# MCA funder credit policy (typical 2026)

> Typical MCA funder credit policy in 2026 requires 6+ months in business, $15K+/month deposits, 500+ personal FICO, less than 5 NSFs in 90 days, no open bankruptcy, no active MCA stacks, with paper-grade ranges from A (1.18–1.28) to D (1.40+).

Credit policy is the documented rule set that defines a funder's appetite, risk tolerance, and pricing structure. It is the most important governance document at any MCA funder.

**The structure of a typical 2026 credit policy.**

A credit policy document at a top-tier MCA funder typically runs 30–80 pages and covers:

1. **Eligibility criteria (knockouts).**
2. **Paper-grade definitions and pricing matrix.**
3. **Maximum advance amounts by tier.**
4. **Industry inclusion / exclusion lists.**
5. **Stacking policy.**
6. **Personal guarantor requirements.**
7. **Documentation requirements.**
8. **Approval authority limits.**
9. **Exception policy.**
10. **Renewal eligibility criteria.**
11. **Concentration limits.**
12. **Compliance and regulatory framework.**

**Typical eligibility minimums (2026).**

- **Time in business:** 6 months minimum at most funders; 12 months at top-tier; 24 months for A-paper.
- **Monthly deposits:** $15K minimum (raised from $10K in 2024 due to default-rate pressure); $25K for A-paper.
- **Personal credit score:** 500 minimum; 580 for B-paper; 650 for A-paper.
- **NSF count last 90 days:** Maximum 5 at most funders; 3 for A-paper.
- **Negative day count:** Maximum 10 days in last 90.
- **Bankruptcy:** None open; 12+ months since discharge for consideration.
- **Existing MCA stack:** None active at most funders; some allow 1 existing position.
- **Tax liens:** None active (some funders allow on payment plan).
- **Business legal entity:** LLC, S-Corp, C-Corp, sole proprietorship with EIN.

**Paper-grade pricing matrix (typical).**

- **A-paper:** 650+ FICO, $25K+/mo deposits, 18+ months operating, no NSFs, no stacks → factor 1.18–1.28.
- **B-paper:** 580–649 FICO, $15K+/mo deposits, 12+ months operating, ≤3 NSFs → factor 1.28–1.36.
- **C-paper:** 540–579 FICO, $12K+/mo deposits, 9+ months operating, ≤5 NSFs → factor 1.36–1.42.
- **D-paper:** 500–539 FICO, $10K+/mo deposits, 6+ months operating, ≤8 NSFs → factor 1.42–1.50.

**Industry inclusion / exclusion in 2026.**

**Standard inclusions:** restaurants, retail, professional services, auto repair, construction (with caveats), trucking (specialty funders), healthcare, beauty/wellness, e-commerce, manufacturing, wholesale.

**Standard exclusions:**
- Cannabis (in non-licensed states).
- Firearms / ammunition.
- Adult entertainment.
- Gambling (non-licensed).
- Cryptocurrency / digital assets.
- Multi-level marketing.
- Debt-collection agencies.
- Bail bonds.
- Subprime auto sales.
- Pawnshops.

**Caveat industries** (some funders include, some exclude, often higher pricing):
- Long-haul trucking (specialty funders only).
- Full-service restaurants with bar revenue >40%.
- Construction with seasonal revenue patterns.
- Hospitality (hotels, motels).

**Stacking policy.**

Most top-tier funders in 2026 enforce strict no-stacking policies:

- **No existing MCA positions** at time of funding.
- **30-day blackout** between paying off prior MCA and new advance (some funders).
- **Renewal-only relaxation** — funders allow merchant to "renew up" into a larger advance even with outstanding balance.
- **Subordination requirement** — if existing position is from same funder or sister entity.

D-paper specialists explicitly allow 2nd and 3rd position; pricing reflects.

**Personal guarantor requirements.**

- **Standard:** Personal guarantee from any owner with 20%+ equity stake.
- **A-paper exceptions:** Some A-paper deals waive PG for established corporations with strong balance sheet.
- **High-risk PG:** Required documentation includes credit pull, employment verification, asset disclosure.
- **COJ (Confession of Judgment):** Required at many funders for advances >$100K; banned in some states.

**Approval authority limits.**

- **Auto-approval:** Sub-$50K, A/B-paper, clean file (no human review).
- **Underwriter approval:** $50K–$250K, all paper grades.
- **Senior underwriter:** $250K–$500K.
- **VP underwriting:** $500K–$1M.
- **Credit committee:** $1M+.

**Renewal eligibility.**

- 50%+ paid down on existing advance.
- No payment defaults in last 60 days.
- No reconciliation requests outstanding.
- Deposit volume stable or growing.
- No new MCA stacks taken since original advance.

**Concentration limits in credit policy.**

- Single industry: max 20% of portfolio.
- Single state: max 25% of portfolio.
- Single ISO: max 10% of monthly origination.
- Single merchant: max 2% of outstanding book.

**2026 trends in credit policy.**

- **Tighter minimum deposit requirements** ($15K → likely $20K by late 2026).
- **AI-driven explainable decline codes** to satisfy CA, NY, UT, VA, GA disclosure requirements.
- **Industry-specific sub-policies** (trucking, restaurant, retail each have distinct tightening).
- **Macroeconomic overlay** — temporary deposit-volume bumps during recession concerns.
- **Climate-risk overlays** for hurricane / wildfire / flood-zone merchants.

**Common confusions.**

First, "credit policy = risk-pricing model." Related but distinct — policy defines eligibility; model defines pricing.

Second, "credit policy is public." Almost never — proprietary; competitive intelligence value.

Third, "all funders use the same minimums." False — varies significantly across the 100+ active MCA funders.

Fourth, "policy is fixed." False — typically updated quarterly; major changes annually.

Fifth, "exceptions are common." Less so in 2026 — exception rate at top-tier funders typically <5% of decisions.

## Related terms

- [Paper grade (A/B/C/D)](https://fundnode.co/llms/glossary/underwriting-paper-grade) — 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 stacking policy: strict vs. permissive](https://fundnode.co/llms/glossary/mca-funder-stacking-policy-strict-vs-permissive) — Strict-stacking-policy MCA funders (Credibly, CAN Capital, Forward Financing, Rapid Finance) require no existing positions and price 1.18–1.36; permissive-stacking funders (D-paper specialists) allow 2nd-4th positions at 1.40–1.55 factor with daily-debit stacking.
- [MCA funder risk-pricing model (2026)](https://fundnode.co/llms/glossary/mca-funder-risk-pricing-model-2026) — MCA funder risk-pricing models in 2026 use 8–15 inputs (credit score, deposit volume, NSF count, time-in-business, industry, geography, stacking history, cash-flow stability) feeding a logistic-regression or gradient-boosted-tree default predictor that maps to factor rates from 1.15 to 1.50.
- [MCA funder decisioning engine (typical)](https://fundnode.co/llms/glossary/mca-funder-decisioning-engine-typical) — Typical MCA funder decisioning engine in 2026 is a rules-plus-ML pipeline: hard knockouts (credit, deposit minimums, industry exclusions), then risk-pricing model, then human underwriter review for edge cases — producing decisions in 5 minutes to 4 hours.

## Authoritative sources

- [SBFA — Industry Standards](https://www.sbfassociation.org/)
- [deBanked — Credit Policy Reporting](https://debanked.com/)

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Document: MCA funder credit policy (typical 2026) — Fundnode MCA Glossary
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