The OCCC's page says applicants "must create a new account and submit the application using NMLS"; an existing NMLS account works, and a new one needs IRS documents that match the entity name and FEIN.^{1 13} The registration takes effect on receipt of a completed application and the fee, is not transferable, and requires no annual report.^{1 2}

The August 18 checklist spells out the filing: a compliance contact and a complaint contact, a registered agent with a Texas street address, every direct and indirect owner, and any direct owner of 10 percent or more as a qualifying individual.⁴ Applicants upload "any judgment, memorandum of understanding, cease and desist order, or conviction" against the company or any owner, director or officer "relating to a violation of law, act of fraud, breach of trust, or money laundering."⁴ Renewal is due by January 31 each year; the OCCC's NMLS calendar opens it on November 1 and allows reinstatement through February 28.^{1 2}

Who must file is broad. Chapter 398 reaches any provider or broker of sales-based financing, defined as a transaction repaid "as a percentage of sales or revenue" or through "a fixed payment mechanism that provides for a reconciliation process," and it applies to anyone who offers the product "over the Internet to or for a recipient of this state, regardless of whether the provider or broker maintains a physical presence in this state."² Banks, credit unions and their affiliates, real-property-secured deals, leases, and dealer facilities of $50,000 or more are exempt.² There is no small-provider carve-out and no de minimis exemption.¹² A broker is anyone who, for compensation, "obtains commercial sales-based financing for a recipient or offers to obtain" it, which covers ISOs and hybrid equipment shops that place MCA paper in Texas.²

Section 398.056 says a provider or broker "may not establish a mechanism for automatically debiting a recipient's deposit account unless the provider or broker holds a validly perfected security interest in the recipient's account under Chapter 9, Business & Commerce Code, with a first priority against the claims of all other persons."² Under the adopted rule, debits are automatic "if they are authorized in advance to occur more than one time or on a recurring basis." A mechanism for automatic debiting "includes a situation in which a recipient provides more than one prewritten check to a provider in advance." A provider "may not direct a third party to complete a debit that violates this section."³

Read the two nouns carefully, because the statute uses both on purpose. The debit hits the "deposit account"; the security interest must be in the recipient's "account under Chapter 9." Article 9 defines an "account" as "a right to payment of a monetary obligation," meaning receivables; a "deposit account" is the bank account.^{2 16} The Finance Commission adopted that reading. Rule 86.313(c) says that "in order to automatically debit a deposit account, a provider or broker must hold a validly perfected, first-priority security interest in all accounts receivable of the recipient," and the preamble adds that the rule "aligns with a distinction in the definitions of the terms 'account' and 'deposit account'" in section 9.102.³ So the test for recurring ACH in Texas is a UCC-1 on all of the merchant's receivables, filed ahead of every other secured party. It is not a deposit account control agreement. The bill's own author and sponsor had asked for that other reading, a first-priority interest "in the deposit account through a deposit account control agreement or a legally enforceable court order," and the commission did not adopt it.³ It also refused a first lien on a newly designated stream of receivables as a substitute, because that "would enable a provider to circumvent the intended scope of the prohibition."³

The same subchapter lists fifteen unlawful, unfair, deceptive or abusive practices. Among them: a confession of judgment, which section 398.055 already makes "void and unenforceable"; an automatic debit in violation of the rule; debiting any account without authorization; instructing "a recipient or a recipient's customer" to redirect payments that were scheduled to go to another creditor or factor, a phrase the commission added after Texas factors described funders contacting account debtors on receivables a factor had already purchased; a material violation of a written intercreditor agreement; and "a device or subterfuge to evade statutory or regulatory requirements."^{2 3} What the chapter does not do is cap price: the Finance Commission "may not adopt a maximum annual percentage rate, finance charge, or fee."²

Under Article 9, conflicting perfected security interests "rank according to priority in time of filing or perfection."¹⁴ Many merchants who take an advance already sit under someone else's lien: a bank line with an all-assets grant, an equipment lender, or a factor that bought the receivables.¹¹ Mayer Brown said as much in June 2025, before the rules existed: because many merchants have "existing financing arrangements that are secured by an 'all assets' lien," it is "unlikely that a significant number of sales-based financing transactions would be able to take a first-lien security interest in a recipient's deposit account."¹¹ That analysis read the statute as a deposit-account lien; the adopted rule moved the collateral to receivables, which an all-assets lien already covers, so the conclusion stands. The recurring debit goes to whoever filed first, and everyone behind loses it.³

The factoring side understood this before most funders did. Cole Harmonson, chief executive of Dare Capital and a board member of the American Factoring Association, told deBanked in January that the factoring industry "had been responsible for the MCA legislation in Texas" and described the mechanics from the factor's chair: "If you get the Springing DACA, then the bank will not give anyone else (i.e., an MCA) a DACA, and therefore no MCA can legally sweep your customer's account, thereby killing the MCAs in Texas."⁷ A DACA gives a secured party control of the deposit account under UCC 9-104, and control is the only way to perfect a lien on a deposit account as original collateral.^{15 17} That makes the DACA a factor's blocking tool at the merchant's bank, not the statutory test. Under the adopted rule it neither satisfies section 398.056 nor is required by it; the lien the rule demands is on receivables, and it is perfected by filing.³

The operating consequence is blunt. A stacked advance was a credit risk. In Texas it is now a compliance question for the funder that filed second, because the recurring pull is reserved for the first position.^{2 3}

Section 398.101 sets the civil penalty at $10,000 "for each violation," the rule calls it a maximum administrative penalty per violation, and neither defines the unit.^{2 3} The floor is one violation per contract, because the preamble places the violation at the moment a funder obtains a recurring authorization without the security interest.³ The ceiling reading counts each debit, since an automatic debit in violation of the rule is itself a listed practice.³ For a book of 200 Texas merchants collected from second position, that is $2.0 million at the floor and, at one debit per business day, about 4,200 debits and $42 million a month at the ceiling. The OCCC has published no enforcement action, so both numbers are the statute's arithmetic, not a prediction.¹

When the statute took effect on September 1, 2025, deBanked reported that Bitty, CFG Merchant Solutions and Spartan Capital introduced fixed-term installment loans for Texas, Backd Business Funding partnered with FinWise Bank to offer term loans, LCF Group partnered with Utah Business Loans, and Merit Business Funding stayed outside the chapter as a subsidiary of Meridian Bank.⁶ A fixed-term loan is not sales-based financing under the definition, and a bank affiliate is exempt, so both routes leave Chapter 398 behind.²

Two other answers keep the advance itself. deBanked's Sean Murray argued in January that Texas "did not ban" the product, pointing to platforms that let the merchant initiate each payment.⁸ In March a Texas processor, ACH Processing Company, pitched per-transaction authorization; its president, John Innes, said "each payment is individually authorized so you don't need that security interest [component] anymore."⁹ The commission has already spoken to one version. A commenter asked it to confirm that "a single, manually initiated debit falls outside § 398.056's prohibition even when made under a broader standing authorization"; it declined, and wrote that a funder that obtains a recurring authorization without the security interest "would already be in violation."³ A payment the merchant authorizes one at a time, with no standing authorization behind it, is the case the rule does not address, and neither model has been tested against "a device or subterfuge to evade statutory or regulatory requirements."³

The map around Texas is filling in. Venable counts ten states with commercial financing disclosure laws, from California and New York to Virginia, and reports that California's regulator is actively enforcing its rules, including a November 2025 consent order over equipment leasing.¹² Vermont's H.648, signed June 16, 2026 and effective July 1, 2027, lifted the Texas debit language for deals under $1 million and adds a licensing requirement, as deBanked reported and as this newsletter carried on June 25.^{10 18}

Register, or decide to leave. A provider or broker doing business in Texas on September 1, 2025 files before December 31, 2026; a new entrant files before the first deal.² Budget $1,120 and assemble the owner list, the Texas agent and the judgment disclosures before opening the NMLS filing.⁴

Then work the collection side, which the registration form never asks about. Pull the UCC search on every Texas merchant and record who filed first against receivables; where the book is not in first position, recurring ACH authorizations, stacks of prewritten checks and third-party debit vendors have to come out.³ Strip confession-of-judgment language from Texas contracts.² Rebuild the specific-offer disclosure to the eleven statutory items and add the signature step before the application is finalized.² Register the brokers and ISOs who place Texas paper.² Review intercreditor agreements and every collections script that asks a merchant or its customers to redirect a payment, because both are now named practices.³ Keep transaction files four years from the transaction or two years from the final entry, whichever is later.³ Calendar the January 31 renewal.²

One limit matters: the OCCC has published no enforcement action, no interpretation of per-transaction authorizations, and no registrant count, so nothing above says how the agency will treat the workarounds now being sold to funders.^{1 3} Plan against the statute and the rule as written.

The video shows why a borrower's word that collateral is clean is a claim rather than proof, what a public UCC filing can reveal before funding, and how the lookup runs inside the standard Secretary of State search.

Cobalt Intelligence returns UCC filing data as a parameter on the Secretary of State search: the legal name is verified against the state record first, then filings are pulled for the supported states, currently 11, with the secured party, filing date, file number and collateral description for each lien. Unsupported states need a fallback, not a silent clear.

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America's Car-Mart disclosed on September 4 that its Silver Point lenders extended the default waiver's termination date from September 7 to September 11, 2026, while the company says transaction talks "remain active" and gives "no assurance" of a permanent waiver.¹⁹ The June amendment set liquidity floors of $7.0 million on Fridays and $5.0 million otherwise, and fees of up to $18.0 million.²⁰ Beyond Banks led with the company's substantial-doubt warning on July 23.²¹

The Federal Reserve, FDIC, NCUA, OCC and FinCEN said on September 2 that Bank Secrecy Act confidentiality rules "do not prohibit banks and credit unions from communicating with a customer" about potentially fraudulent transactions or an intended account closure, "so long as that communication does not reveal the existence of a SAR."^{22 23} Transaction dates, amounts and parties may be discussed; the statement changes no rule.²³ For a lender whose settlement account or merchant has been frozen, Crowell & Moring's read is that banks can now say why.²⁴

Stellantis Financial Services sued Joe Maus Dublin CDJR LLC in the Southern District of Georgia on August 5, seeking nearly $3.9 million and alleging the closed Chrysler-Dodge-Jeep-Ram store breached its floorplan agreement, including vehicles allegedly sold "out of trust" and issues involving accounts receivable, according to Used Car News, which notes the allegations "have not been proven in court."^{25 27} The Auto Wire reports the owner is named personally under his guaranty.²⁶ The docket shows a summons returned unexecuted on August 17 and no answer filed as of September 8.²⁷ It is the collateral-control failure the lead's priority rule is built around.

_{Sources
1 Texas OCCC | Commercial Sales Based Finance
2 Texas Legislature | H.B. 700 Enrolled Text (Finance Code Chapter 398)
3 Texas Register | Adopted Rules, 7 TAC Chapter 86 Subchapter C, July 3, 2026
4 Texas OCCC | CSBF Company Registration Checklist (Aug. 18, 2026)
5 Texas Legislature Online | HB 700 Bill History
6 deBanked | Funders Comply With New Texas MCA Law
7 deBanked | Factor Gives Update on Killing MCAs in Texas
8 deBanked | No, Texas Did Not Ban Merchant Cash Advances
9 deBanked | Texas Automatic Debit Law: This ACH Company Says There Is a Way
10 deBanked | Vermont Follows Texas on Merchant Cash Advance Regulations
11 Mayer Brown | Texas Law Threatens Sales-Based Financing Industry
12 Venable | State Commercial Financing Disclosure Laws
13 FS Vector | Texas Requires Sales-Based Financing Providers to Register
14 Cornell LII | UCC 9-322, Priorities Among Conflicting Security Interests
15 Cornell LII | UCC 9-104, Control of Deposit Account
16 Cornell LII | UCC 9-102, Definitions (Account; Deposit Account)
17 Cornell LII | UCC 9-312, Perfection of Security Interests in Deposit Accounts
18 Beyond Banks | June 25, 2026 Edition (Vermont H.648 Card)
19 SEC EDGAR | America's Car-Mart Form 8-K, September 4, 2026
20 SEC EDGAR | America's Car-Mart Form 8-K, June 25, 2026
21 Beyond Banks | July 23, 2026 Edition (Car-Mart Lead)
22 FinCEN | Agencies Issue Joint Statement on SAR Confidentiality
23 Federal Reserve, FDIC, NCUA, OCC, FinCEN | Joint Statement on SAR Confidentiality (PDF)
24 Crowell & Moring via Mondaq | Regulators Clarify SAR Confidentiality
25 Used Car News | Stellantis Sues Closed Georgia Dealership Over $3.9M Floorplan Dispute
26 The Auto Wire | Stellantis's Own Bank Sends a $3.9 Million Bill
27 CourtListener | Stellantis Financial Services v. Joe Maus Dublin CDJR LLC, 3:26-cv-00051 (S.D. Ga.)}