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ARTICLE · 08 JULY 2025

Texas Passes Legislation To Regulate Sales-Based Financing

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On June 20, Texas Governor Greg Abbot signed into law HB 700, adding Chapter 398 to the Texas Finance Code. Effective September 1, the statute establishes...

United StatesFinance and Banking
A.J. Dhaliwal
A.J. Dhaliwal
Mehul Madia
Mehul Madia
Beineng Zhang
Beineng Zhang
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On June 20, Texas Governor Greg Abbot signed into law HB 700, adding Chapter 398 to the Texas Finance Code. Effective September 1, the statute establishes a regulatory framework for commercial sales-based financing and imposes specific compliance obligations on providers offering such products to Texas borrowers.

HB 700 (previously discussed here) requires providers or brokers of commercial sales-based financing transactions, including merchant cash advances products, to register with the state and provide Texas borrowers certain disclosures. Key provisions of the bill include:

  • Comprehensive disclosures. For commercial sales-based financing transactions of less than $1 million, a provider must deliver a written disclosure and obtain the recipient's signature. The disclosure must include: (1) the total financing amount; (2) the disbursement amount; (3) the total repayment amount; (4) payment schedule and estimated monthly payments; (5) all finance charges and

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