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Sell rate
Also called retail rate, sold rate, contract rate.
The rate written on the paper the merchant signs, as distinct from the buy rate the funder approved at — the gap between the two being the broker's compensation.
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
A funder approves a file at a price. A broker is permitted, within a cap in its agreement, to paper the deal at a worse one. The difference is the broker's money, and the merchant sees only the second number.
How the spread is taken
- On an advance, the sell rate is a factor. Raising it raises the purchased amount while the funded amount stays the same: you receive identical cash and owe more.
- On a term loan or equipment deal, the markup usually appears as points added to the rate, or as an origination or documentation fee the broker retains.
- In some channels the broker takes both: a commission paid by the funder on the funded amount, and a spread on top of the buy rate.
What varies
The cap, expressed as maximum points or maximum factor uplift, set in the ISO or broker agreement to protect the funder's portfolio and reputation rather than your wallet. Whether the funder pays commission in addition to the spread. Whether commission is clawed back if the deal defaults early or pays off early. And whether the disclosure you receive names broker compensation at all — New York's Commercial Finance Disclosure Law and California's commercial financing disclosure regime require certain broker compensation to be disclosed in covered transactions, with different scope and thresholds, so read the disclosure form and check the current rules.
The term belongs to the broker's side of the desk. A merchant will almost never hear it used, which is why using it changes the conversation.
Where this one catches people
The spread is invisible in the only document you are shown. Your agreement states one factor, and nothing on the page separates the funder's price from the markup.
Two consequences follow. "I shopped this to eight funders and this is the best offer" can be simultaneously true and meaningless, if the same broker applied the same markup to all eight, or if what varied between the quotes was the markup rather than any credit decision. Ask which funder is behind each offer, in writing, and note that two offers from the same funder at different prices tell you exactly what is being added.
Second, the markup is not negotiable at closing, because by then it is inside the purchased amount and the documents are drawn. The moment to ask what the funder approved at is before the contract is generated. Some brokers answer. The ones who react badly to the question have told you the answer.
Worked through
Illustrative. A funder approves 120,000 at a 1.29 buy rate. Purchased amount: 154,800.
The broker's agreement caps the uplift at 12 points of the funded amount. It papers the deal at a 1.41 sell rate. Purchased amount: 169,200.
The merchant receives the same 120,000 and owes 14,400 more. That 14,400 is the spread, and 14,400 ÷ 120,000 is exactly the 12 point cap.
Put a term on it. If daily debits retire 169,200 over about nine months, the merchant has paid 49,200 to use roughly 120,000 for an average of under five months. At the buy rate the same use would have cost 34,800. Neither figure is an APR — a factor rate has no time dimension, and converting one requires the actual repayment schedule and has to be shown — but the 14,400 difference bought the merchant nothing at all. Same funder, same decision, same money, same day.
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
Sell rate — common questions
What does sell rate mean?
The rate written on the paper the merchant signs, as distinct from the buy rate the funder approved at — the gap between the two being the broker's compensation.
Where does sell rate catch people out?
The spread is invisible in the only document you are shown. Your agreement states one factor, and nothing on the page separates the funder's price from the markup.
Is sell rate the same as an interest rate?
Sell rate 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 sell rate apply to?
Merchant Cash Advance, Working Capital, Term Loan, Equipment Financing, Revenue-Based Financing.
Is there a worked example of sell rate?
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 sell rate?
Backend fee, 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.