---
title: "Are Merchant Cash Advances Still Legal in Texas? (2026) What HB 700 Actually Changed for Restaurants"
description: "No, Texas did not ban merchant cash advances. HB 700 regulates sales-based financing: OCCC registration by Dec 31, 2026, void confession-of-judgment clauses, and restricted ACH debits. Funding stays available."
canonical: "https://wayfindhq.com/guides/are-mcas-still-legal-in-texas-2026-restaurants"
author: "Wayfind Editorial"
reviewer: "Reviewed by a commercial-finance advisor"
datePublished: "2026-06-25"
dateModified: "2026-06-26"
---

# Are Merchant Cash Advances Still Legal in Texas? (2026) What HB 700 Actually Changed for Restaurants

No. HB 700, signed in 2025, regulates sales-based financing in Texas; it did not ban it. Providers must register with the Texas OCCC by December 31, 2026, confession-of-judgment clauses are void, and automatic ACH debits are restricted unless the funder holds a perfected first-priority security interest. Funding remains available, often via per-transaction payment authorization.

## Are MCAs still legal in Texas in 2026? The short answer

**Did Texas ban merchant cash advances?** No. Texas **HB 700**, signed in 2025, **regulates** sales-based financing (the legal term for merchant cash advances); it did **not** ban it. The law adds registration, disclosure, and contract rules, but funding remains legal and available to Texas restaurants in 2026.

Wayfind is an **independent referral broker, not a lender, and may be compensated by funding partners.** This page is educational information, **not legal advice** — for your situation, consult a Texas-licensed attorney.

## Where the "Texas banned MCAs" myth came from

When HB 700 passed, several headlines were read as a ban. They were wrong. The statute is a **disclosure-and-registration** law modeled on the wave of state commercial-financing rules, not a prohibition. The misreading spread far enough that trade press had to correct it directly. As deBanked put it in its January 2026 piece, **"No, Texas Did Not Ban Merchant Cash Advances."**

As our reviewing commercial-finance advisor framed it: *"The headlines said ban; the statute said register and disclose. A Texas restaurant can still access funding — what changed is the paperwork and the ACH mechanics, not legality."*

## What HB 700 actually requires

Here is the sourced reality. Under HB 700, providers of sales-based financing must **register with the Texas Office of Consumer Credit Commissioner (OCCC) by December 31, 2026**, **confession-of-judgment clauses are void and unenforceable**, and **automatic ACH debits are restricted** unless the funder holds a perfected first-priority security interest — it is a **regulation, not a ban** (Texas OCCC, [occc.texas.gov](https://occc.texas.gov/publications/legal/rules/); HB 700 bill analysis, [capitol.texas.gov](https://capitol.texas.gov/tlodocs/89R/analysis/html/HB00700E.htm)).

In plain terms, the law adds three things on top of legal funding:

1. **Registration.** Providers of sales-based financing must register with the OCCC by the December 31, 2026 deadline; brokers are also covered by the registration framework ([OCCC commercial sales-based financing rules](https://occc.texas.gov/publications/legal/rules/)).
2. **Void confession-of-judgment clauses.** Contracts can no longer include a confession-of-judgment (or similar) provision; those terms are unenforceable ([HB 700 bill text/analysis, capitol.texas.gov](https://capitol.texas.gov/tlodocs/89R/analysis/html/HB00700E.htm)).
3. **Written disclosure + ACH restriction.** Funders must give recipients a written disclosure (amount financed, finance charge, total repayment, fees, terms), and automatic ACH debiting is restricted unless the funder holds a perfected first-priority security interest.

## The ACH nuance, explained for a restaurant owner

This is the provision that actually changes how repayment feels day to day. The old MCA model often relied on an **open-ended ACH debit** — the funder pulled a set amount from your account on a schedule you couldn't easily pause. HB 700 restricts that unless the funder holds a perfected first-priority security interest.

The practical workaround most funders are using is **per-transaction payment authorization**: instead of an open-ended standing debit, each remittance is authorized as it's collected, frequently as a split or pull off card-processing volume. For you, the takeaway is simple — **ask any funder how repayment is collected under the new Texas rules** before you sign, and confirm it's documented in the disclosure.

## "Banned" myth vs HB 700 reality

| Question | The "ban" myth | HB 700 reality (2026) |
|---|---|---|
| Are MCAs legal in Texas? | Banned | **Legal** — regulated, not prohibited |
| Registration | N/A | Providers/brokers register with **OCCC by Dec 31, 2026** |
| Confession of judgment | — | **Void and unenforceable** in the contract |
| Automatic ACH debits | — | **Restricted** unless funder holds a perfected first-priority security interest |
| Disclosure | — | **Written disclosure required** (amount financed, finance charge, total repayment, fees, terms) |
| Availability today | Gone | **Available**, often via per-transaction payment authorization |

## What this means for a Texas restaurant seeking funding today

Funding is still on the table. What changed is the **paperwork and the repayment mechanics**, not whether you can get an advance. Before signing, a Texas restaurant owner should:

- **Confirm the funder is registered** (or registering) with the OCCC.
- **Read the written disclosure** and compare total repayment, not just the rate label.
- **Ask how repayment is collected** — per-transaction authorization vs. an ACH debit tied to a security interest.
- **Check that there is no confession-of-judgment clause** (it would be unenforceable anyway, but its presence is a red flag).

### A note on cost: factor rate is not an APR

HB 700 doesn't change the math of an MCA, and the math is where owners get surprised. MCA pricing uses a **factor rate**, which is **not an APR**. Your **total payback equals the advance multiplied by the factor rate**. A **$30,000** advance at a **1.30** factor rate means you repay **$39,000** total ($30,000 × 1.30), regardless of how quickly it's repaid. Evaluate offers on **total dollars repaid** and how the remittance fits your cash flow — never compare a factor rate head-to-head with a bank APR.

## What you need to qualify

The legal change doesn't alter the basic underwriting profile. Most restaurants we see qualify with:

- Roughly **$15,000+ in monthly revenue** (card and bank deposits combined)
- At least **6+ months in business**
- A business bank account with consistent deposits
- **3–6 months** of recent bank or card-processing statements

These are typical thresholds, not guarantees. According to the Federal Reserve's [Small Business Credit Survey](https://www.fedsmallbusiness.org/reports/survey/2025/2025-report-on-employer-firms), **37% of small employer firms applied for a loan, line of credit, or merchant cash advance** in the prior 12 months — and food-service firms are consistently among the most likely to seek financing and to face funding shortfalls, which is why fast products like MCAs stay common in the space. Final terms always come from the funding partner.

## Where Wayfind operates — and how Texas is handled

Wayfind fully serves restaurant owners in **Florida, Georgia, Illinois, Ohio, Arizona, Nevada, and Colorado**. **Texas is available on a gated basis** while we complete our legal review of HB 700's evolving rules and the OCCC registration framework. If you operate in Texas, we'll route you to a waitlist and to comparison resources rather than an open funding application until that review is complete.

Wayfind is a referral broker, not a lender; we match your revenue profile and timeline to vetted funding partners and never underwrite or approve advances ourselves.

## FAQ

**Did Texas ban merchant cash advances in 2025?** No. HB 700 regulates sales-based financing rather than banning it, and trade coverage published corrections because the headlines were misread.

**What does HB 700 actually require?** OCCC registration by December 31, 2026, void confession-of-judgment clauses, restricted automatic ACH debits, and written transaction disclosures.

**Can a Texas restaurant still get an MCA right now?** Yes — funding is available; repayment is increasingly handled via per-transaction authorization. Ask the funder how it's collected.

**Does Wayfind serve Texas?** On a gated basis pending legal review. Wayfind fully serves FL, GA, IL, OH, AZ, NV, and CO.

**Is this legal advice?** No. Consult a Texas-licensed attorney for your specific situation, and read every disclosure before signing.

## Next steps

- **Compare your options first.** See [MCA vs line of credit for restaurants](/guides/mca-vs-line-of-credit-for-restaurants) and the full [MCA requirements for restaurants](/guides/merchant-cash-advance-requirements-for-restaurants), or [compare offers](/compare).
- **Outside Texas (FL, GA, IL, OH, AZ, NV, CO)?** You can [apply](/apply) to be matched with funding partners.
- **In Texas?** Texas is gated pending legal review — start with [/compare](/compare) and our waitlist rather than a funding application.

Wayfind is an **independent referral broker, not a lender, and may be compensated by funding partners.** This guide is educational information, **not legal advice**; for your specific situation, consult a Texas-licensed attorney. The funding partner sets and discloses all final terms before you sign.

---
Disclaimer: Wayfind is an independent referral broker (ISO), not a lender, and does not underwrite or make funding decisions. Educational content only; not financial advice. Wayfind may receive compensation from lending partners.