Texas Business Debt Relief
Expert MCA Settlement & Debt Restructuring

Texas passed HB 700, the Texas Commercial Sales-Based Financing Law, which took effect January 1, 2026. For years before this landmark legislation, Texas was considered a regulatory blind spot for MCA financing — one of the largest state economies in the country with virtually no oversight of merchant cash advance providers. That changed dramatically on January 1, 2026, when Texas became one of the first states to impose comprehensive registration and disclosure requirements on MCA companies operating within its borders.

Under HB 700, every MCA provider doing business in Texas must now register with the Office of Consumer Credit Commissioner (OCCC) at occc.texas.gov. This registration requirement applies to both in-state and out-of-state funders targeting Texas businesses. The law mandates that MCA lenders provide clear, standardized disclosures showing the total repayment amount, the annualized cost of financing, the payment frequency and amounts, and any fees or penalties that may apply. These disclosures must be delivered before the business owner signs the agreement, giving Texas borrowers a genuine opportunity to understand what they are committing to.

Texas business owners can verify their lender's registration status directly through the OCCC website. If an MCA provider is operating without proper Texas registration, HB 700 creates a strong basis for challenging the enforceability of the agreement, potentially voiding the contract entirely. This is a powerful protection that did not exist before 2026. If you are considering a new MCA or are already locked into one with an unregistered provider, the new Texas framework gives you leverage that was previously unavailable. Business owners should always check the OCCC registry before signing any sales-based financing agreement.

Texas Finance Code Section 342.504 explicitly prohibits taking a confession of judgment from Texas borrowers. Unlike jurisdictions such as New York, where COJs have been historically favored by MCA lenders, Texas courts have long been hostile to these clauses. When an MCA lender files a confession of judgment in another state and then attempts to domesticate it in Texas, the borrower has multiple grounds for challenge.

Many MCA lenders file confessions of judgment in New York or Delaware and then try to enforce them in Texas courts through domestication proceedings. However, the new HB 700 framework strengthens the basis for challenging these out-of-state judgments, particularly when the lender failed to register with the OCCC or deliver required disclosures. In Dallas County, Houston, and other major Texas jurisdictions, procedural hurdles for enforcing out-of-state COJs are substantial. Texas courts require strict compliance with service of process rules, and borrowers can raise defenses based on lack of personal jurisdiction, improper venue, and Texas public policy against COJ enforcement.

For Texas business owners facing a domesticated COJ or threats of one, the combination of Texas Finance Code protections and the new HB 700 registration requirements creates a favorable legal environment. Consulting with a Texas attorney who understands both commercial litigation and MCA defense strategies is essential. In many cases, the lender's failure to follow Texas-specific procedures can result in dismissal of the enforcement action, giving the business owner significant negotiating leverage.

Texas has one of the broadest homestead exemptions in the nation, protecting your primary residence from seizure for business debts including MCA personal guarantee judgments. This protection is enshrined in the Texas Constitution and applies regardless of property value — there is no dollar cap on the homestead exemption in Texas, unlike most other states that limit protection to a fixed amount. For Texas business owners facing MCA collection actions, this means your family home is shielded even if a lender obtains a judgment against you personally.

The limits of the homestead exemption are important to understand. It protects only your primary residence, not investment properties or vacation homes. Additionally, while the homestead blocks forced sale, it does not prevent a judgment lien from attaching to the property, which can complicate refinancing or sale until the lien is resolved. Compared to states with minimal or capped homestead protections, Texas offers extraordinary security for business owners whose personal assets would otherwise be exposed through MCA personal guarantees. This constitutional protection is a cornerstone of Texas debt defense strategy and a significant reason why MCA lenders often prefer to negotiate rather than pursue lengthy and potentially fruitless collection efforts in Texas courts.Learn more about how personal guaranties work and how to protect your assets.

Texas has unique industry concentrations that drive MCA debt patterns across the state. The booming Dallas-Fort Worth logistics and trucking sector relies heavily on transportation and logistics financing to manage fleet expansion, fuel costs, and route expansion. Fuel cost volatility creates cash flow squeezes that push trucking companies toward fast MCA capital, but daily repayment deductions can cripple operations when diesel prices spike unexpectedly.

Oil and gas service businesses across West Texas and the Permian Basin face classic boom-bust cycles that make traditional bank lending difficult to secure. When energy prices drop, revenue falls but MCA repayment obligations remain fixed, creating a dangerous mismatch. Restaurants in Houston, Austin tech services firms, and agricultural operations across rural Texas each face their own pressure points that drive emergency borrowing. Meanwhile, construction businesses serving Texas's rapid population growth statewide face material cost inflation and labor shortages that can trigger sudden working capital gaps.

What makes Texas particularly vulnerable to MCA debt spirals is the combination of high growth pressure, industry volatility, and the state's historically light regulatory environment for alternative lenders. Before HB 700, MCA providers operated with minimal oversight, and Texas businesses often accepted terms they did not fully understand. The new registration and disclosure requirements should improve transparency, but business owners already trapped in costly agreements need proactive strategies to escape the cycle.Explore business debt relief options tailored to your industry and situation.