Funding Comparison
Invoice factoring and MCA sound similar — both give you cash now in exchange for future revenue. But they work completely differently. Factoring requires B2B invoices with net payment terms. MCA works on bank deposit volume — which means it works for businesses that factor can't touch.
Invoice factoring only works if your customers are businesses that pay on net-30/60/90 invoice terms. If you're a restaurant, retail store, salon, auto shop, or any consumer-facing business — factoring is not an option for you. MCA works for any business with $8,000+/month in business bank deposits, regardless of whether customers are individuals or businesses.
12 factors — MCA vs invoice factoring for small business owners.
| Factor | MCA | Invoice Factoring |
|---|---|---|
| Works for B2C businesses | Yes (restaurants, retail, salons, auto) | No — requires B2B invoices |
| Works for B2B businesses | Yes | Yes (if invoices qualify) |
| Approval Speed | 24–48 hours | 3–7 days setup + ongoing |
| Based On | Bank deposit volume | Invoice quality & customer credit |
| Customer Notification Required | No | Usually yes (assignment notice) |
| Minimum Credit Score | 500 FICO | Less relevant — depends on customers |
| Cost Structure | Factor rate 1.15–1.45 | 1–5% discount fee per invoice |
| Advance Rate | 75%–150% of monthly deposits | 70–90% of invoice face value |
| Ongoing vs One-Time | One-time advance (renewable) | Ongoing — factor invoices as issued |
| Customer Relationship Impact | None — private arrangement | Customers redirected to pay factor |
| Recourse Risk | No recourse — not based on A/R | Recourse factoring: you repay if customer defaults |
| Best For | Any business with consistent deposits | B2B businesses with slow-paying large customers |
Business type is the first filter — not cost or speed.
MCA advances capital against your future bank deposit volume — repaid as a daily percentage of deposits. Invoice factoring sells your outstanding B2B accounts receivable invoices at a discount for immediate cash. MCA works for any business with bank deposits. Invoice factoring only works if your customers are businesses that pay on net-30/60/90 terms.
No. Invoice factoring requires business-to-business invoices with net payment terms. Restaurants, retail stores, salons, and consumer-facing businesses collect payment at point of sale and don't have B2B invoices. These businesses must use MCA or similar deposit-based funding.
MCA is typically faster. MCA can fund in 24–48 hours once bank statements are submitted. Invoice factoring setup takes 3–7 business days to establish the factoring line, verify invoices, and notify customers. Once a factoring line is established, individual invoice advances can be processed quickly — but initial setup takes longer than MCA.
Most invoice factoring arrangements (notification factoring) require your customers to be told that their invoice has been assigned to the factor and that payment should go to the factor directly. This changes your customer relationship. MCA requires no customer notification — it's a private arrangement between you and the MCA provider.
It's possible for B2B businesses that have both bank deposits and outstanding invoices, but uncommon. Most underwriters — for both products — look at existing financial obligations. Having a factoring line active may affect MCA advance amounts, and vice versa, depending on how payments flow through your bank account.
We'll look at your deposits and business model and tell you honestly what fits — and what doesn't.
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