| Disclosure law | In effect (since July 1, 2022); single sales-based financing transactions of $500,000 or less |
|---|---|
| Covers factoring? | No |
| APR in disclosure? | No, dollar figures |
| UCC filing office | State Corporation Commission, Clerk's Office (UCC filings accepted online only through the Clerk's Information System) |
| State agencies pay | State agencies: 30 days after receipt of a proper invoice or of the goods or services, whichever is later, unless the contract sets a date. Localities: 45 days if the contract is silent. |
| Late-pay interest (state) | State agencies: the Wall Street Journal prime rate on amounts unpaid more than 7 days after the payment date; localities: up to 1% per month |
| Lien deadline (private) | Memorandum of lien within 90 days after the last day of the month of last furnishing, and no later than 90 days after the structure is completed or work ends; it may include only work from the last 150 days, plus retainage |
| Public payment bond | Nontransportation construction contracts over $500,000; state-funded transportation projects over $350,000 |
Who uses invoice factoring in Virginia?
Virginia is one of the largest federal contracting markets in the country. Northern Virginia's government services firms bill the Pentagon, intelligence agencies and civilian departments, often as subcontractors to large primes. Hampton Roads runs on the Navy: Naval Station Norfolk, Norfolk Naval Shipyard and Newport News Shipbuilding buy machining, marine services, staffing and engineering. The Port of Virginia and its distribution centers create logistics receivables, and the data center build-out in Loudoun and Prince William counties keeps electrical, mechanical and construction subs busy. Richmond adds healthcare systems, state agencies and corporate headquarters.
Federal subcontractors often wait 45 to 60 days or more as invoices pass through the prime, and factoring federal receivables requires Assignment of Claims Act steps. State agencies generally must pay within 30 days after a proper invoice. On private construction, owners have 60 days to pay contractors, and contractors must pay subs within 7 days after being paid. Data center and shipyard work runs on long contracts with retainage.
- Industries that factor most: Government services and federal contracting, Shipbuilding and ship repair, Data center construction, Logistics and port services, Healthcare services, Staffing.
- Metro areas: Northern Virginia, Virginia Beach-Norfolk, Richmond, Roanoke, Charlottesville.
- Federal installations that buy from local firms: The Pentagon, Naval Station Norfolk, Norfolk Naval Shipyard, Joint Base Langley-Eustis, Fort Belvoir, Marine Corps Base Quantico.
What does Virginia's commercial financing disclosure law require?
Sales-based financing disclosure and registration law, passed as HB 1027 (2022), 2022 Acts ch. 516 (Va. Code §6.2-2228 et seq.), has been in effect since July 1, 2022. It requires covered providers to give a written cost disclosure before a business signs. Scope: single sales-based financing transactions of $500,000 or less.
It does not appear to reach invoice factoring transactions, though it covers other commercial financing.
It does not require an APR. Expect dollar figures instead: amount financed, amount disbursed, total cost and payment terms.
Registration: Sales-based financing providers and brokers register with the State Corporation Commission ($1,000 initial fee, $500 annual fee due September 15)
Exemptions: Financial institutions, transactions over $500,000, and providers or brokers with no more than 5 sales-based financing transactions with a recipient in 12 months
Enforcement: Attorney General may seek injunctions, damages, restitution and fees; noncompliant terms are unenforceable against the recipient; no express private right of action
The law defines sales-based financing as repayment over time as a percentage of sales or revenue, which describes merchant cash advances; it does not address invoice factoring. Required disclosures include the finance charge and total repayment amount on an SCC form, but not an APR.
Compare offers side by side in the proposal decoder, and see every state's law in our disclosure law tracker.
How do UCC filings work in Virginia?
Where UCC-1s are filed in Virginia: State Corporation Commission, Clerk's Office (UCC filings accepted online only through the Clerk's Information System). Paper UCC submissions are returned unprocessed; search CIS by debtor name or file number.
A factor will search that index on your exact legal name before it funds, and will file its own UCC-1 on your accounts receivable at closing. Anyone already claiming your receivables, such as a bank, an SBA lender or a merchant cash advance provider, must release, subordinate or sign an intercreditor agreement first. Search your own name first at the official Virginia UCC search; old filings from paid-off lenders are common and can take a week or more to terminate. More in UCC liens and intercreditor agreements.
How fast do government payers in Virginia pay?
Virginia state agency deadline (Va. Code §2.2-4347 to §2.2-4356): State agencies: 30 days after receipt of a proper invoice or of the goods or services, whichever is later, unless the contract sets a date. Localities: 45 days if the contract is silent. Late interest: State agencies: the Wall Street Journal prime rate on amounts unpaid more than 7 days after the payment date; localities: up to 1% per month. Contractors must pay subs within 7 days after being paid or give written notice of withholding; sub interest is 1% per month unless the contract says otherwise. Agencies must flag defective invoices within 15 days (20 for localities).
Federal agencies follow the Prompt Payment Act: generally 30 days after a proper invoice, with interest at the Treasury rate (4.75% for July 1, 2026 to December 31, 2026) when they pay late. To factor federal invoices, the funder usually needs an assignment of claims acknowledged by the contracting officer, which adds a week or two to setup. See factoring for government contractors and the prompt payment interest calculator.
What do Virginia lien and prompt pay rules mean for construction factoring?
Funders that factor construction receivables check lien and bond rights before they advance on a pay application, because those rights are what get an unpaid sub paid. Described generally:
- Mechanics lien deadline (private work, Va. Code §43-1 et seq.): Memorandum of lien within 90 days after the last day of the month of last furnishing, and no later than 90 days after the structure is completed or work ends; it may include only work from the last 150 days, plus retainage. To enforce: Suit within 6 months after recording or 60 days after completion or termination of the project, whichever is later.
- Preliminary notice: Not generally required; on 1 or 2 family residential jobs, notice to the mechanics lien agent named on the building permit within 30 days after first furnishing.
- Private prompt pay (Va. Code §11-4.6): owner to contractor: 60 days after receipt of an invoice for satisfactorily completed work; written notice of any withholding within 45 days; contractor to sub: the earlier of 60 days after the sub's invoice or 7 days after the contractor is paid for that work; withholding notice within 50 days; late interest: interest penalties as under Va. Code §2.2-4355.
- Public projects (Va. Code §2.2-4337 and §2.2-4341): you cannot lien public property, so payment bonds take its place. Bond required: Nontransportation construction contracts over $500,000; state-funded transportation projects over $350,000. Claim notice: Claimants without a contract with the prime must give written notice to the contractor within 90 days after their last labor or materials, by registered or certified mail; suit within 1 year after last furnishing.
- Read every lien waiver before you sign it, and ask counsel how a waiver signed before payment affects your rights. More in factoring for construction subcontractors.
What else should a Virginia business know?
- Virginia's 2022 disclosure law reaches sales-based financing (MCA) only; a business comparing an MCA with factoring will get an SCC-format disclosure on the MCA side but not on a factoring offer.
- Under Va. Code §11-4.6, a private construction sub generally must be paid by the earlier of 60 days after its invoice or 7 days after the contractor is paid, and owner payment is not a condition unless the owner is insolvent, which shortens many Virginia construction receivables.
Questions people ask
Is invoice factoring legal in Virginia?
Yes. Factoring is a sale of accounts receivable under Article 9 of the Uniform Commercial Code as adopted in Virginia, perfected with a UCC-1 filed online with the State Corporation Commission Clerk's Office. Virginia regulates sales-based financing providers, but a purchase of specific business invoices is a commercial transaction outside that registration law.
Does Virginia require a disclosure for factoring deals?
Generally no. Virginia's 2022 law (Va. Code §6.2-2228 et seq.) requires SCC registration and a cost disclosure for sales-based financing of $500K or less, meaning advances repaid as a percentage of sales or revenue. It does not address traditional invoice factoring, and it does not require an APR. Read any factoring agreement for every fee and the termination terms.
Where do I search for UCC liens in Virginia?
Use the State Corporation Commission's Clerk's Information System (CIS) at cis.scc.virginia.gov, which searches UCC and federal tax lien filings by debtor name or file number. Filings are accepted online only. Search your exact legal name, then clear or subordinate any lien on accounts before a factor takes first position.
Can I factor invoices from a Virginia federal prime or Navy contract?
Usually yes. Subcontract invoices to large primes are factored like any commercial receivable, with a notice of assignment to the prime. Invoices billed directly to a federal agency require Assignment of Claims Act filings, which add a few weeks at setup. Funders like Hampton Roads and Northern Virginia federal work because the end payer's credit is strong.
How fast can a Virginia business get funded by factoring?
With a clean file (current AR aging, invoices, a clear UCC search and creditworthy customers), first funding commonly takes about one to three weeks, and later invoices usually fund within a day or two of verification. Federal receivables take longer because of the assignment of claims.
Sources
- Code of Virginia, Title 6.2 Chapter 22.1 (sales-based financing)
- Code of Virginia §11-4.6 (private construction payment)
- Code of Virginia §43-4 (memorandum of lien)
- Virginia SCC, Uniform Commercial Code
- Levelset, Virginia prompt payment FAQs
- Levelset, Virginia mechanics lien FAQs
- Levelset, Virginia bond claim FAQs
General information, not legal advice. Statutes and deadlines change and have exceptions; check the source or ask counsel before relying on one. Spot an error? Tell us and we will fix it.