An informal classification of merchant quality, from A paper — strong revenue, no positions, long trading history — down to C or D.
There is no standard scale; each funder defines its own bands. What the grades share is the inputs: time in business, deposit consistency, negative days and existing positions. Grade drives both the factor and which funders will look at the file at all.
Underwriting
A funder’s assessment of whether a merchant’s receipts can absorb a daily remittance, and on what terms.
Position
An individual outstanding advance against a merchant, counted in order — first position, second position, and so on.
Factor rate
A multiplier applied once to an advance amount to give the total repayment — a $50,000 advance at 1.40 means $70,000 repaid.
Funder
The party that deploys the capital in a merchant cash advance and carries the risk of repayment.
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