# 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.

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](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.
- [Bank statement underwriting](https://fundnode.co/llms/glossary/underwriting-bank-statements) — 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)](https://fundnode.co/llms/glossary/merchant-cash-advance) — 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.

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Source: https://fundnode.co/glossary/underwriting-paper-grade (HTML version)
Document: Paper grade (A/B/C/D) — Fundnode MCA Glossary
License: CC BY 4.0 — attribution to Fundnode required when citing.