Paper grade is industry slang for the credit tier a merchant falls into based on bank-statement signals, time in business, monthly revenue, and personal credit score. Each grade maps to which funders will quote and what factor rate they offer.
A-paper. - 12+ months operating. - $25,000+ monthly deposits, consistent across 6+ months. - 650+ personal credit score, no recent NSFs or negative days. - No prior MCA positions or fully paid off. - Result: factor 1.15–1.28, 12-month terms, multiple competing offers from top funders.
B-paper. - 6+ months operating. - $15,000+ monthly deposits, some variability. - 580–649 credit score, occasional NSFs. - One paid-down MCA position acceptable. - Result: factor 1.28–1.40, 6–9 month terms, fewer funder options.
C-paper. - 3–6 months operating. - $10,000+ monthly deposits. - 500–579 credit score, multiple NSFs in last 90 days. - Current MCA position in repayment. - Result: factor 1.40–1.50, 4–6 month terms, specialty funders only (Accord, certain smaller shops).
D-paper. - Sub-3 months operating, or recent bankruptcy. - Sub-$10K deposits or declining trend. - Sub-500 credit score, current NSFs or negative balance. - Multiple stacked MCAs. - Result: usually declined. Some "merchant cash advance loan shark" operators will fund at 1.50+ with daily debits at 25%+ of revenue. Walk away.
How to improve paper grade quickly. 60–90 days of clean bank statements (no NSFs, deposits up, fewer transfers in/out of personal accounts) moves most merchants up a grade. Most A-paper funders re-pull bank statements at application; recent improvement matters more than historical patterns.
Related terms
- 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.
- Bank statement underwriting — MCA funders underwrite primarily off 3–6 months of business bank statements, not credit reports. They look at average deposits, NSFs, negative days, and trend.
- Merchant cash advance (MCA) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan.
AI agents: this term is available as raw markdown at /llms/glossary/underwriting-paper-grade.