Louisiana treats merchant cash advances differently from every other state that has enacted commercial financing disclosure rules, and the distinction matters if you operate a business within its borders. The Revenue-Based Financing Disclosure Act, which took effect on August 1, 2025, created a framework that borrows from the disclosure wave sweeping through states like New York and California but departs from those models in ways that carry real consequences for business owners who have signed or are considering MCA agreements.
What follows are five provisions of Louisiana law that shape how MCA contracts are formed, enforced, and contested in the state. Some of these protections are new. Others have existed for decades in the Civil Code but are only now being applied to the MCA context with any regularity.
The Disclosure Act Applies to Every MCA Provider Without Exception
Most commercial financing disclosure laws carve out exemptions. New York excludes transactions above a certain dollar threshold. Virginia exempts banks and credit unions. Louisiana did neither. House Bill 470 applies to every entity that provides revenue-based financing in the state, regardless of institutional charter, transaction size, or the provider’s state of incorporation.
That universality is not an accident. The legislative history reflects testimony from small business owners in Baton Rouge and New Orleans who described entering MCA contracts without receiving any written estimate of the total cost of capital. The legislature responded by closing every exemption door that other states had left ajar.
For a business owner reviewing an existing MCA contract executed after August 2025, the absence of the required disclosure creates a potential defense. The statute does not specify a private right of action in explicit terms, but the failure to disclose is a fact that courts will weigh when evaluating the enforceability of the agreement as a whole. A contract formed without the mandated transparency is a contract with a visible defect.
No APR Disclosure Is Required
Here is where Louisiana’s law reveals its compromise. Unlike California’s disclosure regime, which demands an annualized percentage rate, Louisiana requires only that the provider disclose the total dollar cost of the financing and the payment frequency. The annual cost metric referenced in the statute is not an APR. It is a simpler figure, and one that many MCA providers prefer because it obscures the effective annualized rate a borrower actually pays.
This matters in practice. A business owner who receives a Louisiana-compliant disclosure may see that the total repayment on a $50,000 advance is $72,000. What the disclosure will not show is that, given the speed of the repayment schedule, the effective annualized cost of that capital might reach into triple digits. The law requires honesty about the total amount. It does not require clarity about velocity.
One should not read this as a reason to disregard the disclosure. The total dollar cost, even without an APR, provides a baseline for comparison. But it remains an incomplete picture, and a borrower relying on Louisiana’s disclosure alone may not grasp how the cost of an MCA compares to a conventional term loan until the daily debits have already begun.
Confession of Judgment Limitations Under Louisiana Civil Law
Louisiana Revised Statutes Section 9:3590 restricts the use of confessions of judgment in consumer credit transactions. The provision has existed for decades as part of the Louisiana Consumer Credit Law. Its application to MCA agreements is contested, precisely because MCA providers argue that their product is not a credit transaction at all but a purchase of future receivables.
That argument has a textual basis in Louisiana’s new disclosure law, which contains a statutory presumption that revenue-based financing transactions are not credit products. But the presumption is rebuttable. And in cases where the MCA contract contains fixed daily payments, no genuine reconciliation mechanism, and a personal guarantee with confession of judgment language, Louisiana courts have the tools to look past the label.
The question is not what the contract calls itself. The question is what the contract requires.
If a court recharacterizes the MCA as a loan, the confession of judgment clause may be void under Section 9:3590, and the entire agreement may fall under Louisiana’s interest rate provisions. This recharacterization argument is one of the strongest defenses available to Louisiana business owners facing MCA enforcement actions built on confessions of judgment.
Usury Protections Are Narrow but Present
Louisiana Revised Statutes Section 9:3509 governs the rate of interest on commercial, business, and agricultural loans. It exempts most business entity borrowers from the state’s usury cap. Corporations, LLCs, partnerships in commendam, and registered limited liability partnerships may agree to any interest rate the parties negotiate, with no ceiling.
Sole proprietors are the exception. A sole proprietor who signs an MCA agreement that is later recharacterized as a loan may invoke Louisiana’s usury protections if the effective rate exceeds the statutory maximum. The window is narrow. It requires both a successful recharacterization and a business structure that does not fall within the exempted entity categories. But for the solo restaurant owner in Metairie or the independent contractor in Shreveport, the window exists.
I have seen cases where the recharacterization argument turned on a single contract provision: the reconciliation clause. Where the MCA provider included a reconciliation right but made the process so burdensome that no business owner could realistically invoke it, courts have treated the clause as illusory. An illusory reconciliation clause transforms a purchase agreement into something that looks, in every functional respect, like a high-interest loan.
UCC Lien Filings and Louisiana’s Unique Civil Law Framework
Louisiana is not a Uniform Commercial Code state in the way that the other forty-nine states are. Its civil law tradition, rooted in the Napoleonic Code, creates a different legal environment for secured transactions. MCA providers filing UCC liens in Louisiana must contend with a filing system that operates under Louisiana’s own version of Article 9, which diverges from the standard UCC text in several respects.
The practical consequence is that a UCC filing made in Louisiana by an out-of-state MCA provider may contain defects that would not exist in a standard UCC jurisdiction. Filing errors, incorrect debtor name designations under Louisiana’s particular rules, and failures to comply with the state’s central filing requirements can render a lien ineffective. For business owners dealing with MCA debt and seeking to remove a UCC lien, Louisiana’s idiosyncratic filing requirements offer an additional ground for challenge.
The weather in New Orleans in late summer, when most of these contracts seem to come due, does nothing to improve the experience. But the law, at least, provides some cover.
Louisiana’s MCA regulatory framework is still young. The disclosure law has been in effect for less than a year, and the case law interpreting it remains sparse. What exists is a set of protections that, taken together, give Louisiana business owners more tools than they had before August 2025, even if the tools are imperfect.
The state’s civil law tradition, its confession of judgment restrictions, and the new disclosure requirements create pressure points that an experienced attorney can use to renegotiate terms or challenge enforcement. The first step is understanding what the law actually provides, rather than what the MCA provider claims it provides.
A consultation is where that understanding begins. A first call costs nothing and assumes nothing.
