Advance Worth It?

---

Texas City-Specific MCA Guides

Texas’s four largest metros each have distinct economies, industries, and local funding alternatives. The city guides below cover what is specific to each market — factor-rate ranges by local industry, real cost scenarios, and local SBDC and CDFI alternatives:

• Merchant Cash Advance in Austin — Silicon Hills tech startups, live music and event economy (SXSW, ACL, COTA), construction boom, Dell Medical School healthcare ecosystem
• Merchant Cash Advance in Dallas — Telecom Corridor, Deep Ellum restaurants, DFW construction, UT Southwestern healthcare
• Merchant Cash Advance in Houston — Energy sector, Port of Houston logistics, restaurant and hospitality, Texas Medical Center
• Merchant Cash Advance in San Antonio — Military economy, River Walk hospitality, healthcare (Methodist + University Health), manufacturing

---

Sources: Texas HB 700 — signed June 20, 2025, effective September 1, 2025 (amends Title 5, Texas Finance Code); Texas Legislature bill analysis (capitol.texas.gov). Required disclosures, no-APR provision, and broker-compensation requirement — Holland & Knight and Mayer Brown client alerts, June 2025. OCCC registration deadline (Dec 31, 2026), annual renewal, and $10,000 per-violation civil penalty — Texas OCCC commercial sales-based financing rulemaking; Consumer Financial Services Law Monitor, June 2025. COJ prohibition (void and unenforceable) and first-priority-security-interest auto-debit rule — Holland & Knight; Herrin Law (Texas common-law background). Texas small business statistics — U.S. SBA Office of Advocacy; Texas Comptroller. Provider data — individual provider disclosures, verified June 2026. To verify a provider’s OCCC registration or file a complaint: occc.texas.gov.

This guide is general information, not legal advice. Consult a Texas attorney before signing any commercial financing agreement.