Florida Disclosure Laws: What Your Funding Offer Must Tell You

Introduction

If you run a small business in Florida and are considering alternative funding - such as a merchant cash advance, invoice factoring, or equipment leasing - you have legal rights to clear, upfront information about the cost of that money. Florida's Commercial Financing Disclosure Law (CFDL) took effect to ensure that small-business owners receive a standardized disclosure statement before they accept any commercial financing offer.

This article explains exactly what that law requires, which funding products it covers, and how to use the disclosures to make informed decisions. Whether you are in Miami, Orlando, Tampa, or Jacksonville, understanding your rights under Florida law helps you avoid surprises and choose the funding that best fits your business.

As a free matching service, we connect Florida business owners with vetted funding partners who comply with all applicable disclosure laws. We are not a lender or broker - we simply help you find offers that you can then evaluate with confidence.

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What Is the Florida Commercial Financing Disclosure Law?

The Florida Commercial Financing Disclosure Law (Section 687.81, Florida Statutes) requires funders to provide a written disclosure statement to a business owner before the business becomes obligated on a commercial financing transaction. The law applies to transactions of $500,000 or less and covers a wide range of funding products.

Why Was It Enacted?

Before this law, small-business owners often received funding offers that buried the true cost in complex terms. A merchant cash advance, for example, might be quoted with a simple factor rate and a daily payment amount, but the effective annual rate could be much higher than expected. The law was designed to bring transparency to the market, giving you numbers you can actually compare across different types of financing.

Who Does It Apply To?

The law applies to any person or entity that offers commercial financing to a business in Florida. This includes online funders, alternative lenders, banks, and other financial institutions. The disclosure must be provided before the business signs any agreement, and it must be acknowledged in writing by the business owner.

Which Funding Types Are Covered by Florida's Disclosure Law?

Florida's disclosure requirements cover most forms of commercial financing commonly used by small businesses. Here are the main categories.

Merchant Cash Advances

Merchant cash advances (MCAs) are not technically loans - a funder buys a portion of your future sales at a discount. Under Florida law, the disclosure must show the purchase amount (the funding you receive), the total amount to be remitted (the payback), the difference (the cost), and an annual percentage rate (APR) computed as if the transaction were a loan. This gives you a standard way to compare the cost of an MCA against other options.

Invoice Factoring

When you sell your unpaid invoices to a factoring company, you receive an advance, and the factor collects from your customers. The disclosure must include the advance amount, the face value of the invoices, the factoring fee, and the APR. Again, this helps you see the true cost of using invoice factoring to improve cash flow.

Equipment Leasing

If you lease equipment - such as restaurant kitchen gear, medical devices, or construction machinery - the disclosure must show the total lease payments, the cost of the lease (if any), and the implied APR. This is especially helpful when comparing leasing versus buying.

Lines of Credit and Term Loans

Traditional business loans and lines of credit are also covered. The disclosure must include the amount advanced, the total repayment amount, the interest rate (and APR), the payment schedule, and any fees. Because many alternative loans use simple interest or origination fees, the disclosure gives you a standardized view.

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What Must Your Funding Offer Disclose?

The Florida disclosure statement is a one-page document that must contain specific information. Here is what you should see before you sign anything.

Total Amount of Funds Provided

This is the actual dollar amount you receive - not the gross amount before fees. For example, if a factor rate of 1.3 is applied to a $20,000 advance, you receive $20,000 and the total repayment is $26,000. The disclosure will list $20,000 as the amount provided.

Total Repayment Amount and Cost

You will see the total dollar amount you must pay back. The cost is simply the difference between that total and the amount you received. In our example, the total repayment is $26,000, and the cost is $6,000. This number is straightforward and lets you immediately evaluate how much the funding will actually cost.

Annual Percentage Rate (APR)

The APR is the most important number for comparison. It calculates the cost of financing on an annualized basis, including fees. For a merchant cash advance, the APR will often be higher than a term loan because the money is repaid quickly - often daily. The disclosure must compute the APR using a uniform method, so you can compare an MCA offer from one company with a term loan from another.

Illustrative example: Suppose a funder offers a $20,000 merchant cash advance with a factor rate of 1.3, repaid over 6 months with daily payments. The disclosure would show an APR - say, 45% in a hypothetical scenario. That same $20,000 structured as a 6-month term loan at 15% simple interest might have an APR of 15%. The disclosure makes that comparison possible.

Payment Schedule and Amounts

The disclosure must list the total number of payments, the amount of each payment, and the frequency (daily, weekly, monthly). For an MCA, payments are often a fixed percentage of daily credit card sales, but the disclosure will show the expected payment amounts based on your current volume.

Other Required Disclosures

The law also requires the funder to disclose any prepayment penalties, late fees, or balloon payments. If the offer includes a personal guarantee or blanket lien, that should be noted separately, though not strictly part of the cost disclosure.

How to Read Your Florida Disclosure Statement

Once you receive a disclosure, take the time to understand each line. Here is how to make sense of it.

Compare Multiple Offers

Because every funder must use the same disclosure format, you can put offers side by side. Look at the APR first - it captures the total cost in a single percentage. Next, compare the total cost in dollars: a lower APR might still mean a higher dollar figure if the funding amount is larger. Finally, check the payment schedule to confirm you can handle the frequency and amount.

Identify Hidden Fees

Some funding products bundle fees into the factor rate or interest rate. The disclosure breaks out the total cost, so if you see a high cost relative to the amount funded, ask the funder to itemize the fees. A legitimate funder should explain each component.

Understand Factor Rates vs. APR

Many small-business owners are used to seeing factor rates on MCAs. A factor rate of 1.3 does not sound expensive, but when converted to an APR over a short term, it can be substantial. The disclosure does the conversion for you, so do not rely solely on the factor rate - look at the APR to see the true cost.

Why This Law Matters for Your Small Business

Knowing what your funding offer must tell you is more than a legal curiosity - it directly affects your bottom line.

Protection Against Predatory Practices

Before the law, some funders used opaque pricing to hide fees or inflate the cost. Now, you have a right to see the total cost and APR before you commit. If a funder hesitates to provide the disclosure, that is a red flag. Our matching service works only with vetted partners who comply fully with Florida law.

Ability to Shop Around

Standardized disclosures mean you can compare a merchant cash advance from a Miami-based funder with an equipment lease from a Tampa company. You can then choose the option that costs less or fits your cash flow better. This empowers you to make funding decisions based on facts, not marketing claims.

Practical Tips for Using Disclosures When Applying

Here are steps you can take to get the most out of Florida's disclosure requirements.

Request the Disclosure Before Signing

Ask the funder to provide the disclosure document before you sign any application or agreement. By law, it must be given to you before you become obligated. If you do not receive it, do not proceed.

Ask Questions

If any number on the disclosure is unclear - the APR calculation, the total payment amount, or the fees - ask the funder for a breakdown. A reputable funding partner will walk you through it. Remember, the disclosure is meant to inform, not to confuse.

Use a Matching Service to Find Compliant Funders

Our free service helps small-business owners in cities like Fort Lauderdale, Orlando, and Jacksonville connect with funders who respect disclosure laws. We do not charge you anything, and we only partner with lenders and funders who provide clear, honest terms. After you receive an offer, you still get the Florida disclosure and can evaluate it with confidence.

Common Mistakes Small-Business Owners Make

Even with disclosures, you can misread the numbers if you are not careful. Avoid these errors.

Ignoring the APR

Some owners focus only on the payment amount and whether it fits their budget. That is important, but the APR tells you how much the money actually costs. A low daily payment on a large MCA could still result in a high APR. Always check the APR.

Focusing Only on the Payment Amount

Daily or weekly payments may look manageable, but if the term is long, the total cost could be significant. Look at the total repayment amount and the total cost. A $500 weekly payment over 12 months costs $26,000 - is that worth more than the funding you received?

Not Verifying the Total Cost

If the disclosure shows a total cost of $6,000 on a $20,000 MCA, confirm that number matches the contract language. Some funders may include additional fees not reflected in the disclosure. Cross-check the disclosure against the contract before signing.

Conclusion

Florida's Commercial Financing Disclosure Law gives you, the small-business