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Broker Fee
Also called broker commission, packaging fee, points to the broker, back-end compensation.
What a broker is paid on a funded deal — commission from the funder, points deducted from your proceeds, markup buried in the rate, or some combination that is rarely presented as one number.
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
There are four channels through which a broker gets paid, and a single deal can use more than one.
Disclosure
In the SBA channel, agent compensation has to be disclosed on the agency's fee disclosure form, signed by both the applicant and the agent — read the current form and its instructions, and read it before closing rather than at it. Outside that channel there is no general federal disclosure duty for commercial broker compensation. Some states' commercial financing disclosure statutes require certain broker or provider disclosures; the requirements differ, and what must be shown is not the same everywhere.
Where this one catches people
"It costs you nothing, the lender pays me" is the line, and it is accurate about the mechanics and misleading about the money. Funder-paid commission is priced into the offer. A broker who is paid more delivers you a deal that costs more, and no document tells you by how much.
The second trap is the naming. On a funding statement, broker compensation regularly appears as an origination fee, a processing fee, a documentation fee or an underwriting fee, so the merchant sees three modest-sounding charges instead of one large one. Ask for two things in writing before you sign: the funder's approval as issued, showing the buy rate, and the funding statement showing every deduction from the wire. A broker who supplies both is doing normal business. One who will not is telling you what the difference is worth.
A fee demanded before funding is a separate matter entirely and is the core mechanic of the advance-fee scam.
Worked through
Illustrative only. A $75,000 approval at a 1.30 factor over 9 months.
The broker takes 8 points deducted at funding: $75,000 × 0.08 = $6,000. Wire fee $150. Net into your account: $68,850.
Repayment is computed on the gross: $75,000 × 1.30 = $97,500.
Cost in dollars: $97,500 − $68,850 = $28,650 on $68,850 actually received, over roughly nine months. The factor implies 30 percent of the amount funded; against the money that arrived it is about 41.6 percent, before annualising anything.
The funder may also have paid the broker a commission on top of the $6,000. Nothing on your documents would show it.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
Read next
Broker Fee — common questions
What does broker fee mean?
What a broker is paid on a funded deal — commission from the funder, points deducted from your proceeds, markup buried in the rate, or some combination that is rarely presented as one number.
Where does broker fee catch people out?
"It costs you nothing, the lender pays me" is the line, and it is accurate about the mechanics and misleading about the money. Funder-paid commission is priced into the offer. A broker who is paid more delivers you a deal that costs more, and no document tells you by how much.
Is broker fee the same as an interest rate?
Broker Fee 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 broker fee apply to?
Merchant Cash Advance, Working Capital, Term Loan, SBA Loan, Equipment Financing.
Is there a worked example of broker fee?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside broker fee?
Advance-Fee Scam, Broker, Broker agreement, Buy rate, Commission.
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.