MCA field guide
What A, B, C, and D paper mean in MCA
A practical framework for discussing merchant risk without treating informal paper grades as universal underwriting rules.
Quick answer
A, B, C, and D paper are informal risk bands, not universal lender standards. Use them to organize a routing conversation, then compare the merchant against the lender’s sourced thresholds and current policy.
Paper grades are shorthand, not a standard
MCA professionals use A through D to summarize risk, pricing, term, and file quality. No regulator or industry body publishes one binding definition. A lender may call a file B paper while another treats the same merchant as C paper. Use the grade as a routing conversation, then verify the actual buy box.
A-paper files generally show stronger credit, cleaner bank activity, longer time in business, lower position risk, and stable revenue. D-paper files commonly involve weaker credit, recent negative days, shorter operating history, higher positions, restricted industries, or inconsistent deposits.
What changes the grade
Credit score matters, but bank behavior often decides whether a merchant belongs in a higher or lower risk band. Average daily balance, NSF frequency, ending balances, deposit consistency, current advance payments, and ownership history can outweigh a single credit number.
Position also changes the analysis. A strong merchant seeking a third position is not evaluated like the same merchant seeking a first position because cash-flow burden and default correlation are different.
Use the grade to route—not promise
Start with the estimated paper band, review the lender’s sourced thresholds, and explain unknowns before submission. Never describe a grade as an approval, quoted rate, or commitment to fund. The useful question is not “What grade is this?” but “Which known facts make this file fit or miss this lender?”
Practical checklist
- Separate the merchant’s credit score from the overall file grade.
- Review time in business, eligible monthly revenue, average daily balance, and deposit consistency.
- Count recent NSFs and negative days using one stated method.
- List every active financing position and its current payment.
- Check state and industry eligibility before sending documents.
- Treat the grade as an estimate—not an approval, price quote, or lender commitment.
Common questions
Is low paper the same as A paper?
No. “Low paper” is ambiguous and may refer to lower credit quality. Lender List uses explicit A–D labels and identifies estimates rather than relying on that phrase.
Can two lenders grade the same merchant differently?
Yes. Each lender weights credit, bank behavior, industry, position, and exceptions differently.
Does a paper grade replace lender criteria?
No. The lender’s actual buy box and current underwriting decision control.
Primary sources and context
- Consumer Financial Protection Bureau — Small business lending rule FAQsOfficial federal context for merchant cash advances and sales-based financing.
Methodology and corrections
This guide distinguishes calculations, common industry practice, and lender-specific policy. Criteria should be confirmed from the dated source on each lender profile. Report an error through the correction policy.