# MCA funder paper grade B (detailed) > B paper in MCA underwriting describes the middle 30–40% of funded merchants: 600–659 personal FICO, 12–18 months in business, $15K–$25K average monthly revenue, 3–5 NSFs in 90 days, possibly one closed-out MCA UCC — pricing at factor 1.30–1.40 with 3–6 month terms and selective renewal eligibility. B paper is the largest single underwriting tier by deal volume in the MCA industry — roughly 30%–40% of all funded files. It represents merchants who are still creditworthy but visibly stressed: lower personal FICO, shorter operating history, more NSF activity, or one closed-out MCA in their recent past. Pricing widens materially compared to A and A+, but approval rates remain high. **The qualifying criteria (2026 standard).** - **Personal FICO:** 600–659. - **Business FICO / PayNet:** 50–65 percentile, periodic late-pay acceptable. - **Time in business:** 12–18 months. - **Average monthly revenue:** $15K–$25K deposits. - **Average daily balance:** $1K–$3K positive; occasional negative-balance days tolerated. - **NSFs:** 3–5 in last 90 days, ≤10 in last 12 months. - **UCC filings:** Zero open MCA UCCs; one closed UCC in last 24 months acceptable. - **Existing MCA position:** None, or one paid down to ≤70% balance. - **Public records:** No active large judgments, no current tax liens over $10K, no bankruptcy in 3 years. **The pricing tier.** - **Factor rate:** 1.30–1.40. - **APR-equivalent:** 75%–120%. - **Holdback / specified percentage:** 10%–15% of daily deposits. - **Term length:** 3–6 months. - **Advance size:** $10K–$150K. - **ISO commission:** 6%–10% of funded amount. - **Funding speed:** 24–72 hours from accepted offer. **The funders who compete for B paper.** B paper is the workhorse tier for the mid-tier and balance-sheet funder community: Fora Financial, Mulligan Funding, Channel Partners Capital, BFS Capital, Pearl Capital, LG Funding, Lendr.online, Quikstone Capital, plus the B-paper desks at Credibly, Rapid, and Kapitus. Many funders specifically target B paper because pricing margin is wider and competition is less aggressive than A paper. **The underwriting workflow.** B paper requires more manual underwriting than A. Bank statements get auto-analyzed by Heron/Ocrolus, but underwriters often review NSF clusters, deposit-source quality (are deposits from a single concentrated customer?), and industry vertical specifics. Approval typically takes 4–24 hours of human review on top of automated decisioning. **Worked example.** Restaurant owner: 640 FICO, 14 months in business, $19K/month average deposits, 4 NSFs in 90 days, one closed MCA from 8 months ago. Two funders bid: - Funder X: $25K at 1.35 factor, 5-month term, 12% holdback, 8% ISO commission. - Funder Y: $20K at 1.32 factor, 6-month term, 11% holdback, 7% ISO commission. The merchant typically picks based on cash-flow comfort (lower holdback) more than total cost. B-paper merchants are often cash-stressed and prioritize keeping daily debits manageable. **The default mechanics.** B-paper default rates run 8%–15%, materially higher than A. Funders compensate via higher pricing and shorter terms. Default scenarios typically involve: NSF cluster within first 30 days post-funding (early default), stacking with a new funder mid-term, or seasonal revenue collapse for vertical-exposed businesses. **The renewal economics.** B paper has a meaningful renewal funnel — about 50%–60% renew within 90 days of payoff. Merchants who renew B paper successfully often graduate to A or even A+ over 2–3 funding cycles as time-in-business builds and credit improves. ISOs build long-term relationships with these merchants and earn multiple commissions across years. **The ISO economics.** - Commission rates 6%–10%; absolute dollar commission lower than A but still meaningful. - B-paper merchants are less price-sensitive than A merchants — they're focused on getting approved, not on extracting the best rate. - ISO competitive advantage in B paper comes from speed and approval reliability, not commission rate. **Common confusions.** First, "B paper is risky paper." Partially true — default rates are higher than A, but B paper is the volume tier of the industry and not pathological. Second, "B paper merchants can't qualify anywhere else." Partially true — most B paper merchants don't qualify for bank LOC or SBA financing, which is why MCA wins. Third, "B paper pricing is predatory." Debatable — high APR-equivalent (75%–120%) is unavoidable when default rates run 8%–15% and capital costs run 10%+ for funders; the pricing reflects real risk. Fourth, "B paper merchants are likely to default." False — 85%–92% of B paper repays successfully; the tier is creditworthy on average. Fifth, "B paper deals don't renew." False — renewal rate is 50%–60%; significantly above zero. **The strategic takeaway.** B paper is where mid-tier MCA funders make their margin. ISOs who specialize in B paper develop deep relationships with these funders and learn to package files for fast approval — knowing which funders accept which industry verticals, which tolerate higher NSF counts, and which offer the best ISO commission for the deal type. ## 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 paper grades explained](https://fundnode.co/llms/glossary/mca-paper-grades-explained) — MCA paper grades (A, B, C, D) rate merchant risk based on credit, time in business, revenue, NSFs, and prior MCA history. A-paper qualifies for cheapest factors (1.15-1.28); D-paper sees 1.45+ factors and short 4-6 month terms. - [MCA funder paper grade A (detailed)](https://fundnode.co/llms/glossary/mca-funder-paper-grade-A-detailed) — A paper in MCA underwriting describes the strong 15–25% of funded merchants: 660–699 personal FICO, 18–24 months in business, $25K–$50K average monthly revenue, ≤2 NSFs in 90 days, no open MCA UCCs — pricing at factor 1.22–1.30 with 4–9 month terms and routine renewal eligibility. - [MCA funder paper grade C (detailed)](https://fundnode.co/llms/glossary/mca-funder-paper-grade-C-detailed) — C paper in MCA underwriting describes the stressed 20–30% of funded merchants: 550–599 personal FICO, 6–12 months in business, $7K–$15K average monthly revenue, 5–10 NSFs in 90 days, one open MCA position — pricing at factor 1.40–1.50 with 2–4 month terms and limited renewal eligibility. - [Factor rate](https://fundnode.co/llms/glossary/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. ## Authoritative sources - [deBanked — Mid-Tier MCA Funder Reviews](https://debanked.com/) - [Fora Financial — Underwriting Criteria](https://www.forafinancial.com/) --- Source: https://fundnode.co/glossary/mca-funder-paper-grade-B-detailed (HTML version) Document: MCA funder paper grade B (detailed) — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.