Revenue based financing for California businesses
Merchant cash advance in California
California requires commercial financing providers, including merchant cash advance funders, to give you standardized disclosures with an estimated APR before you sign. Learn what to look for, and check which programs fit your California business.
How merchant cash advances work in California
A merchant cash advance works the same way in California as anywhere else: a funder buys a share of your future sales for a lump sum today. What changes by state is what the funder must tell you before you sign.
You receive funding up front and repay a fixed total amount through daily or weekly debits, or a percentage of card sales. Because an MCA is usually structured as a purchase of receivables rather than a loan, it is priced with a factor rate instead of an interest rate. See how factor rates and total cost work.
California is one of a growing number of states with its own commercial financing law. Knowing what that law requires helps you read an offer, spot missing information, and compare funders on equal terms.
California rules for merchant cash advances
| Rule | What it means for you |
|---|---|
| Law | California Financial Code sections 22800 to 22805 (SB 1235, 2018), with Department of Financial Protection and Innovation regulations |
| Who it covers | Providers of commercial financing, including sales-based financing such as merchant cash advances |
| Amount covered | Specific offers of $500,000 or less |
| When you get it | With a specific offer, before the deal is finalized |
| Effective | DFPI regulations took effect December 9, 2022; SB 33 removed the sunset on the annualized-rate requirement |
| Regulator | California Department of Financial Protection and Innovation (DFPI) |
Summary for general information; see the DFPI and statute sources below for exact requirements and exemptions.
What your offer must show you
California disclosures cover:
- The total amount of funds provided
- The total dollar cost of the financing
- The term or estimated term
- The method, frequency, and amount of payments
- A description of prepayment policies
- The estimated annual percentage rate (APR)
How to use the disclosure to compare offers
With an estimated APR and total dollar cost on every in-scope offer, California business owners can compare an MCA against a term loan, a line of credit, or another advance. Focus on the amount you will actually receive, the total you will repay, the payment schedule, and whether paying early saves you anything.
| Disclosure line | Hypothetical offer |
|---|---|
| Funding amount (total financing) | $50,000 |
| Fee withheld at funding | $1,500 |
| Amount actually deposited (disbursement) | $48,500 |
| Total repayment (1.30 factor) | $65,000 |
| Payments | About $344 per business day for about 9 months |
| Total dollar cost | Shown on the disclosure; in this example $15,000 more than the funding amount, plus the $1,500 fee withheld |
| Estimated APR | About 82% at this pace |
Hypothetical example for illustration only, not an offer. Without the $1,500 fee, the estimated APR at the same pace would be about 73%.
Check that the amount deposited matches what you expect, and compare APRs only between offers with similar terms. Try the MCA calculator.
Typical MCA requirements for California businesses
State law sets disclosure rules, not approval rules. Funders weigh the same factors everywhere.
- Time in business: often 6+ months; some programs review from 3 to 4 months
- Monthly deposits: often $10,000+ in true business revenue
- Bank activity: regular deposits and few or no negative days or returned items
- Existing advances: disclosed, and not already taking a large share of deposits
- Credit: mid-600 profiles commonly considered; some files below 600 reviewed
Typical ranges, not promises; each funder sets its own minimums. See the full MCA requirements checklist and the document checklist.
Related guides and tools
Frequently asked questions
Q01Do merchant cash advances have to show an APR in California?
Yes, for offers within the law's scope. DFPI regulations implementing SB 1235 require commercial financing disclosures, including for sales-based financing, to show an estimated APR along with the total dollar cost, term, payment details, and prepayment policies.
Q02What size of financing does California's disclosure law cover?
Specific commercial financing offers of $500,000 or less, subject to the exemptions in the law and regulations.
Q03Who regulates merchant cash advances in California?
The California Department of Financial Protection and Innovation (DFPI) administers the commercial financing disclosure rules.
Q04Is an MCA a loan in California?
Merchant cash advances are usually structured as purchases of future receivables rather than loans, which affects which lending laws apply. The disclosure rules still apply to in-scope offers.
Q05What do I need to get a merchant cash advance in California?
Usually several months in business, steady monthly deposits, recent business bank statements, a photo ID, and a voided business check. Requirements vary by funder.
Q06Is SmallByzLoans a lender?
No. SmallByzLoans is a funding marketplace. We match you with funding providers, and the provider makes the decision and provides the required disclosures.
Sources and further reading
- California Financing Law: Commercial Financing Disclosures, California Department of Financial Protection and Innovation
- California Financial Code ยง 22802, California Legislative Information
- Business guidance for small businesses, Federal Trade Commission
Financial disclaimer: This page is general information about California law as of October 2026, not legal, financial, or tax advice. Laws and regulations change; confirm current requirements with the regulator or an attorney. SmallByzLoans is a funding marketplace, not a lender. Approval, amounts, and terms are set by each funding provider.
Compare MCA offers for your California business
Start with the 60-second form. A specialist shows the amount you would receive, the total repayment, and the payment schedule in writing before you decide.