đź”´Relating to disclosures for certain commercial sales-based financing transactions, the effect of certain commercial sales-based financing contract provisions, and the registration of commercial sales-based financing brokers and providers; authorizing a fee and providing a civil penalty.
HB 700
đź”´ HB 700: Texas Just Put Merchant Cash Advances in Law, but Took Away Your Right to Fight Back
What it says it does:
The bill claims to protect small businesses from predatory lending. It creates disclosure requirements for “sales-based financing” or merchant cash advances (MCAs), and requires brokers to register with the state.
What it actually changes:
It legalizes a high-cost lending model that had previously operated in a legal gray area. Lenders can now charge unlimited fees and effective interest rates as long as they provide written disclosures. Borrowers are stripped of the right to sue, and the Finance Commission is prohibited from setting maximum APRs or fees. Complaints must go through the Office of Consumer Credit Commissioner, which is fee-funded and not required to take individual enforcement action.
Who is pushing for it:
Momentum Capital Funding, ParaComm Ventures LLC, American Factoring Association, Independent Bankers Association of Texas.
Who benefits:
MCA providers now get legal cover for high-rate lending. Brokers gain credibility through state registration with little oversight. Regulators collect registration fees but have no obligation to prove enforcement.
Who gets left out or exposed:
Small business borrowers lose the right to sue and may face massive fees. Those expecting “transparency” to mean fairness or protection are left vulnerable. There is no system to track or flag bad actors publicly.
Why this matters long term:
HB 700 sets a precedent for legalizing unregulated products while removing legal accountability. It creates a roadmap for other industries, like gig work, digital health, or education financing, to push for similar models that replace court access with paperwork and agency discretion.
What to watch next:
Watch for copycat bills in other sectors using the same model: legalize the product, require disclosure, and block lawsuits. Also monitor whether OCCC enforces rules or becomes a passive registry.
Bottom line:
HB 700 does not prevent predatory lending. It legalizes it. It tells borrowers the cost upfront, then takes away their right to fight back. This is not meaningful oversight. It is permission, written into law.
#HB700 #TexasPolicy #ConsumerFinance #SmallBusiness #LendingRules #StayInformed