Funding Tier
Funding tiers categorize MCA submissions by credit quality and risk profile — typically A, B, C tiers — with differentiated pricing, advance amounts, and payment terms reflecting each tier's risk characteristics.
Why This Matters
Funding tier framework: Tier A (prime credit, established business, strong revenue, low stacking) receives best pricing (factor rates 1.15-1.25) and longest terms; Tier B (standard credit, moderate strength) receives standard pricing (factor 1.25-1.40); Tier C (subprime credit, weaker profiles) receives premium pricing (factor 1.40-1.55) and shorter terms. Some funders have additional D tier for highest-risk profiles. Tier assignment drives entire deal economics — accurate tier assignment is core underwriting competency. Funders often specialize in specific tiers (prime-only, mid-market, subprime specialists).
Frequently Asked Questions
Frequently Asked Questions
How are merchants assigned to funding tiers?
Through underwriting analysis combining credit profile, time-in-business, revenue stability, industry risk, existing debt positions, and business performance trends. Sophisticated underwriting uses ML scoring for consistent tier assignment.
Can merchants improve their funding tier over time?
Yes — through improved credit, longer time-in-business, demonstrated MCA repayment history, and reduced existing debt. Renewal advances often improve tier assignment for merchants with strong initial advance performance.