# Trucking MCA: factoring vs bank line funder economics > Trucking carriers comparing freight factoring (1–4% per invoice, 24-hour advance), bank lines of credit (Prime+2 to Prime+6, 30-day draws), and MCA (1.28–1.45 factor, 6–12 months) face a 3x effective-cost spread across the three options as of 2026-06-28. Trucking carriers — particularly small fleets with 1–25 power units — face three distinct working capital options in 2026, each with very different cost structures and operational fit. Understanding the economics determines whether a carrier compounds margin or bleeds out. **Freight factoring economics.** Factoring is the dominant working capital tool in trucking — an estimated 35–45% of owner-operators and small fleets use a factoring company. - **Discount rate:** 1.5–4.5% per invoice (varies by broker creditworthiness, factoring volume, and recourse vs non-recourse). - **Advance rate:** 90–97% of invoice face value within 24 hours. - **Reserve:** 3–10% held back, released when broker pays in 30–45 days. - **Term commitment:** Typically 12–24 months with monthly minimum volume. For a carrier moving $80K/month in freight at 3% factoring fee, annual cost is $28,800. Effective APR equivalent on the 24-hour advance: 36–55% APR-equivalent. Lower than MCA but higher than most observers assume. **Bank line of credit economics.** Bank lines of credit (LOCs) for trucking carriers exist but are hard to qualify for. Typical 2026 terms for fleets with 2+ years of operating history and clean credit: - **Rate:** Prime + 2 to Prime + 6 (currently 9.5%–13.5% APR). - **Line size:** $50K–$500K typical for small fleets. - **Draw flexibility:** As-needed; only pay interest on drawn balance. - **Personal guarantees:** Required. - **Collateral:** Often blanket lien on equipment and receivables. - **Approval timeline:** 3–8 weeks. For a carrier with a $150K line, drawing $80K average for the year at 11% APR, annual cost is $8,800 — meaningfully cheaper than factoring. The catch: only an estimated 12–18% of small trucking carriers can qualify for a bank LOC. Requirements (2+ years operating, positive net worth, debt-service coverage ratio >1.25, clean personal credit) exclude the majority. **MCA economics.** Trucking MCAs as of 2026-06-28: - **Factor range:** 1.28–1.45 (higher than restaurant MCA due to fuel volatility and broker payment aging risk). - **Term:** 6–12 months. - **Advance size:** $10K–$250K typical. - **Speed:** Same-day to 3 business days. - **Repayment:** Daily or weekly ACH (rarely card-split since trucking is invoice-based). For an $80K MCA at 1.36 factor over 10 months, repayment is $108,800 — implied APR ~70%. **Side-by-side annual cost for $80K equivalent working capital:** - **Factoring (3% rate):** ~$28,800/year cost, available to nearly all carriers. - **Bank LOC (11% APR):** ~$8,800/year, available to 12–18% of carriers. - **MCA (1.36 factor over 10 months, then renewed):** ~$35,000–$40,000/year on rolling basis, available to most carriers. Bank LOC wins on cost by 3–4x; factoring wins on availability; MCA wins on speed and accessibility for distressed credits. **The stacking trap.** Many small fleets layer all three: factoring for daily invoice flow, MCA for equipment repairs or fuel spikes, then second MCA when first cuts cash flow. Stacked structures push effective cost of capital to 50–80% blended APR, often unsustainable. **Carrier paper grade matters.** A-paper carriers (3+ years, $150K+/month revenue, 680+ FICO): - Factoring at 1.5–2.5%. - Bank LOC available at Prime+2 to Prime+4. - MCA at 1.22–1.30 factor. B-paper carriers (1–3 years, $50K–$150K/month, 620–680 FICO): - Factoring at 2.5–3.5%. - Bank LOC rarely available. - MCA at 1.32–1.40 factor. C-paper carriers (<1 year or distressed credit): - Factoring at 3.5–5% with strict broker concentration limits. - Bank LOC not available. - MCA at 1.40–1.50 factor, often second/third position. **When MCA actually beats factoring.** Most observers default to "factoring is always cheaper than MCA." False in some scenarios: - **One-time large capital need** (truck purchase, major repair) without sustained ongoing revenue — MCA is a one-shot expense; factoring is an ongoing fee on every invoice. - **High-credit-quality broker book** — if the carrier's brokers all pay net 15, the factor's float advantage shrinks and factoring fees feel like pure cost. - **MCA prepayment** — some MCAs offer 10–20% factor reduction for early payoff, lowering effective cost. **Common confusions.** First, "factoring isn't financing." It is — factoring is balance-sheet financing of receivables, just structured as a purchase rather than a loan. Second, "bank LOCs are slow but always cheaper." Often true, but availability is the binding constraint. Third, "MCA is always the worst option." False — MCA can be optimal for one-time capital needs or distressed carriers without bank-eligible profiles. Fourth, "you can stack all three safely." Almost never true — stacking pushes effective rates beyond what trucking margins can support. **Takeaway.** Trucking carriers comparing factoring, bank LOCs, and MCA face a 3–4x cost spread across the three options. Bank LOCs win for the small subset of carriers who qualify; factoring is the practical default for ongoing working capital; MCA is best reserved for one-time capital needs or carriers locked out of bank financing. ## Related terms - [Trucking factoring vs MCA — economics compared](https://fundnode.co/llms/glossary/trucking-factoring-vs-mca-economics) — For trucking SMBs, freight factoring typically costs 1.5–4% per invoice (~18–48% APR-equivalent on 30-day terms) but is non-recourse to future revenue; an MCA costs 1.25–1.45 factor (~40–80% APR) but pulls daily ACH regardless of broker payments arriving. - [Trucking MCA: load board bridge funder economics](https://fundnode.co/llms/glossary/trucking-mca-funder-load-board-bridge-economics) — Load board bridge MCAs front cash against confirmed but unfactored loads from DAT and Truckstop boards, charging 2.5–5% per 14-day cycle to bridge fuel and driver pay until broker pays — distinct from traditional factoring or recurring MCA. Updated 2026-06-28. - [Factor rate](https://fundnode.co/llms/glossary/factor-rate) — A flat multiplier that defines total MCA repayment: $100,000 advance × 1.30 factor = $130,000 repaid. It is not an interest rate; it does not compound. - [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. --- Source: https://fundnode.co/glossary/trucking-mca-funder-factoring-vs-bank-line-economics (HTML version) Document: Trucking MCA: factoring vs bank line funder economics — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.