The short answer
Paper grade is shorthand for how much risk a file carries: A paper is a clean, long-trading business with strong balances and no existing positions, and each grade down adds some combination of negative days, additional positions, shorter time in business, weaker balances or a harder industry. The grades are not standardised between funders, which is exactly why placement is a skill rather than a lookup.
No two funders draw the lines in the same place, so the letters describe a direction rather than a category. What they reliably encode is that price and term move together with risk: better paper gets a lower factor, a longer term and a larger advance, and everything else is a trade against one of those three.
| Grade | Typical profile | What it gets |
|---|---|---|
| A | 2+ years trading, strong balances, no positions, clean months | Lowest factors, longest terms, largest advances |
| B | Solid business, maybe one position or a couple of negative days | Moderate pricing, standard terms |
| C | Multiple positions, thinner balances, shorter time in business | Higher factors, shorter terms, smaller advances |
| D | Heavy stacking, frequent negatives, distressed | Expensive, short, and often better declined |
What moves a file down a grade
- Each additional position, and more sharply than most brokers expect.
- Negative days, especially a pattern rather than an incident.
- A balance that the proposed remittance would routinely empty.
- Time in business under a year, regardless of how good the numbers are.
- A restricted or high-risk industry, which can cap the grade whatever the file looks like.
What moves a file up
Very little, quickly. Paying off a position genuinely improves the file and is worth suggesting where the merchant can. Beyond that, the honest levers are resizing the ask to something the balance supports, providing context for an anomalous month, and waiting — a merchant three months from their two-year mark is a materially better file in three months.
This is also why lead quality shows up as paper quality. Leads screened to businesses over $30,000 a month with a year or more trading produce more B paper and less D than unscreened ones, and the difference lands in your average factor and your funded rate rather than in anything you would notice on the call.