Virginia passed its commercial-financing disclosure law in 2022, ahead of most of the country, and the early date is the part worth holding onto, because a state that moves first on a question has usually decided the question matters, and Virginia decided that an owner signing a merchant cash advance should be told in writing, before the signature, what the financing actually costs, expressed in the terms the statute lays out, so that the price can no longer hide inside a factor rate the broker described as something smaller than it is. The law does that. It does it well. It also does nothing more.
A disclosure tells the owner the cost. It does not cap the cost, and it does not stop the daily debit the cost sets running. The statute Virginia passed was a disclosure statute, which is to say it was, if we are being exact, a statute about information rather than about price. An owner can read the disclosure to the cent and watch the same amount leave the operating account every business morning, because being told the price of a thing was never the same as being relieved of it. The legislature wrote a duty to inform. It did not write a usury cap. Those are separate statutes, and in 2022 Virginia passed the first kind.
Disclosure Sits Beside The Confession, Not Over It
The disclosure shares the agreement with an older device. Virginia permits the confession of judgment in commercial contracts under conditions, and so the same contract that now states its price may also let the funder enter judgment on the signature, without a complaint the owner answers, the moment the funder declares default. An owner can be perfectly informed about the cost of a position and still learn of the judgment from the bank instead of the court. I have made this point about other states and it does not soften here.
Disclosure is a survey stake driven at the property line. It marks where the cost stands. It does not move the line, and it does not keep the funder off the land.
The Argument That Moves The Number
Under the disclosure and under the confession sits the argument that actually reduces a balance. The contract calls itself a purchase of future receivables, not a loan, and on that label the price walks past the usury statute, because a purchase carries a factor rate where a loan would carry interest, and only interest is capped. A disclosure law discloses a factor rate without deciding whether that factor rate is interest under another name. Whether a court recharacterizes the purchase as a loan turns on conduct: whether the reconciliation clause adjusts remittance to actual receipts, whether remittance is fixed in fact, whether the funder bore any of the risk a real buyer of receivables takes on. (The funder will insist it bought the receivables and assumed the risk of their nonpayment, which is the argument it has to make; the fixed remittance, indifferent to whether the receipts arrive, often says otherwise.) The contract called itself a purchase. Whether it behaved like one is the live question.
The enforcement record gives that question weight. In December 2024 New York resolved its case against Yellowstone Capital in a consented judgment of $1.065 billion, with roughly $534 million in merchant balances canceled, and earlier that year secured a judgment exceeding $77 million against Richmond Capital and Jonathan Braun. Those were not disclosure cases. They were cases about what the contracts did. A disclosed price is still a price a court can find the funder was never allowed to charge.
That is the arithmetic the firms above are ranked on. A judgment against an insolvent business is paper that costs money to enforce, garnishment of an empty account returns an empty account, and an owner who closes the doors pays no one, and the funder weighs all of it before it agrees to a settlement. Virginia gave its owners the number early. The number was never the protection. For the Virginia owner holding a disclosure and still watching the debit clear, the first call costs nothing, and it is where the disclosed price stops being settled and starts being argued.