Texas regulators move to finalize MCA rules as the September registration clock runs down
Texas's OCCC proposed its HB 700 implementing rules on March 6 and must adopt final rules by September 1, 2026, with provider and broker registration through NMLS due December 31. The operational pivot for MCA funders is the first-priority perfected account-control requirement on automatic debits, not the disclosure form.
The Texas Office of Consumer Credit Commissioner published proposed rules for commercial sales-based financing on March 6, 2026, closed the comment window on April 5, and now has until September 1 to put final rules in place. Those rules carry out House Bill 700 , the 2025 law that pulled merchant cash advances and revenue-based financing under a state registration and disclosure regime. The statute has technically been in effect since September 1, 2025. What changes this fall is that the machinery behind it stops being theoretical. For funders and brokers writing Texas paper, the part that matters is not the disclosure form. It is the payment plumbing. HB 700 bars a provider or broker from setting up automatic debits of a merchant's deposit account unless the funder holds a validly perfected security interest in that account with first priority over everyone else. In practice, a deposit-account security interest needs a control agreement signed by the merchant and the merchant's bank, which is exactly the kind of cooperation a small business in trouble is least likely to give. A funder that runs daily ACH on Texas merchants without that perfected first position is operating outside the law once the rules harden. That is a structural change, not a paperwork update. The daily ACH pull has been the spine of the MCA product for two decades. Texas did not cap rates and did not ban the product, but it did make the collection mechanism conditional on something most funders cannot easily get. That forces a choice: secure real account control, move to a card-split or merchant-initiated payment model, or stop debiting Texas accounts. Anyone underwriting a Texas file on the old ACH assumption is pricing risk that the contract may not be able to enforce the way it used to. Why this matters Texas is treating collection architecture as part of the regulated product. The practical question is not only whether the merchant saw the right disclosure. It is whether the file proves the funder had a lawful way to get paid. The workaround already circulating is merchant-initiated payment. A platform called MCA Pay, profiled by deBanked in January, lets the merchant set up the payment instruction toward the funder rather than the funder pulling from the account. As Sean Murray reported it, the point is to keep MCA workable in Texas without the funder holding the debit trigger. That shifts control to the merchant, which solves the statutory problem and creates a new one: a merchant who controls the payment can stop it. Funders who go this route are trading a legal-collection risk for a behavioral-collection risk, and underwriting has to account for the difference. What the registration regime actually requires The proposed rules route provider and broker registration through the Nationwide Multistate Licensing System, the same backbone used for mortgage and consumer-finance licensing. They require a transaction file for each merchant, accurate disclosures that include the OCCC's contact information, and they give the agency authority to investigate complaints, seek injunctions, assess penalties, and revoke registrations. There is no private right of action, so enforcement sits with the regulator rather than with merchants' lawyers. Providers and brokers doing business in Texas on the statute's effective date have to register by December 31, 2026. The law firm Mayer Brown flagged the timing problem early: the disclosure and automatic-debit rules took effect a year before the registration deadline, and providers should not count on a grace period. A funder that waited for the rules to be final before building compliant disclosures and a lawful payment structure is now working against a calendar set by the Finance Commission, not by its own product roadmap. The broader read for anyone funding outside Texas is that the state-by-state map keeps adding operational requirements that touch the deal mechanics, not just the marketing copy. New York and California changed what a disclosure has to say. Texas changed how a funder is allowed to get paid. Connecticut and Virginia added transaction-level disclosures of their own. A file that was clean in 2024 can carry a defect in 2026 simply because the merchant's address moved the deal into a state that now regulates the payment method. The work is proving, file by file, which state's rule applied and that the contract was built to match it. Opinion Compliance belongs in intake, not after-the-fact review The funders who handle this well will not be the ones with the best legal memo. They will be the ones whose intake already captures merchant location, payment mechanism, and registration status as underwriting inputs rather than compliance afterthoughts. Plutus covers this beat daily at plutusai.net .