A bipartisan Connecticut bill would end the prejudgment remedy waiver that MCA lenders used to freeze borrower bank accounts without court hearings. The vote is scheduled before May 6. Connecticut is not alone: seven states have now acted or are acting to restrict how commercial financing providers enforce defaults.

What happened: Connecticut state representative Jonathan Jacobson introduced HB05211, a bill that would outlaw prejudgment remedy (PJR) waivers for merchant cash advances and require MCA providers to disclose fees as annual percentage rates. The bill gained 20+ bipartisan co-sponsors, including both House party leaders, within a month of introduction, according to NPR. A vote is scheduled before May 6, 2026.¹

Why Connecticut matters: After New York restricted confession of judgment filings against non-residents in 2019, MCA firms migrated to Connecticut to access the state's PJR waiver mechanism, which allows lenders to freeze borrower bank accounts without prior court hearing or notice. One MCA attorney described the Connecticut process in a 2022 court deposition as "probably the most effective way of getting a merchant at least to speak to you again after they have defaulted," as reported by NPR.¹

Why this matters to you: If you govern any MCA or commercial financing contracts under Connecticut law, HB05211 would eliminate PJR waivers as a collection tool for all new agreements. The bill also makes Connecticut the third state (after New York and California) to require APR disclosure for merchant cash advances. Combined with New Jersey's existing COJ ban and California's pending AB-2116, the window for COJ-dependent collection models is narrowing state by state.

The regulatory pattern is not isolated to Connecticut. Seven states have now acted or are acting to restrict how commercial financing providers enforce defaults through confessions of judgment and prejudgment remedies. Here is the current status.

The pattern is directional. Five years ago, COJ-based collection was standard practice across most states. Today, four of the six largest MCA-activity states have either banned or restricted it, and a fifth (California) has legislation pending. Illinois remains the notable holdout for commercial COJ, though procedural requirements there add friction that reduces its utility as a rapid collection tool.

Connecticut's Public Act 23-201, effective July 1, 2024, restricted PJR waivers for MCA agreements under $250K. Under the new law, PJR waivers become "unenforceable upon commencing any litigation," meaning lenders cannot freeze accounts at the moment they serve a complaint. They must wait until after service of process is complete, according to analysis by the law firm Neubert, Pepe & Monteith.⁶

The restriction had two gaps. First, it applied only to agreements under $250K, leaving larger advances untouched. Second, the timing restriction (wait until after service) rather than an outright ban gave MCA attorneys room to interpret the statute narrowly and continue pursuing PJR-based collections with slight procedural adjustments, according to reporting from multiple legal outlets.⁹

HB05211 is designed to close both gaps. It eliminates PJR waivers for MCAs entirely, regardless of advance size, and adds the APR disclosure requirement that has already proven effective in New York and California at increasing borrower awareness of true financing costs.

If HB05211 passes before May 6, the operational impact is immediate for new contracts and significant for portfolio management on existing ones.

The NPR report describes a borrower who took four MCAs in rapid succession, a pattern the industry calls "stacking." The borrower received $47K after fees on a $50K advance, owed $72.5K in total repayment, and was required to make $558 in daily payments. When she missed two or more payments, all accounts were frozen, leaving her business with roughly 10 days of operating runway.¹

Stacking is relevant to the enforcement discussion for two reasons. First, multiple MCAs on the same merchant generate multiple UCC filings, each from a different funder. Cross-referencing those filings would reveal over-leveraged merchants before additional capital is deployed. The absence of systematic UCC monitoring across funders is a known gap that verification tools could address.

Second, legislators and courts are increasingly citing stacking as evidence that the MCA industry's self-regulation has failed, strengthening the case for statutory intervention. The more stacking cases that enter the public record through NPR-level reporting, the faster the legislative cycle moves. Operators who want to slow the regulatory momentum would benefit from demonstrating that their underwriting processes screen for stacking before funding.

Connecticut's HB05211 has a specific deadline: the legislature must vote before May 6, 2026. With 20+ bipartisan co-sponsors and both party leaders signed on, the bill has strong momentum. The MCA industry's split lobbying position (the Revenue Based Finance Coalition supports the PJR ban while opposing APR disclosure) reduces the likelihood of a unified industry block, according to the NPR report.¹

California's AB-2116, introduced February 18, 2026, follows the state's existing trajectory of expanding commercial financing protections. The bill bans COJ in commercial financing, prohibits account garnishment provisions, and requires provider registration with the DFPI commissioner effective January 1, 2028. California's legislative session runs through September, giving the bill a longer runway but also more opportunities for amendment.⁷

A separate Connecticut bill, SB-01093, introduced in February 2025, also proposed banning ex parte prejudgment remedies in MCA contracts. A public hearing was scheduled for March 4, 2025, according to deBanked. The presence of multiple overlapping bills in a single state signals legislative momentum that is unlikely to reverse.¹⁰

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