An SQL is the next step after MQL: a lead the sales team has reviewed, talked to (or attempted to), and decided is worth their time. The qualification criteria usually expand on the MQL definition with explicit budget, authority, need, and timeline signals.
For agencies, the MQL-to-SQL conversion rate is one of the most diagnostic numbers in the funnel. If it is consistently above 60%, the MQL bar is probably too low — sales is accepting everything. If it is below 20%, marketing is sending the wrong shape of lead, no matter how many they are sending.
SQLs only matter against close rate. A pipeline full of SQLs that never close is a different problem than a pipeline starved of them — but they look identical on a dashboard that only tracks volume.