Texas · Regulatory Update
Business Funding in Texas, Where Things Stand After HB 700
Texas signed HB 700 in June 2025 and the law is reshaping how merchant cash advances work in the state, primarily because it removed the account-purchase safe harbor that traditionally kept MCA pricing outside Texas usury law. Commera serves Texas businesses through funding partners that comply with Texas's commercial financing law. This page exists so Texas owners can find honest context, not a sales pitch.
Texas owner? Email us at contact@commerafunding.com , we'll route your inquiry to funding partners registered under Texas's commercial financing law.
By Filip Kozina · Co-Founder, Commera Funding
Reviewed June 8, 2026
What Texas's commercial financing law means for you
Texas HB 700 (Commercial Financing Disclosure + Broker Registration)
Effective: Signed June 20, 2025; disclosure obligations effective September 1, 2025; provider and broker registration with the OCCC required by December 31, 2026
Citation: Texas HB 700 (2025), codified as Texas Finance Code Chapter 398; administered by the Texas Office of Consumer Credit Commissioner (OCCC)
HB 700 does three big things at once: (1) requires commercial sales-based financing providers and brokers to register with the Texas OCCC by December 31, 2026, (2) imposes pre-signing disclosure requirements, effective September 1, 2025, on covered transactions under $1 million, and (3) removes the account-purchase safe harbor (Finance Code section 306.103) for sales-based financing, so an MCA's charges can now be challenged as interest under Texas usury law. The statute stops short of declaring an MCA a loan; whether a given advance gets recharacterized depends on how it is structured. If a court treats one as a loan, its cost is tested against Texas's optional usury ceilings, which generally run 18% to 24%, and up to 28% a year for business or commercial credit. HB 700 itself sets no rate cap and bars the Finance Commission from adopting one by rule. That safe-harbor change is the one upending the market.
Applicability
Disclosure obligations apply to commercial sales-based financing transactions under $1 million with Texas businesses; the registration requirement covers providers and brokers regardless of transaction size, with a December 31, 2026 deadline.
What you should expect
- Many established MCA funders have paused new Texas originations while they evaluate compliance
- Some funders are restructuring their Texas product (longer terms, lower factor rates) to reduce recharacterization risk under the usury ceilings
- Expect the regulatory landscape to keep changing, OCCC rulemaking, the registration deadline at the end of 2026, and the first round of enforcement will shape what 'compliant' looks like
Plain-English context, not legal advice. HB 700 is new and the interpretive landscape is moving. Verify any Texas-specific compliance question with qualified counsel.
Funding options for Texas businesses
Available to Texas businesses through our funding partners, priced and contracted by the partner.
Figures on this page are illustrative estimates only and are not an offer of financing. All amounts, rates, factor rates, terms, payment amounts, timelines, and qualification criteria vary by lender, depend on funder underwriting and your business's bank statement history, and are subject to change without notice. Nothing here is guaranteed until a funder issues terms and you sign them. Factor rates do not represent APR. Commera is a broker, not a lender, and does not set rates.
Common questions from Texas owners
Does HB 700 ban merchant cash advances in Texas?
No, HB 700 doesn't ban MCAs outright. What it did is remove the account-purchase safe harbor that historically kept a receivables purchase outside Texas usury law. An MCA is not automatically a loan under the new law, but its structure can now be challenged, and if a court recharacterizes one as a loan, the cost is tested against Texas's usury ceilings (generally 18% to 24% under the optional rate ceilings, up to 28% a year for commercial credit), with serious penalties for usurious interest. Some funders are pausing Texas originations; others are restructuring to fit. The market is in flux.
How does Commera serve Texas businesses under HB 700?
Commera serves Texas businesses through funding partners that comply with Texas's commercial financing law. HB 700's registration window runs through December 31, 2026, so before any Texas submission we verify the funder's Texas posture under the new framework, its disclosure compliance and, once registration opens for it, its OCCC registration; if we can't verify that posture, we don't submit the file.
Which options are least affected by HB 700?
Options that aren't materially affected by HB 700: SBA loans (federally regulated, exempt), traditional bank lines of credit (bank-issued financing is exempt), and invoice factoring (operates differently from MCA and is treated differently under TX law). Questions about your options? Email us at contact@commerafunding.com.
How does Commera pick funders for Texas deals?
We match Texas files only to funding partners whose compliance posture under the new framework we can verify, disclosure practice now and OCCC registration as the December 31, 2026 deadline phases in, and only where the structure fits the post-HB 700 rules. If a funder's Texas posture can't be verified, we don't submit the file.
Texas business owner? Get in touch.
We can sometimes refer to a partner currently brokering in Texas under the new framework. Email us, no fees, no pitch.
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