Who decides what paper grade I am?

Every funder runs its own scoring model. The factors are similar — FICO, time in business, monthly revenue, average daily balance, negative days, industry, prior MCAs — but the cut-offs differ. You can be A paper at one funder and C paper at another on the same submission, which is why broker submissions to 3–5 funders typically come back with very different terms.

Can I move up a tier between deals?

Yes. Six months of clean banking (no NSFs, no overdrafts, positive average daily balance), one paid-off MCA, a 50-point FICO bump, or moving past the 24-month-in-business mark can each shift you a tier. Most merchants who actively manage their funder relationship and bank statements move from C to B within 12–18 months.

What's the factor rate range for each tier in 2026?

A paper typically prices 1.16–1.25 on 9–18 month terms. B paper prices 1.26–1.36 on 6–12 month terms. C paper prices 1.37–1.46 on 4–9 month terms. D paper prices 1.47–1.55+ on 3–6 month terms. Ranges shift quarterly with funder cost of capital — see our pricing reference for current quotes.

Do paper grades affect things besides factor rate?

Yes — heavily. A paper gets weekly ACH (not daily), reconciliation clauses, prepayment discounts, and 3–5 day funding. C and D paper get daily ACH with no reconciliation, no prepayment relief, COJ in permissible states, and 24-hour funding. The structural terms matter more than the factor in many cases.

What's the lowest tier I should accept funding at?

If you're being quoted D paper (1.47+ factor on a 3–4 month daily-ACH term), pause. The daily payment alone usually consumes 18–25% of revenue and the math rarely works unless you have a confirmed receivable bigger than the payback. Most D paper deals end in stacking, default, or both within nine months.

MCA funder paper grade tiers — the detailed 2026 guide to A, B, C, D paper pricing

A, B, C, D paper is not a marketing label. It's the underwriting tier that decides your factor rate, your term length, your repayment cadence, and which funders will even quote you. Here's how each tier actually prices in 2026, and how to move up.

The 60-second answer

MCA funders sort every incoming submission into a paper grade — A, B, C, or D — that summarizes the risk of the deal. The grade drives three things that matter to merchants: the factor rate, the term length, and the structural terms (daily vs weekly ACH, reconciliation, prepayment discount, confession-of-judgment, COJ).

Every funder has its own scoring rubric. The variables are similar — FICO, time in business, monthly revenue, average daily balance, NSF count, industry, open MCA stack — but the weight assigned to each variable changes by funder. That's why the same merchant can come back from a broker submission with quotes ranging from 1.22 to 1.42 across five funders.

A paper — the prime tier

A paper is the merchant every funder wants. The classic A-paper profile:

FICO 700+ on the owner's personal credit
3+ years in business with continuous operating history
$50K+ monthly revenue consistent over the trailing 6 months
$10K+ average daily balance with zero NSFs in the trailing 90 days
Zero open MCAs and clean public records (no liens, no judgments, no recent bankruptcy)
Non-restricted industry — no adult, cannabis, firearms, or other funder-blacklisted SIC codes

A-paper pricing in 2026:

Factor rate: 1.16 to 1.25
Term: 9 to 18 months
Repayment: Weekly ACH or daily ACH with reconciliation clause
Prepayment discount: Standard — typically 20–40% of remaining fee forgiven on early payoff
Funding speed: 3 to 5 business days, with a soft underwriter review
Renewal cadence: Funders compete heavily for renewals — expect 1.14 renewal pricing on a second deal

A-paper merchants should always demand line of credit or SBA Express quotes alongside the MCA — at this tier, you qualify for cheaper capital, and an MCA only makes sense if speed is paramount.

B paper — the middle market

B paper is the bulk of the MCA market. The B-paper profile typically looks like:

FICO 620–699
18–36 months in business
$25K–$75K monthly revenue, with some weekly variability
$3K–$10K average daily balance, ≤2 NSFs in trailing 90 days
One open MCA acceptable at most funders, two becomes B-minus or C
Some industry restrictions apply — restaurants and trucking get specialty B-paper pricing, healthcare and construction get slight premiums

B-paper pricing in 2026:

Factor rate: 1.26 to 1.36
Term: 6 to 12 months
Repayment: Daily ACH standard; weekly available on the upper end
Prepayment discount: Available at about half of funders; usually 10–20% of remaining fee
Funding speed: 24 to 72 hours
Renewal cadence: Funders renew at 50% paid-down with modest discount (1.30 → 1.27)

C paper — the high-risk tier

C paper is the tier that drives most stacking and default outcomes. Profile:

FICO 550–619
6–18 months in business
$10K–$25K monthly revenue, often with seasonal swings
$500–$3K average daily balance, 3–6 NSFs in trailing 90 days
Open MCAs: 1–2 open advances common at this tier
Recent tax liens or judgments may exist but be on payment plan

C-paper pricing in 2026:

Factor rate: 1.37 to 1.46
Term: 4 to 9 months
Repayment: Daily ACH only, no reconciliation clause in most contracts
Prepayment discount: Rare — full payback regardless of speed
Funding speed: Often same-day for re-applicants, 24h otherwise
Structural terms: COJ in permissible states, personal guarantee mandatory, broader default acceleration language

D paper — the survival tier

D paper exists, and it funds, but the math almost never works. The D-paper merchant profile:

FICO under 550
3–9 months in business or distressed long-running business
Under $10K monthly revenue
Negative balances, 6+ NSFs in trailing 90 days
2+ open MCAs already stacking the daily payment
Active tax liens, judgments, or recent bankruptcy

D-paper pricing in 2026:

Factor rate: 1.47 to 1.55, occasionally higher
Term: 3 to 6 months
Repayment: Daily ACH, often hold-back on card processing in addition
Structural terms: Aggressive collections language, broad COJ where legal, possible additional UCC-1 filings on receivables
Outcome: Most D-paper deals stack into a third or fourth advance within 90 days, with default rates exceeding 35% in the funder's portfolio data

If you're being quoted D paper, the right move is almost always to pause the funding search, work through a 30-day cash-flow stabilization plan, and reapply 60–90 days later at C paper.

How to move up a tier

Six concrete moves that have moved real merchants from C to B (or B to A):

90 days of clean banking. Zero NSFs, zero overdrafts, daily positive balance, average daily balance over $3K. This single change moves more merchants up a tier than any other.
Pay off your existing MCA. A zero-stack profile re-prices most merchants by 8–12 basis points on the next deal.
FICO 50-point bump. Pay revolving balances under 30%, dispute inaccuracies, become an authorized user on a long-history card. 50 points typically crosses a tier threshold at most funders.
Cross the 24-month-in-business mark. Most funder rubrics give a step change at 24 months — the same merchant profile prices materially better the day after.
Switch primary deposit bank if necessary. Underwriters parse certain banks' statement formats more cleanly (Chase, BoA, Wells). Cash-pickup deposits or non-standard ACH labels frequently mis-classify and push you a tier down.
Submit only when ready. Don't shop with thin statements or in your worst revenue week. Every funder pull is in the system and a soft credit footprint — multiple submissions in a 30-day window itself moves you down a tier at some funders.

How brokers think about paper grade

Brokers don't see the funder's internal scoring model — but they can predict your tier within one grade. Most brokers have a 2-funder shortlist per tier and route accordingly:

A paper. Routed to bank-partnered or marketplace funders (Bluevine, Fundbox, OnDeck for the smaller A tickets) and direct lenders with prime pricing.
B paper. The bulk of the MCA-broker book — Credibly, CFG, Forward Financing, Kapitus all compete here.
C paper. Routed to higher-cost funders: Reliant Funding, Headway Capital, Lendio's C-paper desk, smaller balance-sheet funders.
D paper. Sub-prime funders only — Pearl Capital, Yellowstone Capital, Capital Stack, and a handful of specialty desks. Higher fees, broader contract language, faster cycle.

If your broker is sending your deal to a sub-prime desk, ask why before you sign. Many merchants get sub-prime quotes because the broker submitted incomplete statements or missed a positive variable that would have lifted the tier.

What changes paper grade most in 2026

Underwriting has tightened over the last 12 months in three specific ways. Funders that used to grade at 1.30 are now grading the same merchant at 1.34:

Stricter NSF tolerance. The 2023–2024 standard was 3 NSFs in 90 days for B paper; in 2026 most funders demand zero or one.
Daily balance trending. Funders now read trailing 6 months instead of 3, and look for trending stability — a recent dip in average daily balance is now a tier drop where it used to be neutral.
Industry pricing fragmentation. Trucking, restaurants, and construction now have specialty pricing books — some better than the broad tier, others worse — instead of a single industry premium.

The bottom line

Paper grade is the most important variable in your MCA pricing — bigger than the funder you pick, bigger than the broker who quotes you, bigger than the term length. Know your tier before you apply, model the realistic factor range, and don't accept funding at a tier where the daily payment exceeds 12% of revenue. Move up one tier and the math gets materially easier.

Frequently asked questions

Who decides what paper grade I am?: Every funder runs its own scoring model. The factors are similar — FICO, time in business, monthly revenue, average daily balance, negative days, industry, prior MCAs — but the cut-offs differ. You can be A paper at one funder and C paper at another on the same submission, which is why broker submissions to 3–5 funders typically come back with very different terms.
Can I move up a tier between deals?: Yes. Six months of clean banking (no NSFs, no overdrafts, positive average daily balance), one paid-off MCA, a 50-point FICO bump, or moving past the 24-month-in-business mark can each shift you a tier. Most merchants who actively manage their funder relationship and bank statements move from C to B within 12–18 months.
What's the factor rate range for each tier in 2026?: A paper typically prices 1.16–1.25 on 9–18 month terms. B paper prices 1.26–1.36 on 6–12 month terms. C paper prices 1.37–1.46 on 4–9 month terms. D paper prices 1.47–1.55+ on 3–6 month terms. Ranges shift quarterly with funder cost of capital — see our pricing reference for current quotes.
Do paper grades affect things besides factor rate?: Yes — heavily. A paper gets weekly ACH (not daily), reconciliation clauses, prepayment discounts, and 3–5 day funding. C and D paper get daily ACH with no reconciliation, no prepayment relief, COJ in permissible states, and 24-hour funding. The structural terms matter more than the factor in many cases.
What's the lowest tier I should accept funding at?: If you're being quoted D paper (1.47+ factor on a 3–4 month daily-ACH term), pause. The daily payment alone usually consumes 18–25% of revenue and the math rarely works unless you have a confirmed receivable bigger than the payback. Most D paper deals end in stacking, default, or both within nine months.