Step 1: find out who actually funds you
Also check whether your state requires the funder to show an estimated APR or to register. The company on the phone is not always the company on the contract. A broker or sales office may be selling another company's money, and the contract may use a trade name. New York's Attorney General tells owners to read the first paragraph of the contract, because the name at the top may be a doing-business-as name and not the legal name, and to check the bank statement for the name of the company taking the debits [9].
- Ask in writing: "What is the legal name of the company that will buy my receivables?"
- Ask whether the person you are talking to is the funder or a broker, and how the broker is paid.
- Match the legal name against the contract, the state business registry and the debit name on a sample statement.
Broker pay matters because it can be built into your price. In New York, a provider must tell you in writing how, and by whom, a broker will be paid [2]. Virginia requires a statement of whether the provider pays a broker and how much [4]. Ask for the same in any state.
Step 2: the ten-point checklist for any offer
| # | What to get | Why it matters |
|---|---|---|
| 1 | Funder's legal name and state of organization | Lets you search records and know who you can complain about |
| 2 | Amount funded and cash you actually receive | Fees taken out shrink the cash and raise the cost |
| 3 | Total payback in dollars | The real price; Virginia defines it as cash plus the finance charge [4] |
| 4 | Every fee by name | Underwriting, setup and service fees add to the cost [1] |
| 5 | Debit amount, frequency and method | Fixed debits do not shrink on their own when sales fall |
| 6 | Estimated number of payments | Shows how fast the cost is squeezed in |
| 7 | Estimated APR | Required in some states; lets you compare with a loan |
| 8 | Reconciliation clause | Your way to reset the debit if sales drop |
| 9 | Early payoff terms | Virginia requires a description of any prepayment discount or fee [4] |
| 10 | Personal guaranty and confession of judgment, yes or no | Decides how far collection can reach |
Put every offer through the translator above. If a company will not give you the inputs it needs, that is your answer about the company.
Step 3: know what your state's disclosure law requires
A handful of states now require MCA providers to give you a standard disclosure before you sign. The rules differ, so it helps to know which one covers you. This is general information, not legal advice, as of Oct 20, 2026.
| State | Estimated APR? | Other notable rules |
|---|---|---|
| New York | Yes; the rules set how providers estimate it for sales-based deals [3] | Brokers must pass on the provider's disclosure unaltered; broker pay disclosed in writing [2] |
| California | Yes; figured by the Regulation Z actuarial or United States Rule method [6] | Standard disclosure format for sales-based financing |
| Virginia | No APR in the statute's list | Provider and broker registration; total repayment, payment count and broker pay disclosed [4]; confessions of judgment barred [5] |
| New Jersey | Not yet; bill S1760, pre-filed for the 2026 session, would require one [13] | No commercial financing disclosure law in force |
Virginia goes further than disclosure. Every sales-based financing provider and broker must register with the State Corporation Commission, pay a $1,000 initial fee, and disclose past fraud-related judgments or orders in its application [14]. Any confession of judgment in a Virginia sales-based financing contract is unenforceable, and suits under the contract must be brought in a Virginia court [5].
See our state disclosure law lookup for the full list and the New Jersey MCA law guide for the home state.
Step 4: search the company's court and regulator record
A funder's history with other merchants is public if you know where to look. Use the legal name from step 1, and search any trade names too.
| Record | Where | Cost | What to look for |
|---|---|---|---|
| Federal court cases | PACER and its Case Locator [11] | $0.10 a page; fees waived if you run up $30 or less in a quarter [11] | Suits brought by merchants, the FTC or state attorneys general |
| New York state cases | The court's public docket; the Attorney General's Yellowstone case is No. 450750/2024 [9] | Free to view | Suits by or against the funder in New York state court |
| FTC actions | ftc.gov case listings | Free | Orders on fees, unauthorized debits or false promises |
| State attorney general actions | Your AG's press releases | Free | Settlements naming the company or its owners |
| Registration | Your state's financial regulator, where a law requires it | Free | Whether the company and any broker are registered |
What the records can show is real. The FTC's 2021 settlement with Yellowstone Capital required more than $9.8 million in refunds and alleged the company kept withdrawing money from businesses' accounts for days after their balances were paid [8]. New Jersey's Attorney General reached a separate $27.375 million settlement with the same group in 2023 [10].
Read lawsuits for patterns, not headlines
A funder that sues some merchants who stop paying is normal. A funder with many suits by merchants, or any action by a regulator, deserves a hard look. Read the complaint's first pages: they say what the company is accused of.
Step 5: red flags that should end the call
- A confession of judgment in the contract. NerdWallet says that requirement alone may be a reason to look elsewhere [1]. In New York, one can only be filed with the clerk of the county where the signer said they lived, or live at filing [7].
- Promises of easy approval or no credit check, which NerdWallet flags as a predatory sales tactic [1].
- An upfront fee you must pay before any money is sent to you.
- A "percentage of sales" pitch on a contract that sets a fixed daily dollar debit.
- No reconciliation clause, or one that leaves any adjustment to the funder's choice.
- Pressure to sign today without a copy of the contract to read.
- A broker who will not say who the funder is or how they are paid.
The market itself sends a signal. In the Federal Reserve's Small Business Credit Survey, net satisfaction among applicants to online lenders fell from 15% to 2% between the 2023 and 2024 surveys, with high costs and unfavorable repayment terms the most common complaints [12]. Vet first; it is cheaper than regret.
If something goes wrong: where to complain
Keep the contract, every offer, and the bank statements that show each debit. Then report it.
- New Jersey: the Division of Consumer Affairs takes online complaints, or call 1-800-242-5846 for a form by mail [10].
- New York: the Attorney General's office says it takes complaints about MCAs [9].
- Any state: the Federal Trade Commission, which has brought cases against MCA providers [8].
Batch Capital shows every offer as total payback, cash received, the debit and an estimated APR, and names the funder. Use the checklist above on our offers too.