Texas has long been one of the largest markets for merchant cash advances and revenue-based funding in the country, and until recently it was also one of the least regulated. That changed with House Bill 700, a law aimed specifically at sales-based financing, the legal category that includes merchant cash advances. If you own a business in Texas and you're comparing funding offers, HB 700 changes what providers must show you before you sign. This guide explains what the law requires, who it covers, and how to use it to your advantage.
What HB 700 Is
HB 700 was passed by the Texas legislature in 2025 and took effect in September of that year. Unlike the broad commercial financing disclosure laws in states like California and New York, which cover many product types, the Texas law is narrowly focused on sales-based financing: funding that is repaid as a percentage of a business's sales or revenue. That makes it one of a small group of state laws, alongside Connecticut and Virginia, written specifically around how merchant cash advances actually work. The disclosure requirements apply to sales-based financing offers of $1,000,000 or less; larger transactions fall outside the statute.
The Disclosure Requirements
Under HB 700, a provider must deliver a written disclosure to the business before the financing is completed. The disclosure must include the total amount financed, the disbursement amount, the finance charge, the total repayment amount, the estimated repayment period, all potential fees including prepayment and refinancing charges, any collateral requirements, and — where a broker is involved — the broker's compensation. In plain language: before you sign, you are entitled to see how much you're getting, how much it costs, how much you'll pay back in total, and how the payments work. For a product priced with a factor rate rather than an interest rate, having these numbers in writing makes comparing two offers dramatically easier.
Registration With the OCCC
HB 700 is administered and enforced by the Texas Office of Consumer Credit Commissioner (OCCC). Beyond disclosures, the law requires providers and brokers of sales-based financing to register with the OCCC by December 31, 2026, and to renew that registration annually. Notably, the Texas law does not include a de minimis exemption for low-volume providers, which several other states' laws have. In practice, this creates a public registration trail: Texas business owners will be able to verify that the company offering them funding, and any broker involved, is registered with the state.
What HB 700 Does Not Do
Like Florida's disclosure law, HB 700 is a transparency and registration statute rather than a rate cap, and it does not set a maximum cost for sales-based financing. How usury rules apply to any particular agreement depends on its structure and is a question for your attorney. The law improves what you can see before signing; it does not change your responsibility to read the agreement, understand the total repayment obligation, and confirm the payment structure fits your cash flow. Our guide on how to read a merchant cash advance contract walks through the key clauses to check.
How Texas Fits the National Picture
Texas joins a growing list of states regulating commercial financing disclosure: California and New York require estimated APR figures; Utah, Virginia, and Connecticut tie disclosures to registration; Florida, Georgia, Kansas, Missouri, and Louisiana have their own versions; and more states have bills pending. The direction is consistent everywhere: business owners get the cost of financing in writing before committing. For multi-state operators, the disclosure format may vary by state, but the core numbers, amount financed, total cost, and total repayment, are becoming standard.
How to Use the Disclosure When Comparing Offers
When you receive an HB 700 disclosure, compare three lines across offers. First, the amount you will actually receive after fees. Second, the total repayment amount. Third, the repayment terms, including how payments flex with your revenue. Two offers with identical headline amounts can differ meaningfully in net proceeds and total cost. And treat the registration requirement as a screening tool: a provider or broker operating in Texas should be able to point to its OCCC registration once the requirement takes hold.
The Direct Funder Advantage Under HB 700
Laws like HB 700 formalize what transparent funders were already doing. At Y Millennial Funding, we fund Texas businesses directly, so the disclosure you receive comes from the company actually making the decision. If your business generates $25,000 or more in monthly revenue, you can see your real numbers, including the total repayment amount, before committing to anything. Not all applicants qualify. Transparency is not a compliance burden for a direct funder; it is the sales pitch.
This article is for general informational purposes only and is not legal advice. Commercial financing laws change, and how they apply depends on the specific facts of your transaction. For questions about HB 700, consult a qualified attorney or the Texas Office of Consumer Credit Commissioner.