What does a business funding broker charge, and who pays it?

Most brokers in this market are paid by the funder, not by you. The commission comes out of the transaction, typically somewhere between 3% and 15% of the funded amount depending on product, size and how hard the file was to place.

That sounds like it is free to you. It is not. On an advance, commission is one of the things being priced into your factor rate. You are paying it; you are just not seeing a line item.

The two structures

Funder-paid commission. The standard. You see one number, the total remittance, and the commission is inside it.
Points added to your deal. On some advances the broker can add points on top of the funder's pricing. Your factor goes from 1.32 to 1.40 and nothing on the paperwork says why. This is legal and disclosed only in the sense that the final number is disclosed.

What you are entitled to ask

Ask these, plainly, and judge the answers:

"Are you the funder or a broker?" A straight answer here tells you most of what you need.
"How are you compensated on this deal?" An honest broker will tell you. An evasive answer is information too.
"Is there anything added to the funder's pricing?"
"How many funders did you send this to?" This one matters, and it is below.

The real cost of a broker is rarely the commission

It is the shotgun submission. Some brokers blast your file to twenty funders at once. The effects are concrete and bad for you:

Your phone does not stop for weeks, because your details are now with twenty sales floors.
Multiple credit pulls.
Funders can tell when a file has been shopped hard, and a heavily-shopped file reads as a distressed one. It gets priced worse, not better.

Two or three targeted submissions beats twenty. A broker who knows which funder wants your industry and size is worth their commission. One who forwards your file to everyone is costing you money while appearing to work hard.

When a broker genuinely earns it

Placing difficult files: a restricted industry, a prior default, a complicated stack, a business between products. Knowing which three funders will look at that and how to present it is real expertise, and it is worth paying for.

On a clean file with strong statements, the value is smaller, because a clean file places itself.

What should make you walk

Any request for an upfront fee before funding.
Refusing to say whether they are a broker.
Pressure to sign today because "the approval expires".
Your online banking username and password. Read-only bank verification is normal; credentials are not.

Questions owners ask

Should I go direct instead?

On a clean, straightforward file, going direct is often simpler and cheaper. On a hard file, a broker who knows the market is usually worth it.

Is it illegal for a broker to add points?

Generally no, provided the final terms are disclosed. Several states have introduced commercial financing disclosure rules that are changing what has to be shown.

Can I negotiate the broker fee?

You can ask what is being added and ask for it to come down. On funder-paid commission there is less room, but the question itself tends to improve the pricing.

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General information, not financial or legal advice. Terms vary by lender and business.