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Paper grade
Also called A paper, B paper, C paper, credit tier, paper.
The informal tiering funders and brokers use to sort files by quality, from bank-eligible A paper down through progressively weaker tiers priced and structured accordingly.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Grade is assembled from the usual inputs: owner credit, time in business, deposit size and consistency, negative days, existing positions, industry, state, and whether prior advances were paid as agreed. The output determines which funders see the file, what factor rate or interest rate applies, what term is offered, and whether the deal is even shopped.
The lower the grade, the shorter the term and the higher the cost, because loss expectations rise and funders shorten duration to limit exposure. Position interacts with grade: strong paper in third position is priced closer to weak paper in first.
For brokers the grade is a routing decision. Submitting a clean file to funders who only buy weak paper produces weak-paper pricing, and the merchant never knows the difference.
Where this one catches people
No two funders define the tiers the same way, and none of them publish their definitions. Being told you are B paper means one desk priced you as B - it is a pricing decision dressed as a diagnosis. Shop the file before accepting the grade.
Where you will meet this term
Read next
Paper grade — common questions
What does paper grade mean?
The informal tiering funders and brokers use to sort files by quality, from bank-eligible A paper down through progressively weaker tiers priced and structured accordingly.
Where does paper grade catch people out?
No two funders define the tiers the same way, and none of them publish their definitions. Being told you are B paper means one desk priced you as B - it is a pricing decision dressed as a diagnosis. Shop the file before accepting the grade.
Is paper grade the same as an interest rate?
Paper grade is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does paper grade apply to?
Merchant Cash Advance, Working Capital, Term Loan.
Is there a worked example of paper grade?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside paper grade?
Factor rate, Mid-prime, Position, Qualification criteria, Rate sheet.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.