Invoice Factoring in Maryland: Rules, Liens, Payers

Maryland rules at a glance, verified November 12, 2026. No commercial financing disclosure law. General information, not legal advice.
Disclosure law	None
UCC filing office	Maryland State Department of Assessments and Taxation (SDAT), UCC Division, 700 E. Pratt St., Baltimore
State agencies pay	Within 30 days after the payment due date in the contract or, if later, after the agency receives the invoice
Late-pay interest (state)	9% per year on amounts unpaid more than 45 days after the agency receives the invoice, starting on day 31; the contractor must invoice for the interest within 30 days of the state's payment
Lien deadline (private)	File a petition to establish the lien in circuit court within 180 days after the work is finished or materials furnished (§9-105)
Public payment bond	Construction contracts above the small procurement amount: generally over $100,000 (over $200,000 for DGS and MDOT construction); payment security of at least 50% of the contract; local public bodies may require it on contracts over $100,000

Who uses invoice factoring in Maryland?

Maryland is a federal contracting state. Fort Meade (home of the National Security Agency and U.S. Cyber Command), Aberdeen Proving Ground, Joint Base Andrews, Naval Air Station Patuxent River and Fort Detrick anchor large prime and subcontract chains in IT, engineering, security and facilities work. Federal agencies such as the National Institutes of Health in Bethesda and the Social Security Administration in Woodlawn add civilian contracts. Johns Hopkins University and its health system, the Applied Physics Laboratory and the University of Maryland Medical System are major buyers, and the Port of Baltimore supports trucking, warehousing and customs brokerage firms.

Government contractors typically wait on prime contractors who wait on federal payment cycles, and fiscal-year-end and continuing-resolution delays can stretch receivables. The Port of Baltimore lost months of traffic after the Francis Scott Key Bridge collapse in March 2024. State agencies must pay within 30 days, with 9% interest on amounts unpaid more than 45 days after the invoice.

Industries that factor most: Federal IT and defense contracting, Healthcare and life sciences, Cybersecurity, Ports and logistics, Construction.
Metro areas: Baltimore, Bethesda-Rockville (Montgomery County), Columbia, Annapolis, Frederick.
Federal installations that buy from local firms: Fort George G. Meade, Aberdeen Proving Ground, Joint Base Andrews, Naval Air Station Patuxent River, Fort Detrick.

Does Maryland regulate invoice factoring?

Maryland has no commercial financing disclosure law, so a factor is not required by state law to give you a standardized cost disclosure. There is no federal one for business financing either. That puts the burden on you to get every fee in writing.

Factoring is generally structured as a purchase of your invoices rather than a loan, which is why consumer lending rules and usury caps generally do not apply to it. The protections that do apply come from your contract and from the Uniform Commercial Code, which governs the sale of accounts in every state.

Ask any provider for the total dollar cost on a sample invoice, the advance rate, every fee, the term and the exit terms. Our proposal checklist lists what a good proposal shows, and the disclosure law tracker shows which states require it.

How do UCC filings work in Maryland?

Where UCC-1s are filed in Maryland: Maryland State Department of Assessments and Taxation (SDAT), UCC Division, 700 E. Pratt St., Baltimore. SDAT says it does not perform record searches for the public (private search companies do), though its eGov portal offers online filing and search with small per-filing and per-search service fees.

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 Maryland 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 Maryland pay?

Maryland state agency deadline (Md. Code, State Fin. & Proc. §§15-101 to 15-105): Within 30 days after the payment due date in the contract or, if later, after the agency receives the invoice. Late interest: 9% per year on amounts unpaid more than 45 days after the agency receives the invoice, starting on day 31; the contractor must invoice for the interest within 30 days of the state's payment. On state construction, primes must pay subs undisputed amounts within 10 days of receiving payment (§15-226), and a procurement officer may impose a penalty of up to $100 per day for violations.

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 Maryland 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, Md. Code, Real Prop. §9-101 et seq.): File a petition to establish the lien in circuit court within 180 days after the work is finished or materials furnished (§9-105). To enforce: 1 year from the day the petition to establish the lien was first filed (§9-109).
Preliminary notice: Subcontractors must give the owner written notice of intent to claim a lien within 120 days after doing the work or furnishing the materials (§9-104), by certified mail or personal delivery.
Private prompt pay (Md. Code, Real Prop. §§9-301 to 9-305): owner to contractor: undisputed amounts within 7 days after the payment date set in the contract; if the contract sets none, within 30 days after the occupancy permit or the owner takes possession, whichever is earlier; contractor to sub: undisputed amounts within 7 days after the contractor receives each payment; late interest: the statute sets no rate; interest runs from the date a court finds the amount was due, and attorney fees may be awarded for bad faith nonpayment.
Public projects (Md. Code, State Fin. & Proc. §17-101 et seq. (Little Miller Act)): you cannot lien public property, so payment bonds take its place. Bond required: Construction contracts above the small procurement amount: generally over $100,000 (over $200,000 for DGS and MDOT construction); payment security of at least 50% of the contract; local public bodies may require it on contracts over $100,000. Claim notice: Suppliers with no contract with the prime must give written notice to the contractor by certified mail within 90 days after last supplying labor or materials (§17-108(b)).
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 Maryland business know?

UCC filings in Maryland go to SDAT, a tax and assessment agency, rather than the Secretary of State.
Maryland's Senate has twice passed a commercial financing disclosure and licensing bill (2025 and 2026); if it passes, it is set up to be enforced by the Commissioner of Financial Regulation.

Questions people ask

Is invoice factoring legal in Maryland?

Yes. Factoring is a sale of accounts receivable, and under Maryland's version of UCC Article 9 the factor perfects its interest by filing a UCC-1 with SDAT. No Maryland statute requires a factoring license or a special disclosure today. Federal contractors should also follow the federal Assignment of Claims Act if a factor will be paid directly by a federal agency.

Does Maryland require a disclosure for factoring deals?

Not as of November 2026. The Small Business Truth in Lending Act (SB 881 in 2026, SB 754 in 2025) would have required APR-style disclosures and licensing for commercial financing providers, and it passed the Senate both years, but it did not pass the House. Check for a 2027 version before you sign a long-term facility.

Where do I search for UCC liens in Maryland?

Maryland UCC records are kept by the State Department of Assessments and Taxation (SDAT), not a Secretary of State. SDAT's eGov portal handles online filing and search, with small service fees. SDAT itself does not run searches for the public, so many lenders order reports from private search firms.

How fast do Maryland state agencies pay contractors?

Under State Finance and Procurement §15-103, agencies must pay within 30 days after the contract's payment date or receipt of the invoice, whichever is later. If an invoice stays unpaid more than 45 days, 9% annual interest accrues from day 31, but you must bill the interest within 30 days of the state's check. On state construction, primes must pay subs within 10 days.

How fast can a Maryland 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

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.

Invoice factoring in Maryland