Four Products, Four Different Repayment Structures
A term loan is a lump sum repaid on a fixed schedule over a set period, the most familiar structure and the one most other financing gets compared against. A line of credit is revolving: a merchant draws what is needed, repays it, and can draw again, paying interest only on the outstanding balance rather than a fixed lump sum. Invoice factoring sells a business’s outstanding receivables to a third party at a discount for immediate cash, with repayment effectively happening when the factored invoice gets collected. An MCA advances capital against a merchant’s future card or bank receipts, repaid through a percentage holdback or a fixed daily debit rather than a scheduled monthly payment.
Those structural differences, not differing price points on the same underlying transaction, are the real reason the four products serve different situations.
Application and Approval Odds, Compared
Per the 2025 Federal Reserve Small Business Credit Survey, as covered by deBanked in June 2026, business lines of credit were the most commonly applied-for product among the four at 43% of small businesses, followed by business loans at 32%, SBA loans at 20%, and MCA at 12%, the least applied for. That ordering roughly tracks how mainstream and familiar each product is to a typical small-business owner.
Full-approval rates tell a more interesting story than the application numbers alone. Auto or equipment loans, which are asset-backed, led at 71%, mortgages followed at 55%, then MCA at 48% and business lines of credit close behind at 45%. MCA and LOC land within three points of each other and well below the asset-backed categories, which means MCA is not the underdog its reputation sometimes suggests; it approves at a rate comparable to a line of credit, a mainstream product businesses apply for more than three times as often.
Why MCA Usage Has Not Grown Since 2017
Regular MCA usage among small businesses held at 7% in 2025, identical to the rate measured in 2017, per the same Fed survey. Eight years of industry growth, marketing spend, and lead-generation activity have not moved that regular-usage number at all. That flatness is worth sitting with: MCA is not a shrinking category, but it is also not the fast-growing disruption its own marketing sometimes implies, it is a stable, roughly 7% slice of the small-business financing landscape that has held steady across nearly a decade.
Where Invoice Factoring Fits, at a Genuinely Different Scale
Invoice factoring operates at a scale the other three products do not approach. According to FCI’s 2025 world industry statistics, as reported by Business Money, global factoring turnover surpassed €4.039 trillion in 2025, up 3.7% from €3.895 trillion the year before. That is a global figure, not a US-specific one, and it should not be read as a direct dollar-for-dollar comparison against MCA’s smaller, more US-concentrated footprint; no US-specific factoring-volume figure with disclosed methodology was located for this comparison. What the global number does establish clearly is that factoring is a mature, enormous financing category in its own right, a real alternative worth naming for a merchant sitting on outstanding receivables rather than steady card or bank deposits.
How to Position the Four to a Merchant, Product by Product
A merchant who qualifies comfortably for a line of credit or a term loan is usually better served there first: those products carry lower cost of capital and, per the approval data above, are applied for far more often precisely because more businesses qualify. MCA earns its place with speed and a repayment structure that flexes with revenue, which matters most for a merchant who cannot wait weeks for a decision or whose income does not fit neatly into a fixed monthly payment. Invoice factoring is the right conversation specifically for a business sitting on unpaid invoices rather than daily card or bank deposits, a different cash-flow shape than MCA is built to solve.
A broker who can explain honestly why a merchant might be better served by a different product, instead of closing whatever is in front of them, is having a longer-term, more credible conversation than one running the same MCA pitch regardless of fit.
What this means for you
- Fed data (2025): application rates run LOC 43%, business loan 32%, SBA loan 20%, MCA 12%, the least applied for of the four.
- Full-approval rates run auto/equipment loan 71%, mortgage 55%, MCA 48%, LOC 45%, with MCA and LOC landing within three points of each other.
- Regular MCA usage among small businesses held at 7% in 2025, identical to 2017, no growth over eight years.
- Global factoring turnover surpassed €4.039 trillion in 2025 per FCI, a global, not US-specific, figure describing a mature, much larger-scale category than MCA.
- The strongest broker positioning explains, honestly, when a merchant is better served by a different product entirely.
Sources
The external data in this guide draws on the sources below. Figures described in the text as estimates or industry triangulations are directional and are not attributed to a single dataset.
- deBanked, Fed Surveys Show Minimal Change in Regular Financing Product Usage
- Business Money, FCI Releases 2025 World Industry Statistics as Global Factoring Market Surpasses €4tn