Funders that adopted soft-pull pre-qualification in 2025 are reporting 2.3x higher application-to-funding conversion and materially lower CAC than peers still gating with hard pulls.
Soft-pull pre-qualification — checking a borrower's credit and routing eligibility without affecting their credit score — has moved from optional to table stakes in SMB credit. Operators we benchmark report 2.3x higher application-to-funding conversion when a soft-pull pre-qualification precedes the full application.
The conversion lift comes from two places. Borrowers who pre-qualify are materially more committed by the time they reach the full application. And funders can route the lead to the highest-probability lender on the first attempt, rather than burning through stips and time on poor-fit submissions.
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.
Falling SBA fees and faster PLP processing have changed the math. For tickets under $500K with weaker collateral, 7(a) is now structurally cheaper than conventional term once total cost of capital is measured.
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.
