The Legal Ground You’re Standing On
Louisiana 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 Louisiana law. A firm that can’t speak to them isn’t the best firm for a Louisiana file.
1Usury limits & the recharacterization question
Louisiana's 12% conventional interest cap (La. R.S. 9:3500) expressly does not apply to business-purpose loans, and in 2025 the state went further: La. R.S. 9:3137.10 (Act 198) declares that a revenue-based financing transaction "is not a transaction for the use, forbearance, or detention of money" and that its charges "are not interest" — statutorily foreclosing usury recharacterization under Louisiana law. But the shield has a hole funders built themselves: MCA contracts almost always select New York law, and in the 2026 Crosby Marine bankruptcy, the Eastern District of Louisiana bankruptcy court recharacterized an MCA as a disguised loan under exactly that New York choice-of-law clause. A Louisiana merchant's recharacterization argument runs through the contract's chosen law, not Louisiana's.
Sources: La. R.S. 9:3500 (12% cap; business exclusion) · 2025 La. Acts No. 198 (HB 470) — La. R.S. 9:3137.10, enrolled text · In re Crosby Marine (Bankr. E.D. La. 2026, opinion PDF)
2Confessions of judgment in Louisiana
No NY-style pre-suit confessions Louisiana recognizes confessions of judgment only in a narrow security-device context: under La. C.C.P. arts. 2631–2632, an authentic act evidencing a mortgage or privilege "imports a confession of judgment" supporting executory process — seizure and sale without prior citation. That is a mortgage-enforcement device, not the blank pre-suit confession historically embedded in MCA contracts, which has no entry mechanism in Louisiana courts. The industry's main confession channel was New York, closed to out-of-state debtors since the 2019 CPLR 3218 amendment.
Sources: La. C.C.P. art. 2632 (confession in executory process) · Riker Danzig — 2019 amendment to NY CPLR 3218
3Louisiana Revenue-Based Financing Disclosure Law (Act 198 of 2025): what funders must tell you
Effective August 1, 2025, La. R.S. 9:3137.10 requires a one-time written disclosure at or before consummation of any revenue-based financing transaction — the MCA structure, where payments rise and fall with sales. Required items: total funds provided; funds actually disbursed if less (after fees, prior-balance payoffs, or third-party payments); total to be paid to the provider; total dollar cost; payment manner, frequency, and amounts (with the variable-payment methodology); and prepayment costs or discounts. No APR is required. Distinctively, the law has no dollar ceiling and no entity exemptions — but also no provider registration, no designated enforcement agency, and no penalty provision, so compliance disputes will likely play out in private contract litigation. The newest MCA disclosure regime in the country, and the same act that shields funders from Louisiana usury claims — a legislative trade.
Sources: Enrolled HB 470 (2025) — La. R.S. 9:3137.10 · Résumé Digest, Act 198 — effective Aug. 1, 2025 · Mayer Brown — Louisiana revenue-based financing disclosures (Aug. 2025)
How funders actually enforce here: Funders holding out-of-state judgments domesticate them under Louisiana's Enforcement of Foreign Judgments Act (La. R.S. 13:4241–4242): the authenticated judgment is annexed to an ex parte petition to make it executory, after which it is treated like a Louisiana judgment — enforceable through the same seizure and garnishment procedures and subject to the same defenses. Funders also perfect UCC-1 liens against receivables through parish Clerks of Court via the Secretary of State's central system. Louisiana's civil-law procedure differs enough from other states that local counsel matters more here than most places. La. R.S. 13:4242 (foreign judgments made executory) · Louisiana Secretary of State — UCC financing statements
