If you've been shopping for business funding, you've probably heard both terms. And if you've tried to compare them, you've probably found a lot of articles that dance around the real differences without telling you what you actually need to know.
Here's the straight version.
An MCA is not a loan. It's a purchase of your future receivables. A funder gives you cash today in exchange for a percentage of your future revenue — collected daily or weekly from your bank account or card sales.
The key number is the factor rate — typically 1.15 to 1.49. If you receive $100K at a 1.35 factor rate, you repay $135K total. There's no APR, no interest — just a flat cost that comes out until it's paid.
A line of credit is revolving access to capital up to a set limit. You draw what you need, pay interest only on what you use, and replenish as you repay. Think of it like a business credit card with much higher limits and lower rates.
Lines of credit are typically issued by banks, credit unions, or fintech lenders, and they range from $10K to $500K+ depending on your profile.
| Factor | MCA | Line of Credit |
|---|---|---|
| Speed to fund | 24–72 hours | 3–14 days |
| Credit requirement | 500+ (flexible) | 600–650+ |
| Repayment | Daily/weekly % of revenue | Monthly interest on draw |
| Cost | 1.15–1.49 factor rate (expensive) | Prime + 2–8% (much cheaper) |
| Collateral needed | No | Sometimes |
| Revenue requirement | $10K–$15K/month min | $20K–$50K/month |
| Best for | Urgent needs, lower credit | Ongoing working capital |
💡 Real talk on MCA cost: A 1.35 factor rate on a 6-month advance works out to roughly 70–90% APR. It's expensive. But if you need $80K in 48 hours to cover payroll or a supplier, and the alternative is missing that payment — the math changes.
Taking an MCA when you actually qualify for a line of credit. It happens constantly — either because the business owner didn't know they had better options, or because a broker pushed the higher-commission product.
If you qualify for a line of credit at 18% APR, there's almost no scenario where you should be paying a 1.35 factor rate. The difference on a $100K draw over 12 months can be $20,000–$30,000.
Before applying anywhere, know these four numbers: your credit score, your monthly revenue, your time in business, and your current debt load. Those four data points will tell you exactly which product makes sense — and which lender to approach.
At Caply, we run your profile against 50+ lenders simultaneously and show you what you actually qualify for. If you can get a line of credit, we'll find it. If an MCA is the right product for your situation right now, we'll be honest about that too.
One application. We'll match you to the right product and lender for your profile.
Apply Now →Andrew Dillard is the founder & CEO of Caply Smart Business Funding — a lending marketplace connecting small businesses with 50+ lenders across the country. We work with entrepreneurs, restaurants, contractors, healthcare providers, trucking companies, dental offices, landscapers, retailers, and startups.
Caply Smart Funding works with 50+ lending partners to connect small business owners and founders with the right capital at the right time — including those who need to build toward fundability first.
Apply at caplylending.com