Broker Commission: Meaning in a Merchant Cash Advance
A broker commission is the fee a funder pays a broker or ISO when a merchant cash advance the broker arranged funds. It is usually a percentage of the funded amount, and it is built into the deal the funder offers.
What does broker commission mean?
Funders pay brokers for bringing them files that fund. The commission comes from the funder, not from a separate check the business writes. It does affect pricing, because the funder factors its sales costs into the rate, which is one reason offers on the same file differ.
Why does broker commission matter to your business?
You have a right to know how the broker is paid. A broker who asks you to pay an upfront fee to "secure" an approval is a warning sign. Legitimate MCA brokers are paid by the funder when the deal funds. With us, applying is free and the merchant never pays us; the funder pays our commission on funding, and the amount is disclosed in the paperwork.
Do brokers earn commission on renewals?
Brokers usually earn a commission on renewals too. That's normal, but a broker pushing renewals the day you become eligible, whether or not you need cash, deserves a hard question.
How does commission show up in pricing?
A higher commission usually means a higher factor rate or a lower net amount. That's one reason to compare the full offer, not just the approval amount.
Where will you see it?
In state-required disclosure forms, where some states list broker compensation. In offer paperwork. In the ISO agreement between the broker and the funder.
What should you ask?
- Who pays you, and when?
- Is your commission shown in the paperwork before I sign?
- Do you earn more from one funder than another?
Which terms are related to broker commission?
The full list is in the glossary. Owners ask about this in Who is the actual funder on my MCA offer?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.