Let’s not dress this up—if you’re seeking a small business loan or MCA, the one question you absolutely must ask is:
“How much is the broker skimming off my deal?”
If you’re met with silence or a salesy dodge, it’s not ignorance—that’s by design. In most states, brokers don’t have to tell you. That’s not a glitch in the system—it IS the system.
Opaque Terms + Hidden Fees = Broker Profit Model
Merchant cash advances and online small business loans have long thrived on confusing terms and vast margins. Getting an offer through a broker often means 5–10% (or more) of the funding amount vanishes into their pocket—no disclosure required.
But a few states are drawing a hard line: they’re demanding transparency. These laws force lenders—and sometimes brokers—to deliver clear, consumer-style disclosures before you sign. That includes things like:
- Actual net funds you receive
- Total amount you’ll repay
- APR or estimated APR
- Broker’s compensation
- Collateral requirements
- Prepayment penalties
- (And in some places) a ban on sneaky junk like confessions of judgment
The States That Actually Care (as of August 2025)
| State | Scope & Impact |
|---|---|
| California | Covers business financing up to $500k, including MCAs, requires APR and itemized terms. A federal judge upheld it as constitutional last year. |
| New York | Up to $500k (some regs cover up to $2.5M), applies to nonbank providers and brokers, APR required. |
| Texas (HB 700) | Effective Sept 1 2025. Targets MCAs up to $1M, mandates broker registration, bans confessions of judgment. |
| Florida | Covers financing ≤ $500k, including factoring. Requires full cost disclosures. |
| Virginia, Georgia, Utah, Connecticut, Kansas, Missouri | Varying caps and scopes. Notable: Utah & Connecticut require broker fee disclosure; Missouri requires broker registration and prohibits misleading claims. |
| Pending: New Jersey, Illinois | Bills are circulating, but nothing enacted yet. |
Red vs. Blue: Surprising Consensus
Here’s the kicker: California and New York (deep blue) and Texas and Florida (deep red) are all moving toward the same basic standard: disclose everything, including the broker’s cut.
When states with wildly different politics agree on something—that tells you it’s becoming the de facto national baseline. Higher odds your state will copy it next.
Why You Should Stop Using Brokers—Unless You Enjoy Overpaying
Let’s be blunt:
- MCA and fintech loans are already pricy by default.
- Brokers make them more expensive. Their cut scales with cost.
These lenders have websites, prequal tools, and live rates. You don’t need someone to stand between you and the source—you’re not hiring an interpreter for pig Latin. Every dollar you pay a broker is one less dollar helping your business.
Pro Tip: Apply directly. Use the same offer you would send a broker. Compare deals. And if a broker demands confidentiality about their fee—well, that’s your answer right there.
Action Steps
- If your state has disclosure laws: Don’t just skim—read the disclosure before signing. Know your actual cost.
- If your state doesn’t: Act like it does. Demand written terms, broker compensation, and APR. If they won’t share, don’t borrow.
- Always compare direct offers before even thinking about using a broker.
Bottom Line
Disclosure laws don’t fix everything—but they make it harder for brokers to quietly gouge you. Until federal standards catch up, you have to be your own watchdog.
You don’t need a broker to make an expensive loan more expensive.