# How business loan brokers get paid

Source: https://businessloanbroker.ai/guides/how-brokers-get-paid/
Site: BusinessLoanBroker.ai (powered by Levr)

> How business loan brokers get paid: lenders pay a commission of 1% to 5% of the funded amount, usually 1% to 3%. Which fees are normal and which are junk.

Business loan brokers are paid by the lender, usually a commission of 1% to 5% of the funded amount, and most often 1% to 3%. Some products add fees on top, and some brokers charge the business directly, which is where problems start. This guide explains how the money flows, which fees are normal, how to spot junk fees, and how this site is paid: your business pays nothing, and lenders pay us when a loan funds.

## Key facts
- **Who pays the broker:** The lender, in most cases, after the loan funds
- **Typical commission:** 1% to 5% of the funded amount, most often 1% to 3%
- **Fees to refuse:** Any upfront fee to a broker for a term loan, line or advance
- **On this site:** Free for your business; lenders pay us, the same whichever lender you choose

## Who pays a business loan broker?

In most cases the lender pays the broker a commission after the loan funds, calculated as a percentage of the funded amount. The lender treats it as a cost of acquiring the customer. You do not write the broker a check, and on a properly structured deal the commission is not added to your rate.

Some brokers also charge the business a fee, either instead of or on top of the lender commission. That is legal in most places if it is disclosed, but it is where most abuse happens. A broker who asks you for money before your loan funds is one to walk away from.

## How much do brokers typically earn?

Lender paid commissions typically run 1% to 5% of the funded amount, and most term loans, lines of credit, SBA loans and equipment deals pay 1% to 3%. On a $200,000 term loan that is $2,000 to $6,000. The SBA requires any fee paid by the borrower to be disclosed on a form you sign.

Merchant cash advances pay more. The commission is built into the factor rate, and brokers can raise the factor rate to raise their commission, so the same advance can be quoted at 1.25 by one broker and 1.38 by another. Ask what the factor rate would be with no added points; [APR versus factor rate](https://businessloanbroker.ai/guides/apr-vs-factor-rate/) shows what the difference costs.

## Does the commission raise your rate?

On bank, SBA, equipment and most online term loans, no. The lender sets its pricing from your file and pays the broker from its own margin, and you would typically get the same rate applying directly. On cash advances and some short term loans, it can, because those products let the broker add points to the factor rate or the origination fee.

Protect yourself by getting more than one offer and asking the lender, not just the broker, what the pricing is. A broker who refuses to tell you which lender you are being placed with is hiding something.

## Which fees are normal, and which are junk?

Normal fees are charged by the lender, disclosed on the term sheet, and taken at closing or from the proceeds: an [origination fee](https://businessloanbroker.ai/glossary/origination-fee/) of 1% to 5%, an SBA guarantee fee, closing costs on real estate, and documentation fees on equipment. Third party costs such as an appraisal are paid to the provider.

Junk fees are paid to the broker, before funding, or for things that should be free: application fees, processing fees, consulting fees, and any fee required to see an offer. No legitimate broker charges an upfront fee for a term loan, line of credit or cash advance. [Business loan scams](https://businessloanbroker.ai/guides/business-loan-scams/) covers the fraudulent end of this.

## How do you spot a broker who is not working for you?

Watch for five signs. They push one product, usually a cash advance, without asking what you need the money for. They will not name the lender. They want a fee or a signed exclusive agreement before showing you an offer. They pressure you to sign the same day. Or they submit your file to many lenders without telling you, which shows up as a burst of hard inquiries.

A good broker asks about the purpose, timing and your numbers, tells you which lenders fit and why, shows you the whole term sheet, and is fine with you taking a day to decide. Ask any broker how they are paid on your deal; an honest one will tell you in one sentence. [How to read a term sheet](https://businessloanbroker.ai/guides/how-to-read-a-term-sheet/) helps you check the offer yourself.

## How is this site paid?

Your business pays nothing to apply or to accept an offer. Lenders pay us when a loan funds, and the amount is the same whichever lender you choose, so we have no reason to steer you toward one lender over another. We show you the offers that come back, with the lender named and the terms in full. [How we make money](https://businessloanbroker.ai/how-we-make-money/) sets this out in detail.

The site is powered by Levr, the platform business loan brokers and lenders use, which has worked on 5,000+ business loans. You can also ask your AI assistant to apply for you through our MCP server; see the [agents hub](https://businessloanbroker.ai/agents/). Brokers who want the broker side of the platform go to [for brokers](https://businessloanbroker.ai/for-brokers/).

| Product | Typical lender paid commission | Can it raise your cost? |
|---|---|---|
| Bank or SBA term loan | 1% to 3% | Rarely; SBA requires borrower paid fees to be disclosed |
| Online term loan | 1% to 5% | Sometimes, through the origination fee |
| Line of credit | 1% to 3% | Rarely |
| Equipment financing | 1% to 3% | Rarely |
| Invoice factoring | A share of fees | Rarely |
| Merchant cash advance | Built into the factor rate, often higher | Yes; ask for the factor rate without added points |
| Commercial real estate | 0.5% to 2% | Rarely |

## Questions and answers
**Is it cheaper to go directly to a lender than through a broker?**

For most term loans, SBA loans and equipment financing, the price is the same either way, because the lender pays the broker from its own margin. For cash advances, a direct quote can be cheaper if the broker has added points. The advantage of a broker or platform is reach.

**Should I ever pay a broker a fee?**

For a standard term loan, line of credit or cash advance, no. For complex deals such as a large commercial real estate loan or an acquisition, some advisors charge a success fee paid at closing from the proceeds, which is legitimate if it is disclosed in writing and paid only on funding. Never pay to see an offer.

**Do brokers have to disclose their commission?**

Rules vary. SBA lenders must disclose any fee the borrower pays on a signed form. Some states require commercial financing brokers to be licensed and to disclose compensation, and a few require APR style disclosures on offers. Many places have no rule. Ask directly.

**Why would a lender pay a broker instead of lowering my rate?**

Because finding and qualifying borrowers costs the lender money either way. A broker that delivers a complete, well matched file costs the lender less than advertising to find the same business. The commission replaces that cost rather than adding to it.

## Related
- [How we make money](https://businessloanbroker.ai/how-we-make-money/)
- [Business loan broker versus direct lender](https://businessloanbroker.ai/compare/broker-vs-direct-lender/)
- [Business loan scams and how to avoid them](https://businessloanbroker.ai/guides/business-loan-scams/)
- [Origination fee](https://businessloanbroker.ai/glossary/origination-fee/)
- [How to read a business loan term sheet](https://businessloanbroker.ai/guides/how-to-read-a-term-sheet/)
- [For business loan brokers](https://businessloanbroker.ai/for-brokers/)

## Apply
Apply for the business: https://apply.businessloanbroker.ai/signup?utm_source=direct&utm_medium=organic&utm_content=md-how-brokers-get-paid
MCP server for AI agents: https://mcp.businessloanbroker.ai/mcp (docs: https://businessloanbroker.ai/agents/mcp/)