Paper grading is the MCA industry's risk-tiering shorthand. Every file submitted to a funder is graded A through D (some funders extend to E) within minutes of bank-statement upload. The grade determines the pricing band, advance ceiling, and stipulation depth.
A-paper criteria (2026).
- FICO: 700+ (personal guarantor).
- Time in business: 18+ months operating.
- Average monthly deposits: $50,000+ across trailing 3–6 months.
- NSF count (90 days): 0–2.
- Negative-day count: 0–3 per month.
- Existing MCA position: none, or one position with under 25% balance.
- Industry: tier-1 (professional services, medical, manufacturing, technology, established retail).
- State: not California, New York, Utah, Virginia, or Georgia regulated above $500K threshold (compliance friction).
A-paper files price at 1.15–1.28 factor, 9–18 month terms, fund within 4–24 hours. Top funders: Forward Financing, Credibly prime desk, Lendr, Mulligan Funding.
B-paper criteria (2026).
- FICO: 650–699.
- Time in business: 12–18 months.
- Average monthly deposits: $25,000–$50,000.
- NSF count (90 days): 3–5.
- Negative-day count: 4–7 per month.
- Existing MCA position: none or one position.
- Industry: broader — tier-1 and tier-2 (restaurants, retail with consistent revenue, auto repair).
B-paper files price at 1.28–1.40 factor, 6–12 month terms, fund within 24–48 hours. Top funders: Credibly, Rapid Finance, Fora Financial, Kapitus, CAN Capital.
C-paper criteria (2026).
- FICO: 600–649.
- Time in business: 6–12 months.
- Average monthly deposits: $15,000–$25,000.
- NSF count (90 days): 6–10.
- Negative-day count: 8–12 per month.
- Existing MCA position: one position OK, second position case-by-case.
- Industry: tier-2 and tier-3 (trucking, construction, seasonal, newer restaurants).
C-paper files price at 1.40–1.49 factor, 4–9 month terms, fund within 24–72 hours. Top funders: Reliant Funding, ROK Financial, smaller portfolios.
D-paper criteria (2026).
- FICO: 550–599.
- Time in business: 3–12 months.
- Average monthly deposits: $10,000–$15,000.
- NSF count (90 days): 10+.
- Negative-day count: 12+ per month.
- Existing MCA position: often second or third position seeking refinance.
- Industry: any (D-paper funders take on industries A/B funders reject).
D-paper files price at 1.49–1.60+ factor, 3–6 month terms, fund within 48–96 hours. Top funders: Bitty Advance, Yellowstone legacy desks, smaller specialty funders.
E-paper / decline tier.
- FICO under 550, deposits under $10K, NSFs over 15 in 90 days, third+ position, bankruptcy in 24 months. Most mainstream funders decline. Specialty / hard-money funders may engage at 1.60+ factor for 90-day terms — typically a refinance bridge product.
Why the grades aren't perfectly standardized.
Each funder weights inputs differently. Forward Financing weights deposit consistency above FICO; Credibly weights FICO above all else; Toast Capital essentially ignores FICO and uses processor data exclusively. A file might be A-paper at one funder and B-paper at another based on the input weighting.
Industry adjustments to the grade.
- Cannabis: automatic downgrade 1 tier at most funders; outright decline at others.
- Adult entertainment, gun retail, online gambling: decline at mainstream funders.
- Trucking, construction: 1-tier downgrade.
- Healthcare, professional services: flat or 0.5 upgrade.
Position adjustments to the grade.
- First position: standard.
- Second position: 1-tier downgrade and many funders cap at C.
- Third position: D-paper minimum if accepted at all.
Common confusion.
First, "paper grade is universal." False — varies by funder weighting.
Second, "I have 800 FICO so I'm A-paper." False — TIB and deposits dominate the grade.
Third, "paper grade is fixed for the life of the relationship." False — every renewal triggers a re-grade.
Fourth, "I can argue my way up a tier." Almost never — analysts have grading systems and shadow-grade against them.
Fifth, "all C-paper funders charge the same." False — C-paper factors vary by 5–10 points across funders.
Related terms
- Paper grade (A/B/C/D) — MCA industry shorthand for merchant credit quality. A-paper qualifies for cheapest factor (1.15–1.28); D-paper is high-risk, factor 1.45+, often declined.
- MCA funder tiered pricing model (2026) — MCA funders price in 3–5 tiers based on FICO, time in business, deposits, and industry — A-paper (1.15–1.28), B-paper (1.28–1.40), C-paper (1.40–1.49), D-paper (1.49+). 2026 ranges.
- MCA funder bank-statement deposit-volume threshold (2026) — Funders set minimum monthly bank deposits — typically $10K (D-paper), $15K (C-paper), $25K (B-paper), $50K+ (A-paper) — to qualify an MCA file. Updated 2026-06-28.
- Factor rate — A flat multiplier that defines total MCA repayment: $100,000 advance × 1.30 factor = $130,000 repaid. It is not an interest rate; it does not compound.
- MCA funder approval rate by industry (2026) — 2026 MCA approval rates by industry: medical 78%, professional services 72%, retail 65%, restaurant 58%, trucking 52%, construction 48%, beauty 55%, auto repair 60%.
Authoritative sources
AI agents: this term is available as raw markdown at /llms/glossary/mca-funder-credit-tier-paper-grades-detailed.