US Consumer Lending Licence: State Licensing for Fintech, BNPL, Earned Wage Access and Small Business Lenders

Which states require a lender or broker licence

Every state sets its own licensing test. The four most populous states show the main patterns: a licence for any business of lending, or a licence triggered by loan size, purpose and interest rate. Lenders that charge less than a state's licensing threshold, or lend only to businesses where the state licenses consumer loans, may fall outside a particular law, so the test is product by product.

California's California Financing Law requires a licence for any person in the business of a finance lender or broker. A finance lender is a person in the business of making consumer or commercial loans. A broker licence only authorises brokering to licensed finance lenders. A licence also gives the lender an exemption from the usury limit in the California Constitution.

New York's licensed lender law, Banking Law section 340, requires a licence to make loans of US$25,000 or less for personal, family, household or investment purposes, or US$50,000 or less for business and commercial purposes, at a rate above what an unlicensed lender may charge. New York's civil usury rate is 16% a year.

Texas requires non-depository lenders that make, transact or collect consumer loans with interest above 10% a year to hold a regulated lender licence from the Office of Consumer Credit Commissioner (OCCC) under Finance Code Chapter 342.

Florida's Consumer Finance Act, Chapter 516, requires a licence from the Office of Financial Regulation (OFR) to make consumer finance loans, defined as loans of US$25,000 or less at more than 18% a year. Licensed lenders may charge up to 36% a year on the first US$10,000, 30% on the part from US$10,000 to US$20,000 and 24% on the part from US$20,000 to US$25,000.

Small business lending: where a licence or registration applies

Small business lending is licensed in fewer states than consumer lending, but the largest markets do act. California's licence covers commercial loans as well as consumer loans, so a non-bank small business lender or broker serving California borrowers needs it. New York's licensed lender law covers business loans of US$50,000 or less above the usury rate.

Texas took a different route for revenue-based products. House Bill 700 added Finance Code Chapter 398, in force from 1 September 2025, which requires providers and brokers of commercial sales-based financing to register with the OCCC through NMLS by 31 December 2026. Registration costs US$1,000, with a US$1,000 annual renewal.

At federal level, ECOA's fair lending rules apply to business credit. The CFPB's revised Section 1071 rule, published on 1 May 2026, requires lenders that originate at least 1,000 covered small business credit transactions in each of two consecutive years to collect and report data from 1 January 2028. Merchant cash advances, agricultural credit and loans of US$1,000 or less are excluded.

Filing through NMLS

NMLS is the online system most state regulators use to receive, review and renew non-bank licences. California, New York and Texas take lending licence applications through it. A company first requests an NMLS account, then completes the company form (MU1), an individual form (MU2) for each control person, and a branch form (MU3) for each branch the state licenses.

Each state publishes a checklist on NMLS listing the documents and fees it needs. Texas, for example, asks for a business operating plan, an organisation chart, a statement of experience, Texas formation documents, sample loan contracts and financial statements, and charges a US$120 NMLS processing fee on top of its own fees. Fees paid through NMLS are not refundable.

Once licensed, the same record carries renewals, amendments and change notices. The NMLS renewal window runs from 1 November to 31 December each year, and states that allow it offer a reinstatement period from 1 January to the end of February.

The bank partnership model and true lender risk, in plain words

In a bank partnership, a state-chartered or national bank makes the loan and the fintech markets the product, runs the technology and often buys the loans or an interest in them soon after. Federal law lets a state bank charge the interest rate allowed in its home state to borrowers in other states (12 U.S.C. 1831d), and national banks have the same power under 12 U.S.C. 85. This is called rate exportation. It lets one product be offered nationally at one price without state lending licences for the bank's loans.

The risk is the true lender question: who is really the lender? If a court or regulator decides the fintech, not the bank, is the true lender, the loan is judged under the state's own licensing and rate laws, which can make it unenforceable or require refunds. In 2020 the OCC and FDIC adopted rules confirming that a loan's lawful interest rate survives its sale (the valid-when-made rules). The OCC also adopted a rule making the bank the lender if it was named in the loan agreement or funded the loan, but Congress disapproved that rule and it was signed out of force on 30 June 2021 (Public Law 117-24).

States have moved in the other direction. Illinois' Predatory Loan Prevention Act caps loans at 36% APR and treats a company as the lender if it holds the predominant economic interest in the loan, if it markets or arranges the loan and holds a right to buy it, or if the whole arrangement shows it is the lender and is structured to evade the Act. Colorado used its right under federal law to opt out of rate exportation from 1 July 2024. A Tenth Circuit panel held on 10 November 2025 that the opt-out reaches loans to Colorado borrowers by out-of-state banks; the full court then agreed to rehear the case, vacating that decision, and the district court's preliminary injunction against enforcement against out-of-state banks remains in place while the case continues.

Banks also answer to their own regulators for these programmes. The federal banking agencies' 2023 guidance on third-party relationships applies to fintech partners, and on 15 September 2026 the agencies proposed replacement guidance, with comments due by 16 November 2026.

Buy now, pay later: where states have acted

Most states have no BNPL-specific law. BNPL credit is assessed under each state's general lending law, so the question is whether the plan is a loan and whether it falls within the state's rate and size thresholds. A plan with no interest or fees may sit outside some state thresholds; fees for late payment, rescheduling or account services can bring it back in.

California treats BNPL as lending. In 2020 its regulator, then the Department of Business Oversight, concluded that a major pay-in-four provider's plans were unlicensed loans and that the merchant credit sale structure did not avoid the California Financing Law. The provider agreed to lend only through a licensed affiliate and to refund US$905,000 of fees to California consumers.

New York has passed a dedicated BNPL licensing law, Banking Law Article 14-B. DFS proposed its implementing rule on 23 February 2026 and issued a revised proposal in July 2026 as new 3 NYCRR Part 423. Under the revised proposal the rule takes effect 180 days after the notice of adoption is published, existing BNPL lenders must apply within 45 days of that date and may keep operating while their application is decided, interest is capped at the general usury rate, penalty fees of up to US$8 fall within a safe harbour, and each licensee holds capital and a surety bond set by DFS. The rule was not final at 20 October 2026.

Earned wage access: where states have acted

Earned wage access (EWA) lets a worker draw pay already earned before payday, usually repaid from the next pay cheque. Federal law now treats qualifying employer-linked products as outside the Truth in Lending Act: the CFPB's advisory opinion of 23 December 2025 covers products limited to earned wages, repaid by payroll deduction, with no recourse against the worker and no credit checks. States have not waited for federal rules.

Federal rules that apply to every lender, in plain words

• - Truth in Lending Act and Regulation Z: give borrowers standard cost disclosures, including the annual percentage rate (APR, the yearly cost of credit including most fees) and the finance charge, before they commit
• - Equal Credit Opportunity Act and Regulation B: do not discriminate on protected grounds such as race, sex, age or receipt of public assistance, and give a written reason when credit is declined; this applies to business credit too
• - Fair Credit Reporting Act: pull credit reports only for a permissible purpose, tell applicants when a report led to a decline or worse terms, and report accurate data to credit bureaus
• - UDAAP: the Dodd-Frank Act bars unfair, deceptive or abusive acts or practices, which the CFPB applies to marketing, fees, servicing and collections
• - Military Lending Act: active-duty service members and their dependants may not be charged more than a 36% military annual percentage rate on covered consumer credit
• - Section 1071 of the Dodd-Frank Act: small business lenders with 1,000 or more covered originations in each of two consecutive years report lending data from 1 January 2028

Renewals, annual reports and ongoing filings

A lending licence is kept, not just obtained. Each state sets its own renewal, reporting and change notice rules, and NMLS carries most of them.