Can I get a cash advance on my lawsuit in Iowa, and what does Iowa law say?

By Michael Shemtoub, trial attorney, Beverly Law. Updated November 2026.

The Iowa bill that keeps coming back

Senate File 54 was introduced January 16, 2025 as the “Litigation Financing Transparency and Consumer Protection Act” (SF 54 text). As introduced, it would have:

• required funders to register with the Iowa Secretary of State;
• capped what a funder collects at 25 percent of the recovery and kept interest within the chapter 535 rate;
• given the consumer five business days after signing or receiving funds, whichever is later, to cancel without penalty;
• made a contract that violates the new chapter unenforceable by the funder.

The bill history shows SF 54 was approved in committee and renumbered SF 586 on March 10, 2025, sent to Ways and Means, carried into 2026, and renumbered again as SF 2419 on February 23, 2026. Its last listed action is a March 5, 2026 referral to a Ways and Means subcommittee. The House companion, HF 210, was tabled in subcommittee on February 25, 2025 (bill history).

The 2026 version reads differently. As introduced, SF 2419 gives a consumer ten business days after the funding date to cancel, if the consumer returns the money. It drops the 25 percent cap and instead says the amount owed “shall not be determined as a percentage of the recovery from the legal claim,” with fixed amounts tied to time periods. It also adds rules for commercial funding (SF 2419 text). None of these terms are law. If a funder quotes “Iowa’s cancellation period” to you, ask which statute it means. For how cancellation rights work where they do exist, see right to cancel lawsuit funding.

Iowa’s interest rate law

Iowa’s general rate statute is Iowa Code 535.2. Without a written agreement, the rate on money loaned is five percent a year. A written agreement may set a higher rate, up to a ceiling the Superintendent of Banking sets each month: two percentage points above the monthly average ten-year constant maturity rate on U.S. government notes and bonds, rounded to the nearest quarter percent.

That ceiling has large exceptions. Subsection 2 lets certain borrowers agree to any rate, including business and agricultural borrowers and borrowers for personal, family or household purposes above a threshold amount defined in section 537.1301.

Iowa’s lender license rule

Iowa Code 536.1 says a person may not engage in the business of making loans of the threshold amount or less, at rates above what a non-licensee may charge, “without first obtaining a license from the superintendent of banking.” The same rule covers anyone that section 537.2301 of the Iowa Consumer Credit Code requires to be licensed.

Whether either statute reaches a nonrecourse advance depends on whether Iowa would treat the advance as a loan at all, and we found no Iowa court that has decided it. Courts elsewhere have split; see is a lawsuit cash advance a loan.

Champerty in Iowa

We found no Iowa appellate decision that applies champerty or maintenance to a consumer lawsuit advance, and no Iowa statute on champerty. If you are in a dispute with a funder, a lawyer can research older Iowa cases for your facts.

What an Iowa lawyer can and cannot do

Iowa Rule of Professional Conduct 32:1.8(e) says a lawyer “shall not provide financial assistance to a client in connection with pending or contemplated litigation,” except that a lawyer may advance court costs and litigation expenses, “the repayment of which may be contingent on the outcome of the matter,” and may pay those costs for an indigent client. Comment 10 says lawyers may not subsidize lawsuits, including by making loans to clients “for living expenses” (Iowa Court Rules, chapter 32). So your Iowa lawyer can pay for records and experts but cannot cover your rent.

Your filing deadline in Iowa

Iowa Code 614.1(2) gives two years for actions “founded on injuries to the person or reputation,” whether based on contract or tort. Claims against government bodies and some other claims have their own rules. An advance does not extend the deadline.

What to ask before you sign

• What is the total owed at 6, 12, 24 and 36 months? Our page on how much pre-settlement funding costs shows how time drives the payoff.
• Is the charge figured as a percentage of your recovery, or as fixed amounts by date? The two Iowa bills took opposite approaches.
• Does the contract give you any right to cancel, and what must you return to use it?
• Which state’s law does the contract choose, and where would a dispute be heard?

Common questions

Related pages

Cash advance on a lawsuit · Laws by state · Injury law FAQs

Important: This page is general information, not legal or medical advice, and reading it does not create an attorney-client relationship. Every case is different; talk to a lawyer about yours. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. Last reviewed: November 7, 2026.