Merchant Cash Advances for Trucking Companies: Why They Don't Fit the Model

Merchant cash advances are one of the most heavily marketed financing products to small businesses. Every day, trucking company owners receive calls and emails promising fast cash with minimal qualification requirements. There is a reason MCAs spend so much on marketing: they need to find businesses that will accept extremely expensive financing.

For trucking companies specifically, MCAs almost never make sense. The product structure fundamentally conflicts with how trucking revenue works.

How Merchant Cash Advances Work

MCAs are technically not loans — they are purchases of future revenue. Here is the structure:

• Advance amount — You receive a lump sum, say $50,000
• Factor rate — You agree to repay a multiple, say 1.35x or $67,500
• Daily or weekly payments — Repayment happens via automatic debits from your bank account
• Repayment period — Typically 4-18 months depending on payment amount
• No stated APR — Because it is not technically a loan, APR is not disclosed

Why MCAs Were Designed for Retail

MCAs originated for retail and restaurant businesses with specific characteristics:

• Daily credit card sales — Predictable, consistent card revenue
• Consumer customers — Cards processed through merchant accounts
• Real-time collection — Payments taken as a percentage of daily card processing
• High transaction volume — Many small transactions rather than few large ones

The MCA model was built around businesses like restaurants that process $2,000-$10,000 in credit cards daily. The MCA provider takes 10-15% of each day's card revenue, so repayment naturally adjusts with business volume.

Why Trucking Revenue Does Not Fit

Trucking companies have fundamentally different revenue patterns:

Because trucking companies do not process credit cards, MCAs cannot tap into merchant processing. Instead, they take fixed daily or weekly debits from your bank account — regardless of whether customer payments have arrived.

The ACH Debit Problem

For trucking companies, MCAs typically work through fixed ACH debits:

• Daily debits — $300-$500/day pulled from your account regardless of revenue
• No adjustment for slow weeks — Payment stays the same even if loads are down
• Overdraft risk — If your account is short, you face NSF fees on top of MCA costs
• Cash flow collision — Debits happen before your invoices are paid

Real Cost Example

Consider a trucking company that takes an MCA for emergency repairs:

The situation: $40,000 advance with 1.38 factor rate, repaid via $450 daily ACH debits over approximately 122 days (4 months).

Total repayment: $55,200

Cost of capital: $15,200 (38% of advance amount)

Effective APR: Approximately 95%

Daily cash drain: $450 x 5 days = $2,250/week regardless of loads completed

Compare this to a term loan at 15% APR for the same $40,000 over 2 years: monthly payment of approximately $1,940, total repayment of $46,560, and cost of capital of $6,560. The term loan costs less than half — even at a rate most borrowers would consider high.

When Trucking Companies Get Trapped by MCAs

Despite being a poor fit, trucking companies do take MCAs. Common scenarios:

• Declined elsewhere — After being declined for equipment financing or term loans, MCAs are often the only "yes"
• Speed pressure — Urgent repair or opportunity with no time for traditional financing
• Aggressive marketing — MCA providers target trucking companies heavily
• Misunderstanding terms — Factor rates and daily payments can obscure true cost
• Desperation — Cash crunch leaves few options

Better Alternatives for Trucking

Almost any other financing option costs less than MCAs for trucking:

If You Already Have an MCA

If you are currently paying an MCA, options exist:

• Calculate remaining balance — Understand exactly what you owe and when it will be paid off
• Do not stack — Taking another MCA to cover the first makes things worse
• Explore refinancing — Some lenders offer MCA consolidation at lower rates
• Focus on completion — Once paid off, establish better financing relationships
• Build reserves — Create a buffer so you never need emergency MCA financing again

The Bottom Line on MCAs for Trucking

MCAs were not designed for trucking and do not fit trucking business models. The daily fixed payments conflict with invoice-based revenue cycles. The cost is vastly higher than alternatives designed for trucking.

If an MCA provider is the only one saying "yes" to your financing request, that is a signal to figure out why others are saying no — and address those issues rather than taking expensive money that could create bigger problems.

At Liminal, we help trucking companies find financing that actually fits their business model. Equipment financing, lines of credit, and factoring all serve trucking companies better than MCAs. Our matching process is free, takes 2 minutes, and helps you connect with lenders who understand trucking.