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The CFPB finalized a scaled-back Section 1071 rule in May 2026 that officially excludes merchant cash advances from small business lending data requirements, while New York's FAIR Act—effective February 2026—and new disclosure mandates in Illinois and New Jersey signal mounting state-level pressure on the industry.
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The merchant cash advance industry is navigating a split regulatory moment: federal regulators are stepping back from one major data-collection requirement, while state lawmakers are simultaneously adding new teeth to small-business protection statutes.
Here is what MCA funders, brokers, and borrowers need to know.
CFPB Finalizes Revised Section 1071 Rule, Officially Excluding MCAs On May 1, 2026, the Consumer Financial Protection Bureau finalized its revised small business lending data collection rule under Section 1071 of the Dodd-Frank Act — and merchant cash advances are explicitly out.
The revised rule narrows scope significantly from the 2023 version: it raises the origination reporting threshold from 100 to 1,000 covered transactions per year and excludes MCAs, agricultural lending, and small-dollar loans entirely.
Initial data collection will not begin until January 1, 2028.
Crucially, the CFPB is also walking back a 2023 position that MCAs are "credit" under the Equal Credit Opportunity Act (ECOA).
The amended rule retreats from that stance but stops short of definitively declaring MCAs are not credit — the Bureau says "additional analysis and monitoring" is necessary before drawing a firm conclusion.
Industry publication deBanked reported that MCAs are now "officially out" of the rule, framing it as a meaningful win for the industry under the current administration.