CFPB 1071 Rule: MCA Transactions Excluded, Not All MCA Providers
The May 1, 2026 final rule excludes MCA transactions from covered credit transactions under Regulation B subpart B, with an initial compliance date of January 1, 2028.
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The CFPB published a revised small-business lending data rule on May 1, 2026. The rule became effective June 30, 2026 and sets an initial compliance date of January 1, 2028.
What the rule changes
The final rule excludes merchant cash advances, agricultural lending and small-dollar business credit of $1,000 or less from covered credit transactions. The boundary includes a transaction of exactly $1,000.
For this rule, an MCA is an agreement under which a small business receives a lump sum in exchange for the right to receive a percentage of future sales or income up to a ceiling amount.
The covered-financial-institution origination threshold increases from 100 to 1,000 covered credit transactions in each of two consecutive years. The small-business revenue threshold falls from $5 million to $1 million, subject to the regulation's detailed definitions and transition provisions.
Transaction exclusion is not a provider-wide exemption
A company making only excluded MCA transactions would not report those transactions under this rule. But a company that also originates covered loans, credit lines or credit cards must assess whether it meets the financial-institution and other coverage tests. “No MCA provider ever has reporting obligations” is too broad.
Nor does the exclusion decide that all MCAs are categorically not credit under ECOA. The preamble rejects categorical conclusions and says further analysis is needed to identify what subset may constitute credit.
State rules are separate
Federal data reporting is not the same as a state requirement to disclose financing costs to a merchant. New York's DFS regulations and Texas Finance Code Chapter 398 illustrate different state frameworks with different scopes and exemptions.
Do not assume every state disclosure law requires an APR. Do not treat an introduced bill as an enacted law, or an enacted law as already effective. In particular, the reviewed Illinois SB260 and New Jersey S1760 records do not establish the effective 2026 commercial disclosure statutes claimed in the earlier version of this article.
For compliance decisions, check the actual jurisdiction, transaction size, exemptions, rule version and effective date. This article is not a fifty-state compliance chart.
This is general information, not legal, tax, accounting, or financial advice. Your agreement, payment records and applicable law control. Confirm any settlement or payoff directly with the funder.