Average buy rates across A-paper merchants tightened 9 bps month-over-month as risk-on capital rotated back into short-duration revenue-based product.
After eighteen months of underwriter caution and elevated factor rates, the merchant cash advance market is showing the first sustained pricing compression of the cycle. Across the deals we placed in May 2026, mean A-paper factor rates settled at 1.28, down from 1.37 a year ago and 1.31 in April.
The move reflects two structural shifts. First, several tier-1 funders that paused or curtailed origination in late 2024 have re-entered the market with revised box guidelines and aggressive renewal pricing. Second, syndicate appetite for short-duration paper has materially improved as institutional allocators rebalance away from longer-dated private credit.
For merchants in the 700+ FICO, 12+ months in business, $50K+ monthly revenue cohort, today's pricing is the most favorable since Q3 2023. Operators with renewal-eligible balances should expect competitive buyouts inside the next thirty days.
For B and C paper, spreads remain elevated. Funders are still pricing for elevated default expectations in restaurant, trucking, and discretionary retail. A 25 to 40 bp gap between A and B paper has persisted through the compression cycle.
For A-paper merchants (700+ FICO, $50K+ monthly revenue, 12+ months in business), 1.25 to 1.32 is competitive in mid-2026. B paper typically prices 1.35 to 1.42; C paper 1.45 and higher.
From signed application to wire, well-prepared A-paper files fund in 24 to 72 hours. Stip-heavy or larger ticket files ($500K+) typically take 5 to 7 business days.
Twelve-month default rates on 2026 originations are tracking 80 bps below the 2023 vintage at the same seasoning point, with the largest improvement in services and B2B.
Spot rates have stabilized but fuel volatility, insurance inflation, and concentration risk continue to keep most lender boxes restrictive on owner-operators.
Institutional capital that previously favored direct lending to middle-market sponsors is rotating into shorter-duration SMB and revenue-based product as spreads compress in the larger market.
