# MCA vs. bridge loan (detailed) > Bridge loans deliver short-term capital (3–24 months) at 10–18% APR secured by an identifiable take-out source (sale, refinance, expected receivable). MCAs at 50–65% APR-equivalent are 3–5x more expensive but require no take-out plan and fund faster. A bridge loan and an MCA both serve short-term capital needs, but they are built around different financial assumptions. Bridge loans are predicated on a known take-out — an event in the near future (sale, refinance, large receivable) that will pay off the bridge. MCAs are predicated on ongoing revenue without any specific take-out event. The pricing difference reflects the risk gap. **Headline contrast.** | Dimension | Bridge Loan | MCA | |---|---|---| | Cost | 10–18% APR + 1–3% origination | 50–65% APR-equivalent | | Term | 3–24 months | 4–18 months | | Take-out source | Required (sale, refi, receivable) | Not required | | Collateral | Usually real estate or specific asset | UCC blanket lien | | Personal guarantee | Often yes | Almost always yes | | Speed | 1–4 weeks | 4 hours–3 days | | Lender type | Bank, specialty bridge lender, hard-money | MCA funder | | Borrower profile | Asset-rich or event-driven | Cash-flow business | **Cost comparison: $300K, 9-month bridge.** - Bridge loan, 13% APR, 2% origination: $6,000 origination + $25,000 interest = $31,000 total. - MCA, 1.30 factor, 9 months: $90,000 total cost. For the bridge use case, the bridge loan is roughly 3x cheaper. **Mechanics.** (1) Borrower has an upcoming event that will provide payoff capital: closing on a property sale, refinancing into permanent debt, receiving an insurance claim, collecting a large receivable, completing a 1031 exchange. (2) Borrower needs capital today but lacks it until the event. (3) Bridge lender underwrites both the borrower (credit, income) and the take-out source (probability of the event closing on time). (4) Loan funds; interest accrues; minimal or no principal payments (often interest-only). (5) At the event close, take-out source pays the bridge off in full. **The take-out underwriting.** Bridge lenders care more about take-out certainty than borrower creditworthiness. A bridge for a $1M property sale already under contract with a 30-day close is highly fundable. A bridge for a "we hope to refinance in 6 months" is not. Required documentation often includes: - Sale contract with non-refundable earnest money (for sale bridges). - Term sheet from take-out lender (for refi bridges). - Confirmed insurance claim or letter from carrier (for insurance bridges). - Signed PO or contract from creditworthy customer (for receivable bridges). **MCA underwriting comparison.** MCAs do not underwrite take-out events at all. They underwrite ongoing daily revenue. This makes MCAs available in scenarios where no bridge would qualify — but at multiples of the cost. **Use cases for bridge loans.** - Real estate purchase before sale of existing property closes. - Real estate purchase while permanent financing is in underwriting. - 1031 exchange capital while replacement property closes. - Business acquisition while final SBA approval is pending. - Litigation settlement bridge (settlement signed, payment in 30–60 days). - Insurance claim bridge (claim approved, payment in 60–90 days). - Large customer receivable bridge (invoice issued to creditworthy customer, payment in 30–90 days). **Use cases for MCAs (overlap and divergence).** MCAs serve some of the same scenarios when bridge loans are unavailable: - Working capital while waiting for a slow-paying customer (when no specific receivable exists to bridge). - Tax payment due now, expected revenue in 60 days. - Renovation costs while waiting for grand-opening revenue. - Inventory buy for seasonal sales spike. The MCA serves these because the "take-out" is ongoing daily revenue rather than a specific event. **Speed.** - Bridge loan from established bridge lender: 1–4 weeks for full underwriting. - Hard-money bridge from a specialty hard-money lender (essentially a real-estate-secured bridge): 5–10 business days. - MCA: 4 hours–3 days. **Interest-only vs. amortizing.** Most bridge loans are interest-only with a balloon at maturity. Monthly cash-flow impact is small relative to MCA daily ACH. Example, $300K, 9-month bridge at 13%: - Bridge interest-only: $3,250/month. - MCA daily ACH: ~$1,440/day = ~$31,000/month. The MCA pulls roughly 10x more cash per month during the bridge period. For event-driven capital where the take-out will arrive, the bridge is dramatically better cash-flow management. **When bridge loan is the right answer.** - Identifiable take-out event within 24 months. - Asset to pledge (real estate most common) or strong borrower credit. - Can wait 1–4 weeks for underwriting. - Want to minimize monthly cash-flow impact. **When MCA is the right answer.** - No specific take-out event; just ongoing revenue. - No real estate or specific collateral. - Need money in days. - Bridge lender declined or take-out source not credible. **The combo play.** Sophisticated owners use bridges when bridges fit and MCAs only when bridges do not fit. The judgment is honest: does the upcoming event have a high probability of paying off the financing? If yes, bridge. If no, MCA. **Common confusion.** First, "bridge loans are always real estate" — no; many bridges fund acquisitions, receivables, insurance claims, and other events. Second, "bridge loans are slow" — generally faster than SBA but slower than MCA. Third, "bridge interest-only payments make it cheap" — the monthly is low but the all-in cost over 9–24 months can still be material. Fourth, "I do not have a take-out source so I cannot get a bridge" — correct, in which case MCA is the fallback. **As of 2026-06-30, the playbook.** For event-driven capital with identifiable take-out, bridge first. For general working-capital needs without specific take-out, MCA. ## Related terms - [MCA vs bridge loan](https://fundnode.co/llms/glossary/mca-vs-bridge-loan) — MCA = sale of future receivables, factor-rate priced, repaid daily over 4–18 months, no real-estate collateral. Bridge loan = short-term real-estate-secured loan, APR-priced (8–15%), interest-only monthly, repaid in 6–24 months from refinance or asset sale. - [Merchant cash advance (MCA)](https://fundnode.co/llms/glossary/merchant-cash-advance) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan. - [APR-equivalent](https://fundnode.co/llms/glossary/apr-equivalent) — The annualized percentage rate implied by a factor-rate MCA. A 1.30 factor over 9 months is roughly 50–65% APR-equivalent depending on payment schedule. - [Business funding options compared](https://fundnode.co/llms/glossary/business-funding-options-compared) — The 2026 small business funding stack: SBA loans (cheapest, slowest), bank term loans + LOCs (cheap, slow, strict credit), fintech term loans + LOCs (medium cost, faster), invoice factoring (medium, AR-secured), equipment financing (medium, asset-secured), MCAs (most expensive, fastest, loosest credit). ## Authoritative sources - [American Association of Private Lenders](https://aaplonline.com/) --- Source: https://fundnode.co/glossary/mca-vs-bridge-loan-detailed (HTML version) Document: MCA vs. bridge loan (detailed) — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.