Funding Offer Disclosures in Texas: What to Look For Before You Sign

How Disclosure Rules for Business Funding Work

A commercial financing disclosure rule requires a funder to give a business a clear, standardized summary of an offer before the business signs. Where these rules exist, the summary typically covers the amount of funding provided, the total amount to be repaid, how and how often payments are collected, and what the financing costs. The aim is simple: to let business owners compare offers side by side and understand exactly what they are agreeing to.

These rules are set state by state, and they have been changing. Several states have passed commercial financing disclosure laws, others have considered similar bills, and the details differ from one state to the next. Before relying on any summary, including this one, confirm what currently applies to a Texas business with the Texas Attorney General's office, the state's financial regulator, or a business attorney.

So what must your funding offer tell you? Whether a particular item is legally required for your deal is a question for those sources. What a good offer should tell you is easier to answer, and it is the same in Houston, Dallas, El Paso, or a small town in the Panhandle: how much you get, how much you repay, how repayment works, and what it all costs. The rest of this guide shows you how to get those numbers and put them to use.

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Why Clear Disclosures Matter for Small-Business Owners

Running a small business in Texas means your attention is on customers and operations, not on decoding fine print. Clear written terms protect you from the most common funding surprises: costs buried in complex language, repayment that works differently than you expected, and fees that appear only after the money arrives.

Consider a merchant cash advance repaid through a percentage of daily card sales. If the offer does not state that percentage, how the funder estimates the repayment period, and the total amount you will repay, a slow month can leave you unsure where you stand. With those numbers in writing, you can budget and plan.

Clear terms also make comparison possible. A business line of credit might carry an annual fee and an interest rate, while a cash advance uses a factor rate. With both offers written out in the same basic figures, you can work out the true cost of each and choose the one that fits. That is where Capital Match Now can help: it is a free matching service that puts Texas business owners in touch with vetted funding partners, so you have more than one offer on the table.

What Your Offer Should Tell You in Writing

Whatever the rules for your deal, here is what you should expect to see in writing before you sign any agreement, and what to ask for if something is missing.

Total Amount of Funding Provided

This is the gross amount of the funding. If the funder deducts origination or other fees upfront, the net amount you receive will be smaller. Illustrative example: on a $25,000 offer with a $750 fee taken from the proceeds, you would receive $24,250. Ask for both figures, and base your comparison on the net amount.

Total Repayment Amount

This is every dollar you will pay back, including all fees and factor rate charges. For a merchant cash advance with a factor rate of 1.25 on $20,000, the total repayment is $25,000. Ask for that number explicitly rather than working it out from a rate yourself.

Repayment Method and Frequency

How will you repay? Common methods include:

• Fixed daily or weekly ACH debits from your business bank account
• A percentage of daily card sales, often called a holdback or remittance
• Monthly payments for a line of credit or term loan

The offer should specify the method, the amount or percentage, and the frequency. It also helps to understand how a merchant cash advance is structured: it is usually a purchase of future receivables rather than a loan, which is why it uses a factor rate instead of an interest rate. Whether a particular agreement is treated as a loan depends on its terms, and courts have reached different conclusions, so have an attorney review anything unclear.

Fees and Charges

Origination, underwriting, documentation, and late fees should be itemized. If there are no additional fees, ask the funder to say so in writing. Watch for vague labels like administrative fee, and ask for a breakdown.

Estimated Term or Duration

Merchant cash advances often have no fixed term because repayment depends on sales. A clear offer still includes an estimated repayment period and explains how it was determined, for example: based on your average daily sales, repayment is estimated to take six to nine months.

Annual Percentage Rate (APR) or Equivalent Cost

Loans and lines of credit are usually quoted with an interest rate, and many funders can also state an APR. Merchant cash advances are priced with a factor rate instead. To compare the two, ask each funder for an APR or an estimated annualized cost in writing, along with the total dollar cost, and ask how the figure was calculated.

🔗 Related reading: Massachusetts Funding Disclosures: What Your Offer Should Tell You · Find Merchant Funding

How to Use Disclosures to Compare Offers

Once you have written terms from more than one funder, start with the total repayment compared with the funding provided; the difference is the total cost. Then look at the repayment method, since a fixed daily debit is easier to budget for than a variable percentage of sales, or the reverse if your revenue swings. Finally, check the estimated term: a shorter term means larger payments and, for a loan with interest, less total cost.

Illustrative example: Funder A offers $30,000 at a factor rate of 1.2, repaid through fixed daily ACH debits of $400. Funder B offers $30,000 at a factor rate of 1.35, repaid through a 15 percent holdback on daily card sales. Funder A's total repayment is $36,000, and at $400 per business day it ends after 90 payments, about four months. Funder B's total repayment is $40,500, and the daily amount rises and falls with your sales. Funder A costs $4,500 less, while Funder B's payments ease off in a slow week. Depending on your cash flow, either could be the better fit, and written terms are what make the comparison possible.

Also ask about prepayment. Some funders offer a discount if you repay early, others require the full amount regardless of timing, and a few add a fee. If the offer does not say, ask, and get the answer in writing.

Common Mistakes to Avoid When Reviewing Offers

• Focusing only on the payment amount: A low daily payment can seem affordable, but if the term is long, the total can be far more than you expect. Always check the total repayment.
• Ignoring the repayment method: A fixed ACH debit is predictable but does not ease off in a slow month, while a percentage of sales moves with revenue. Understand how each method affects your daily operations.
• Not asking about fees that are not listed: If a summary looks too simple, ask whether any other charges apply, such as processing or returned-payment fees.
• Assuming all funders are equally transparent: They are not. Work with funders that put every number in writing before you sign.
• Skipping the fine print on renewals: Some agreements offer renewals or refinancing that add new fees or roll an unpaid balance into a new advance. Ask how renewals work and what they cost.
• Missing a confession of judgment: This clause, found in some agreements, can allow a funder to obtain a court judgment quickly if you default, and several states restrict its use. Read the contract for it and talk to an attorney before signing if it is there.

Practical Tips for Texas Small-Business Owners

• Get every number in writing before you agree to anything. A written offer gives you a record to check the contract against, and verbal promises are hard to prove later.
• Compare at least three offers. Use the written terms to compare total cost, repayment method, and term. Do not rush into the first offer.
• Ask about anything unclear. If a term like factor rate or holdback percentage is not explained, ask the funder to clarify in writing. A reputable funder will be glad to.
• Treat vagueness as a red flag. If a funder refuses to provide written terms or hands you a vague document, consider working with a different partner.
• Use a free matching service. Capital Match Now can connect you with vetted funding partners so you can compare several offers without starting from scratch each time.

What If an Offer Isn't What You Were Told?

If a deal turns out to be different from what you were promised, such as fees you were never shown or a repayment method that does not match the offer, start by documenting everything: save emails, texts, the offer, and the signed contract. Ask the funder in writing to explain the difference. You can report deceptive practices to the Texas Attorney General's office or the FTC, and a business attorney who works with commercial finance can tell you what options you have.

Prevention is still better than cure. Getting every number in writing before you sign, and walking away from funders that will not provide it, is the most reliable way to avoid an unpleasant surprise.

Final Thoughts

Whatever the rules say about your particular deal, a good funding offer tells you how much you are getting, how much you will repay, how repayment works, and what it all costs, before you commit. Read every offer carefully, ask questions, and compare before you choose. The right funding should fit your cash flow, not strain it.