Merchant Cash Advance Underwriting and Paper Grades
An Easy Guide for Business Owners
If you are applying for a Merchant Cash Advance, underwriting is the step that decides whether you get approved and what the offer will look like. MCA underwriters review your business revenue, bank activity, credit profile, and overall risk to see how likely you are to repay the advance.
What Underwriters Look At
Underwriters usually review three to six months of business bank statements, credit card processing reports, revenue trends, owner credit, and business documents like your ID, EIN, and entity records. Many also use automated bank data tools to analyze deposits, balances, NSFs, overdrafts, and other warning signs before sending files to manual review.
Some of the biggest factors are monthly sales volume, consistency of deposits, time in business, and whether your revenue is stable or growing. Frequent NSFs, negative balances, chargebacks, liens, unpaid judgments, or vague use of funds can hurt approval chances.
Impact Weight of Underwriting Factors
Paper Grades Explained
Most MCA funders use a paper grade system from A to D to rank risk and price the deal. An A paper file is the strongest profile, usually with a FICO score around 650 or higher, clean bank statements, solid revenue, and few or no issues.
A B paper file is still fundable, but may include a lower credit score, a few NSFs, a tax lien on a payment plan, or a discharged bankruptcy. C paper and D paper files are riskier, often with weaker credit, more NSFs, unpaid liens, stacking, defaults, or other serious cash flow problems.
A Paper
FICO 650+, clean statements, solid revenue, minimal NSFs. Best rates and terms available.
B Paper
Lower credit, few NSFs, lien on payment plan, or discharged bankruptcy. Still fundable with adjusted pricing.
C & D Paper
Weak credit, frequent NSFs, unpaid liens, stacking, defaults. Higher cost and more restrictive terms.
What Can Hurt Approval
Certain issues can make approval harder or lower the size of the offer. These include frequent NSFs, overdrafts, recent revenue drops, undisclosed existing MCAs, unpaid judgments, tax liens, evictions, late rent, and criminal financial history.
One common rule of thumb is that you are probably not A paper if your personal FICO is below 650, you have more than five NSFs per month, an outstanding tax lien, or multiple stacked MCAs or loans. Disclosing problems early usually helps more than hiding them, because underwriters can price or structure the deal around the full picture.
Top 5 Reasons for Lower Paper Grade
What Happens After Approval
If the file is approved, the funder sets the advance amount, factor rate, repayment method, and estimated term, which is often somewhere between three and twelve months. Funding commonly arrives within one to three business days, and sometimes as fast as 24 hours.
After funding, missed payments or new NSFs can hurt future renewal chances and may create extra risk with the funder. In simple terms, underwriting is about proving that your business has enough consistent revenue to support the advance.
MCA Underwriting Checklist
3 to 6 months bank statements with consistent deposits and minimal NSFs
Credit card processing reports showing stable or growing sales volume
Business documents: ID, EIN, entity records, voided check
Disclose existing debt including other MCAs, loans, or liens upfront
Clear use of funds with documentation if requested
Bottom Line
Strong, steady sales and clean bank activity lead to better paper grades, better pricing, and better approval odds. Weaker credit can still work, but the more risk an underwriter sees, the more expensive and restrictive the offer usually becomes.