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Mid-prime
Also called near-prime, B paper.
The tier between bank-quality credit and high-cost advance paper: businesses that miss bank underwriting on a point or two but can carry amortising, rate-priced debt.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Bank credit and merchant advances sit at opposite ends of a spectrum with a large gap in the middle. Mid-prime describes the businesses in that gap - real financials, several years of history, adequate margins, but something that keeps them out of a bank: a credit event two years ago, an industry the bank avoids, a leverage ratio, an owner's score, a recent restructuring.
Products aimed at this tier are structured like loans rather than purchases: an interest rate, an amortization schedule, monthly or weekly payments, a stated maturity, and often covenants and reporting the advance world does not use. Underwriting looks at tax returns and financial statements, not only bank statements, and takes longer.
For brokers the tier is a routing decision. A file with clean financials submitted to advance funders will be priced as advance paper because that is what advance funders sell.
Where this one catches people
Mid-prime is a marketing label, not a defined standard. Every funder draws the boundary where its own credit box happens to end, so the same file is mid-prime at one desk and a decline at the next. Treat the label as a description of the lender, not of the borrower.
Where you will meet this term
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Mid-prime — common questions
What does mid-prime mean?
The tier between bank-quality credit and high-cost advance paper: businesses that miss bank underwriting on a point or two but can carry amortising, rate-priced debt.
Where does mid-prime catch people out?
Mid-prime is a marketing label, not a defined standard. Every funder draws the boundary where its own credit box happens to end, so the same file is mid-prime at one desk and a decline at the next. Treat the label as a description of the lender, not of the borrower.
Is mid-prime the same as an interest rate?
Mid-prime is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does mid-prime apply to?
Working Capital, Term Loan, Business Line of Credit.
Is there a worked example of mid-prime?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside mid-prime?
Non-bank lender, Paper grade, Qualification criteria, Risk-based pricing, Term loan.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.