# MCA Broker License: States That Require One - Author: TrueBankFlow (https://truebankflow.com) - Published: 2026-10-17 - Category: Lending compliance and borrower data - Canonical: https://truebankflow.com/blog/mca-broker-license > Which states require an MCA broker license or registration, what ISOs must disclose and how funders check broker compliance before paying. There is no national MCA broker license. A few states regulate merchant cash advance brokers instead. Virginia requires brokers of sales-based financing to register with the state and pay a fee each year. New York treats a broker who presents specific offers as a provider with disclosure duties. Funders should confirm an ISO's registrations before paying any commission. ## Which states require an MCA broker license or registration? An MCA broker license, in the sense of a dedicated state license for advance brokers, is rare. Most states regulate merchant cash advances lightly or not at all, because an advance is usually structured as a purchase of future receivables rather than a loan. The states that act do so through registration and disclosure laws. Two states set the pattern this guide covers. Virginia has a registration requirement that names brokers explicitly. New York folds brokers into its commercial finance disclosure law. Other states have passed or proposed laws in this area, and the list changes. Check each state where your merchants are located, and get counsel's view before you rely on a state being unregulated. Whether an advance is a loan matters here. If a court or regulator treats a product as a loan, lending and loan broker licenses may apply instead. The guide to [whether a merchant cash advance is a loan](/blog/is-a-merchant-cash-advance-a-loan) explains the tests. ## Virginia registration for MCA brokers and sales-based financing Virginia requires both providers and brokers of sales-based financing to register with the state. Registration was due by November 1, 2022, costs $1,000 to start and $500 a year after that, and lapses on its own if the annual fee is not paid by September 15. Applicants disclose certain judgments, orders and convictions. The details come from [Title 6.2, Chapter 22.1 of the Code of Virginia](https://law.lis.virginia.gov/vacodefull/title6.2/chapter22.1/), the state's sales-based financing chapter. A few points matter to an ISO: - **Who is a broker.** Anyone who, for compensation or the expectation of it, obtains or offers to obtain sales-based financing for a business. A broker cannot also be the recipient. - **Out-of-state brokers.** The chapter applies to brokers who arrange financing over the internet, whether or not they have an office in Virginia. - **Background disclosures.** The application asks about judgments, cease and desist orders and convictions involving fraud, breach of trust or money laundering, for the company and its controlling people. - **Lapse by default.** Missing the September 15 fee ends the registration automatically. The same chapter makes the provider disclose, at the time of an offer, whether it will pay the broker directly and how much. ## How does New York treat an MCA broker presenting offers? New York treats an MCA broker who solicits and presents specific offers on behalf of a funder as a provider under its commercial finance disclosure law. That puts the broker inside the law's disclosure duties rather than outside them. New York's definition is about conduct: what the broker does, not what it calls itself. [New York Financial Services Law section 801](https://www.nysenate.gov/legislation/laws/FIS/801) defines a provider as a person who extends a specific offer of commercial financing, and includes a person who solicits and presents specific offers for a third party. The same section defines sales-based financing as repayment over time as a percentage of sales or revenue, including deals with a true-up that reconciles a fixed payment to actual sales. In practice, an ISO in New York should not present an offer without the disclosure that goes with it. The funder usually prepares the form. The broker's job is to deliver it with the offer and not to quote a factor rate in a way that contradicts it. ## What funders check on an MCA broker before paying commission Funders check an MCA broker before paying commission to make sure the ISO is a real business, registered where the law requires, and not a channel for fraud. The checks borrow from business verification and anti-money laundering practice, scaled to the volume the broker sends. The checklist below is an example for onboarding an ISO and for each commission run: 1. **Confirm the entity.** Legal name, state of formation, good standing and owners, using the same steps as [KYB verification for lenders](/blog/kyb-verification-for-lenders). 2. **Collect registrations.** For Virginia deals, a current registration. For other states, the broker's own statement of where it is registered, kept on file. 3. **Screen the owners.** Check names against sanctions lists and note any judgments or orders the broker disclosed. 4. **Match the payee.** Pay commission only to a bank account in the broker's legal name. 5. **Review deal quality.** Track early defaults and altered statements by broker. A pattern is a reason to pause payments. 6. **Record compensation for disclosure.** The amount you pay must match what the disclosure told the merchant in states that require it. Funders with a formal [BSA/AML program](/blog/bsa-aml-program-for-lenders) can fold broker checks into it. Statement review is part of deal quality too: [TrueBankFlow](/) flags large or out-of-pattern deposits and ties each total to its statement line, which helps when a broker's files keep showing the same odd items. ## When an MCA broker license question is really about lending licenses An MCA broker license question becomes a lending license question when the ISO also arranges loans. Brokering a business term loan, a line of credit or a mortgage can fall under state loan broker or mortgage broker licensing that does not apply to advances. The product decides the license, not the broker's title. The mortgage side is the clearest case. An ISO that refers a business owner to a [business bank statement loan](/blog/business-bank-statement-loan) for a home purchase is now in residential mortgage lending, which runs on state mortgage licensing and its own rules. Keep a simple product list for each broker relationship: which products the ISO may present, in which states and under which registrations. When the list changes, the license review should happen before the first deal, not after the first complaint.