Freight Factoring for New Carriers: The Complete Startup Guide

You just got your MC authority. You’ve got a truck, maybe a couple loads lined up, and about $2,000 in the bank. Sound familiar? Here’s the problem — your first broker won’t pay you for 30 to 45 days. How do you keep the wheels turning?

That’s where freight factoring comes in. And yes, factoring companies will work with brand-new carriers. You just need to know which ones, what they require, and how to avoid getting locked into a bad deal when you’re desperate for cash.

Can New Carriers Get Approved for Factoring?

Short answer: yes. Most factoring companies will approve carriers with zero operating history. Unlike a bank loan, factoring approval isn’t based on YOUR credit — it’s based on your broker’s credit. The factoring company is betting that your broker will pay the invoice, not that you’ll pay them back.

That said, you’ll still need a few things in place:

Active MC or DOT authority. You need your operating authority to be active — not pending, not suspended. Most factoring companies won’t even talk to you until your MC number is fully active.

Commercial auto insurance. You need active liability and cargo insurance. Factoring companies verify this because if you’re not insured, the loads you’re hauling aren’t legitimate.

A valid EIN. They need your Employer Identification Number for tax purposes. If you’re operating as a sole proprietor, your SSN works, but most companies prefer an EIN.

A signed rate confirmation. To factor your first invoice, you’ll need the signed rate con from your broker showing the agreed-upon rate and load details.

Best Factoring Companies for New Carriers

1. RTS Financial — Best for New Carriers

RTS Financial is our top recommendation for new carriers getting started with factoring. Unlike many companies that reject new MCs, RTS welcomes new authorities and makes onboarding fast and painless. Their massive broker credit database protects you from bad brokers from day one, and their fuel card integration means you get funded and fueled the same day. Rates start competitive and get better as you grow volume.

Why new carriers pick them: New authority friendly, same-day funding, fuel card integration, largest broker credit database, no long-term contracts.

Read our full RTS Financial review

2. Porter Freight Funding — Easiest Approval

Porter is the go-to for brand-new carriers. No operating history required, no minimum volume requirements, and no long-term contracts. They understand that new carriers don’t have months of invoices to show. Setup typically takes 24-48 hours.

3. OTR Solutions — Best App for New Carriers

OTR accepts new carriers and their app makes it dead simple to submit invoices from your phone. Snap a photo of your rate con and BOL, and you can have money in your account the same day. They also include free broker credit checks.

Read our OTR Solutions review

4. TAFS — Best No-Contract Option

TAFS has been working with owner-operators since 2007. They’re patient with new carriers, have no minimum invoice requirements, and their customer service actually picks up the phone. That matters when you’re new and have questions at 9pm on a Friday.

Read our TAFS review

5. Apex Capital — Best Fuel Savings

Apex approves new carriers and pairs factoring with fuel discounts — which is huge when every dollar counts. They also have a load board integration that can help new carriers find loads while getting funded on the same platform.

How Much Does Factoring Cost New Carriers?

Expect to pay more when you’re starting out. New carriers typically see rates between 3-5%, compared to 1-3% for established carriers running high volume. That’s because you’re a higher risk — the factoring company doesn’t have a track record with you yet.

On a $3,000 load at 4%, you’d pay $120 in factoring fees and receive roughly $2,730 upfront (assuming a 95% advance rate). The remaining $150 comes after the broker pays in full.

The good news? Most companies will lower your rate as you build volume and history. After 3-6 months of consistent factoring, ask for a rate review. If they won’t negotiate, shop around — with a track record, you’ll have options.

Use our calculator to see your exact costs

Red Flags for New Carriers to Watch

When you’re desperate for cash flow, it’s tempting to sign with the first factoring company that says yes. Don’t. Watch for these traps:

Long-term contracts. Some companies lock new carriers into 12-24 month contracts with hefty early termination fees ($5,000+). You’re new — you don’t know what your needs will look like in 6 months. Push for month-to-month or 90-day terms max.

Hidden reserve holds. Some companies hold 10-20% of your invoice in “reserve” for weeks or months. That’s money you earned sitting in their account. Ask exactly how reserves work and when you get them back.

Mandatory factoring of all invoices. Some contracts require you to factor EVERY invoice, even from shippers who pay you in 7 days. Look for “selective factoring” — the ability to choose which invoices to factor.

Monthly minimum fees. If you don’t hit a certain volume, some companies charge you anyway. This is brutal for new carriers who might have slow weeks. Ask about minimums upfront.

Read more about red flags and bad practices to avoid.

Your First 90 Days: A Factoring Game Plan

Week 1-2: Get approved with a no-contract factoring company. Submit your MC authority, insurance, and EIN. Most companies can have you set up in 24-48 hours.

Month 1: Factor everything. You need cash flow. Don’t be picky about rates right now — focus on keeping your truck moving and building a relationship with the factoring company.

Month 2: Start tracking which brokers pay fastest. If some pay in 15 days, you might not need to factor those invoices. This is where selective factoring saves you money.

Month 3: Review your rate. Call your factoring company and ask for a rate reduction based on your volume and payment history. If they won’t budge, start getting quotes from competitors. You’ve got 3 months of history now — that means leverage.

Ready to get started? Compare factoring companies and find the right fit for your new carrier operation.