Merchant cash advances, or MCAs, are marketed to trucking fleets as no-hassle, debt-free financing with no strings attached. MCAs are supposed to offer flexibility without holding trucking fleets back from growth. The saying goes that if something seems too good to be true, it probably is. So, beneath the attractive marketing, and claims to help fleet owner, what do MCAs really offer?

MCAs Are Debt-Free, But…

One of the biggest selling points of MCAs is that they offer working capital without placing debt on the balance sheets. With the rise in debt-free financing, merchant cash advances have been forcing their way into the trucking industry. The reason merchant cash advances do not use debt is that they are based on future sales. Since future revenue is always uncertain, and there is no collateral involved in the agreement, MCAs have a much higher interest rate than even traditional bank loans. In other words, the overall financing may end up costing fleet owners a lot more than they originally thought.

How Flexible Are MCAs?

The other big point MCAs push is that they are flexible, as opposed to locking fleet owners into rigid monthly payments. A merchant cash advance gets repaid from a percentage from sales. In theory, this means if your fleet is doing well, then the MCA should be repaid quickly due to high sales. During light sales periods, the percentage does not place a strain on finances. None of this is guaranteed. First, repayments only occur when customers pay via credit cards. Payments from cash and checks to not go towards the balance owed on MCAs. So, if the balance and interest are not repaid by the end of the terms in the agreement, fleet owners end up having to pay off the remainder in one large balloon payment. Unfortunately, this large final payment usually places a major strain on finances, causing fleet owners to take out loans to pay off the MCA.


Instead of all of the high interest, hidden fees, and balloon payments, fleet owners are using freight factoring services. Freight factoring does not deal with prolonged payments or high interest. Instead, freight factoring is a simple exchange of receivables for cash. Fleet owners can turn unpaid invoices to working capital without having to worry about anything hidden in the fine print.

Express Freight Finance is a leader in factoring services for the trucking industry. We provide simple, straightforward solutions to fleet owners who want to accumulate working capital and maintain a steady cash flow. Contact us today to learn more.