You’ve delivered the freight, but your broker won’t pay for 30, 45, maybe even 60 days. So now what?
If you’ve been in trucking for a while, you know the drill. Expenses like fuel, repairs, tolls, maintenance, and payroll don’t wait, but your payments do. Those delays can strain your cash flow, and when your truck isn’t moving, you’re not making money.
When bills stack up faster than payments arrive, you need funding that helps you move forward without waiting. That’s where two popular solutions come into play: merchant cash advances and freight factoring.
Both offer quick access to capital, but they work very differently. Each has its place, and choosing the wrong one can cost more than you expect.
This guide breaks down how both options work, the pros and cons of each, and how to choose the right fit for your trucking business, whether you’re an owner-operator or managing a small fleet.
What Is a Merchant Cash Advance?
A merchant cash advance isn’t a loan. It’s a lump sum of cash you receive upfront in exchange for a portion of your future business revenue. Unlike traditional loans with fixed payments and interest rates, this type of funding is based on how much your trucking business earns. If your income is steady, it can be a fast way to handle unexpected costs without jumping through hoops.
How Repayment Works
Once you’re approved and accept the advance, repayments begin automatically. The provider deducts a percentage of your daily or weekly sales directly from your business bank account. The amount can vary based on your income. If you earn less in a given week, your repayment amount will likely be lower too.
Keep in mind, repayment starts almost right away. So while you get access to cash quickly, you’ll also begin repaying it just as fast.
Key Terms You Should Know
Merchant cash advances don’t use interest rates like banks do. Instead, you’ll hear terms like these:
- Factor Rate
A decimal figure (like 1.3 or 1.5) that determines your total repayment. For example, if you receive a $30,000 advance with a 1.3 factor rate, you’ll repay $39,000.
- Holdback
The percentage of your revenue taken for repayment, typically between 10% and 20%. If your business earns $10,000 in a week and your holdback is 15%, $1,500 will go toward the advance.
- Total Repayment Amount
The total you’ll repay by the end of the agreement. It includes the original advance plus the amount added by the factor rate.
How a Merchant Cash Advance Looks in Action
Let’s say your small fleet just landed a large job, but two trucks need urgent repairs. You apply for a $30,000 merchant cash advance and get approved quickly, often within one business day.
Your agreement states you’ll repay $39,000 (based on a 1.3 factor rate), with a 15% holdback. That means 15% of your weekly revenue goes toward repayment. If your business brings in $10,000 next week, $1,500 would be automatically deducted.
This setup helps you handle repairs and get your trucks back on the road without waiting weeks for loan approval or customer payments.
How Merchant Cash Advances Work for Trucking Companies
In the trucking industry, cash flow delays can be devastating. A transmission goes out, fuel prices rise, or a broker pushes back payment. These situations require quick action, not weeks of waiting.
Merchant cash advances are especially helpful for short-term needs like emergency repairs, covering payroll, refueling, or bridging gaps during slow weeks. For trucking companies that deal with high operating costs and unpredictable payment schedules, access to fast capital can make a big difference.
Can Your Trucking Business Qualify for a Merchant Cash Advance?
Merchant cash advances are typically easier to qualify for than traditional loans, but requirements vary by provider.
Here’s what lenders usually consider:
Revenue Consistency
Some lenders look at your monthly credit card sales, often requiring $2,500 to $5,000 or more. Others focus on your total deposits and how steady your income is. A few consistent monthly deposits can make a big difference in your approval chances.
Time in Business
While many lenders prefer businesses to have been in operation for at least one year, some accept businesses that have been active for six months.
Credit Score
Credit score matters, but it’s not the biggest factor. Most providers accept scores starting in the low 500s. Keep in mind, a lower score may mean slightly higher costs.
Basic Requirements Most Lenders Look For:
- 6 to 12 months in business
- $50,000 or more in annual revenue
- Credit score of 500 or higher
- Consistent business deposits
If your business meets these benchmarks, there's a good chance you’ll qualify for a merchant cash advance.
What You’ll Need to Apply
Applying for a merchant cash advance is typically quick and straightforward, especially compared to traditional business loans. Most lenders focus on your revenue and business history rather than your credit score, and the entire process can often be completed online.
Here’s what you can expect at each step.
Basic Information You’ll Provide:
Most applications start with a short online form asking for key business and owner details, such as:
- Your business name and address
- Contact information (email and phone number)
- How long you’ve been in business
- Estimated monthly revenue or credit card sales
- How much funding you’re requesting
- Owner’s name, home address, Social Security Number (SSN), and ownership percentage
Common Documents You’ll Be Asked to Submit
After submitting your application, the lender will usually ask for documents to verify your business’s performance and deposit history. These often include:
- A valid government-issued ID
- Recent business bank statements (typically 3 to 6 months)
- Credit card processing reports, if applicable
- Most recent business tax return
- A credit report (required by some lenders)
If your business doesn’t have a long credit history or hasn’t used a business credit card, some providers may also review how you’ve managed personal financing, such as personal loans or credit cards. This helps them better understand your repayment behavior.
What Happens After You Apply
Once your application and documents are submitted:
- A funding specialist may contact you to confirm details or walk you through the offer.
- Some lenders may require you to use a specific payment processor to handle automatic repayments.
- If approved, you could receive funding within 24 to 48 hours.
This fast and simplified process is one of merchant cash advances' biggest advantages, especially for trucking companies that can’t afford long approval timelines.
What Is Freight Factoring?
Freight factoring is a type of financing that gives trucking companies fast access to working capital by selling unpaid freight invoices to a factoring company. Instead of waiting 30, 60, or even 90 days for brokers or shippers to pay, you receive a large portion of the invoice amount, typically within 24 to 48 hours. The factoring company then collects payment directly from your client.
It’s not a loan, and there’s no debt added to your balance sheet. Factoring turns your completed jobs into immediate cash, helping you stay on the road and cover everyday expenses like fuel, maintenance, or payroll.
How It Works
Freight factoring may sound complicated at first, but the process is simple and built for speed. Here’s how it usually works, step-by-step:
Step 1: Deliver the Load
Complete your delivery as usual and make sure your client signs off on it. Once that’s done, you’re ready to submit your invoice for factoring.
Step 2: Send Invoices and Paperwork
Instead of billing your client directly, you send the invoice to your factoring company. You’ll also include supporting documents such as the rate confirmation, signed proof of delivery (POD), and bill of lading (BOL).
Step 3: Notify Your Customer
Your client will need to be informed that future payments will go directly to the factoring company. This notice is usually required only once at the start of the agreement.
Step 4: Invoice Verification
Before releasing any funds, the factoring company will verify that the load was delivered as agreed. This is often done using digital tools or industry databases to speed up the process.
Step 5: Get Paid Fast
Once the invoice is verified, the factoring company deposits a cash advance into your account, usually between 80% and 95% of the invoice amount, within 24 to 48 hours.
Step 6: Receive the Remaining Balance
When your client pays the invoice in full, the factoring company sends you the remaining balance, minus a small factoring fee. This withheld portion is called the "reserve."
Recourse vs. Non-Recourse Factoring
When choosing a freight factoring agreement, one important detail to consider is whether it's recourse or non-recourse.
Recourse Factoring
This is the more common and cost-effective option. If your client fails to pay the invoice, you’re responsible for repaying the advance. It offers lower fees but also more risk.
Non-Recourse Factoring
With non-recourse factoring, the factoring company takes on more of the risk. If your client goes bankrupt or shuts down, you won’t be required to repay the amount. However, this type of factoring comes with higher fees and may not protect you if there's a dispute over the load or services.
What Are the Requirements?
Freight factoring companies don’t care much about your personal credit score. Instead, they look at:
- Your clients’ ability to pay
- How long you’ve been in business (some accept startups)
- The volume and frequency of your invoices
- Clean, verifiable paperwork like proofs of delivery, bills of lading, and rate confirmations
As long as your paperwork is clean and your customers have a solid track record, you’re likely in good shape to qualify.
How to Apply for Freight Factoring
Most applications are fast and can be completed online. Expect to provide:
- Basic business details
- Proof of business (MC number, DOT number)
- A list of customers you want to factor
- Copies of a few recent invoices
- Delivery documents
Once approved, you’ll be set up with a platform to submit invoices and receive payments, sometimes on the same day.
Freight Factoring in Action
Let’s say you’ve just finished a $10,000 job for a broker who typically pays in 30 days. You’ve already spent money on fuel, food, tolls, and wear and tear on your truck, and you have bills coming up.
Instead of waiting a month to get paid, you use freight factoring. You send your invoice and delivery documents to the factoring company. Within 24 hours, they deposit $9,000 into your bank account (assuming a 90% advance). Once your broker pays in full, you receive the remaining $1,000, minus a small fee.
That cash keeps your truck moving and your business running without delays. For many owner-operators and small fleets, freight factoring can be a practical solution for closing the gap between deliveries and payments.
Merchant Cash Advance vs. Freight Factoring: Cost and Structure
Merchant cash advances and freight factoring both offer quick access to funds, but the way they charge you is very different.
Merchant Cash Advances use a factor rate, which is a set number like 1.2 or 1.3. For example, if you receive $10,000 at a 1.3 factor rate, you will repay $13,000. The total amount is fixed, and it does not change based on how quickly you pay it back.
Freight Factoring charges a percentage of your invoice, typically between 1.5% and 5%. The final cost depends on how long your client takes to pay and how reliable they are. If they pay faster, your cost is lower. This makes factoring more flexible and often more affordable for trucking businesses with steady-paying clients.
If you want a funding option that works with your cash flow, Giggle Finance offers cash advances made for truckers, freelancers, and independent workers. There are no hard credit checks and no confusing terms. Just quick, easy funding when you need it.
Apply now with Giggle Finance to keep your business moving forward.
Merchant Cash Advance vs Freight Factoring: Side-by-Side Comparison
| Feature | Merchant Cash Advance | Freight Factoring |
| Based On | Business revenue | Unpaid freight invoices |
| Repayment | Daily/weekly debit | When broker pays |
| Costs | High (factor rate) | Lower (factoring fee) |
| Debt | No (technically a sale) | No |
| Speed | 24–72 hours | 24–48 hours |
| Ideal For | Urgent costs, fuel, repairs | Regular cash flow, growth |
Pros and Cons of Merchant Cash Advances and Freight Factoring
Before you choose between a merchant cash advance or freight factoring, it helps to weigh the pros and cons. This way, you can decide what fits your trucking business or whether either option is right for you.
Pros of Merchant Cash Advances
Fast Access to Capital
If you’re in a tight spot and need money quickly, a merchant cash advance can be a reliable solution. Unlike traditional loans that may take weeks and require heavy paperwork, merchant cash advances are processed fast. You submit a quick online application, upload recent bank statements, and if approved, you can receive funds within 24 to 72 hours.
This is useful when you need to:
- Fix a broken transmission
- Pay driver wages
- Fill up your tanks for an upcoming haul
- Take on a last-minute freight job
No Invoices Needed
One of the biggest advantages of freight factoring is that you don’t need unpaid invoices to qualify. Merchant cash advances are based on your total business revenue, not your client payment schedule. Even if you are still waiting on a payout from a broker, you can access funding based on your current deposits or card sales.
No Collateral Required
Merchant cash advances are unsecured, which means you don’t have to put up your truck, trailer, or other assets. This is ideal for small fleets and owner-operators who need funds but don’t want to risk their equipment.
Cons of Merchant Cash Advances
1. High Cost
Merchant cash advances can be expensive. Instead of charging interest like a traditional loan, they use a factor rate. While this may seem simple, the effective APR can range from 50% to over 100%, and in some cases, even reach 200%. You get fast funding, but it comes at a high price.
2. Daily or Weekly Repayments
Repayments are made daily or weekly and are automatically withdrawn from your business bank account. This can put pressure on your cash flow, especially during slower weeks or when delays in customer payments affect your revenue. Even when income dips, the repayment schedule stays the same.
3. The Risk of Merchant Cash Advance Stacking
Some trucking businesses end up in a cycle called stacking. This happens when you take one merchant cash advance, then another to cover the first, and maybe a third to stay afloat. Suddenly, multiple payments are being pulled from your account, and your income is being drained by overlapping repayment schedules. If you’re not careful, this can lead to serious financial stress. It’s important to borrow only what you need and make sure you have a clear plan for repayment.
Pros of Freight Factoring
1. Boosts Cash Flow Without Taking on Debt
Freight factoring gives you access to the money you’ve already earned, without taking on a loan. Since you’re selling your invoice rather than borrowing, there’s no interest, no fixed repayment schedule, and no added debt. It’s a practical way to stay liquid without long-term obligations.
2. Grows With Your Business
Factoring is tied to the number of loads you complete. The more jobs you finish and invoices you submit, the more funding you can access. This makes it ideal for growing fleets or busy owner-operators who need their cash flow to keep up with demand.
3. Great for Startups or Thin Credit Profiles
If your business is new or you don’t have perfect credit, freight factoring is often more accessible than other funding options. Approval depends more on the reliability of your clients than your own credit score. If your customers pay on time and are financially stable, you’re more likely to qualify, even if you’re just starting out
Cons of Freight Factoring
1. Ongoing Fees Cut Into Profits
Freight factoring companies typically charge between 1.5% and 5% of each invoice. While this may not seem like much upfront, the cost adds up, especially if you’re factoring every load. For businesses already operating on thin margins, these fees can cut into your bottom line over time.
2. Risk of Non-Payment With Recourse Factoring
With recourse factoring, you’re responsible if a client doesn’t pay their invoice. That means you’ll either need to return the advance or have the amount deducted from future payouts. Non-recourse factoring shifts that risk to the factoring company, but the service usually comes with higher fees. In both cases, the reliability of your customers plays a big role in how much risk you’re taking on.
3. It Takes Some Setup and Back-Office Work
Freight factoring isn’t instant plug-and-play. To get started, you’ll need to submit documents like bills of lading, rate confirmations, and delivery receipts for each load. Some factoring companies may also require you to update your invoicing process or use their systems. While many drivers adjust quickly, there’s a learning curve at the beginning, especially without dispatch tools or load board platforms like DAT and Trucker Tools.
Choosing the Right Option for Your Trucking Business
You’ve got two solid tools to help cover expenses and keep your trucks rolling: merchant cash advances and freight factoring. The right choice comes down to how you get paid, how steady your cash flow is, and what kind of repayment terms you can manage.
When a Merchant Cash Advance Makes Sense
A merchant cash advance works well for trucking businesses that don’t rely on invoices or can’t afford to wait for brokers to pay. If you’re an owner-operator who gets paid directly by customers or through card transactions, this option could be a fit.
It’s especially useful when:
- You need fast funding for a repair or emergency
- Your expenses, like fuel or payroll, are urgent
- You have steady revenue hitting your business bank account
- You want a quick approval process with minimal paperwork
If your business shows consistent deposits, you can often receive funds within 24 to 72 hours.
When Freight Factoring is a Better Fit
Freight factoring is a better option if you haul for brokers and generate regular invoices. If your paperwork is organized and your clients are known for paying on time, factoring can help keep cash flowing smoothly without adding debt to your books.
It’s a strong choice if:
- You want cash upfront for completed loads
- You prefer to avoid traditional loans or advances
- Your clients take weeks to pay but have solid credit
- You’d rather not deal with daily or weekly repayments
Freight factoring allows you to turn outstanding invoices into working capital, helping you manage fuel, maintenance, and day-to-day operations with less stress.
Planning Your Cash Flow Like a Pro
Choosing between merchant cash advances and freight factoring comes down to how your business earns and what you need most—speed, flexibility, or fewer repayment headaches.
If you’re dealing with delayed invoices and need consistent cash flow, freight factoring can help you get paid faster without taking on debt. But if you don’t have invoices to factor and need cash now for fuel, repairs, or payroll, a merchant cash advance may be the better short-term solution.
Just remember: don’t borrow more than you can afford to repay. Quick funding can help or hurt depending on how well it fits your cash flow.
Giggle Finance: A Flexible Option for Truckers
Giggle Finance offers fast, easy cash advances designed for truckers, gig workers, and independent pros. You don’t need perfect credit or piles of paperwork to apply.
With Giggle, you get:
- No hard credit checks
- Funds in just hours
- Repayments based on your actual income
- Clear, simple terms
Smart cash flow planning keeps your business moving forward. And when you need quick, flexible funding, Giggle Finance has your back.
Don’t let cash flow slow you down. Fuel your business with flexible funding that works the way you do. Apply Now with Giggle Finance!
Disclaimer: Giggle Finance provides Revenue-Based Financing programs for business purposes only. Any mention of any loan product(s), consumer product(s), or other forms of financing is solely for marketing and educational content purposes and to help distinguish Giggle Finance’s product from other comparable financing options available in the market.