The Legal Ground You’re Standing On
Delaware MCA law: the three facts that shape every option
Every resolution strategy — renegotiation, settlement, defense, refinancing — plays out differently depending on these three pieces of Delaware law. A firm that can’t speak to them isn’t the best firm for a Delaware file.
1Usury limits & the recharacterization question
Delaware's usury statute (6 Del. C. § 2301) sets a ceiling of 5% over the Federal Reserve discount rate for written agreements — but § 2301(c) removes the cap entirely for loans over $100,000 not secured by the borrower's principal residence, which covers most commercial financing. There is no criminal usury statute; the civil remedy (§ 2304(b)) lets a borrower deduct unlawful excess interest and sue within one year for three times the excess. On recharacterization, the $100,000 exemption would still leave most advances uncapped — so the usury angle in Delaware matters mainly for advances of $100,000 or less. Delaware's real significance for MCA merchants is its confession-of-judgment practice.
Sources: 6 Del. C. ch. 23 (§§ 2301, 2304) — Delaware Code Online
2Confessions of judgment in Delaware
Permitted — the post-2019 forum that matters Delaware still permits confessed judgments on a warrant of attorney (10 Del. C. § 2306; Super. Ct. Civ. R. 58.1) — and critically, nonresidents can be targeted: a merchant anywhere who signed the § 2306(c) affidavit at closing (stating the sum, authorizing a Delaware county, and reciting Delaware contacts) can face a Delaware confessed judgment. The safeguards are real but procedural: the Prothonotary must send certified-mail notice offering a judicial determination of whether the debtor "understandingly waived" notice and hearing, the burden sits on the plaintiff to prove effective waiver if the debtor appears, and a second notice is required before the first writ of execution. After New York closed its doors to out-of-state confessions in 2019, Delaware remained one of the permissive commercial COJ forums — if your MCA paperwork includes a Delaware affidavit, that is the first thing to have counsel review, and the certified-mail notice is a deadline, not junk mail.
Sources: 10 Del. C. § 2306 (judgments by confession; nonresident affidavit) · Del. Super. Ct. Civ. R. 58.1 (procedure and safeguards) · deBanked — NY's 2019 COJ ban (S06395) context
3Commercial financing disclosure: where Delaware stands
Delaware has not enacted a commercial financing disclosure law — the March 2026 Venable survey lists ten enacted states with Delaware in neither column — and no licensing regime specific to MCA funders exists. Delaware merchants (and the many businesses nationwide organized as Delaware LLCs) hold no statutory disclosure rights here; the state's importance runs the other way, as a forum where funders can still enter confessed judgments.
Sources: Venable — State Commercial Financing Disclosure Laws (Mar. 2026)
How funders actually enforce here: Beyond direct confessed judgments, out-of-state judgments domesticate under Delaware's UEFJA (10 Del. C. §§ 4781–4787): the authenticated judgment filed with the Prothonotary enforces like a Superior Court judgment, with an affidavit of addresses, mailed notice, and a 20-day bar on execution after filing. Delaware exempts 85% of a Delaware resident's wages from attachment (§ 4913), so collection pressure lands on business accounts and assets. UCC filings against Delaware-organized debtors — including the many MCA merchants organized as Delaware LLCs — run through the Division of Corporations' UCC section, so a lien search there is worth doing even if your business operates elsewhere. 10 Del. C. §§ 4781–4787 (UEFJA; 20-day bar) · Delaware Division of Corporations — UCC filings and searches
