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Broker ISO
Also called ISO, independent sales organization, funding advisor, loan broker.
An intermediary who takes a business's application, submits it to funders and is paid by the funder that closes, typically as commission points or a rate spread.
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
Brokers exist because the funder market is fragmented and opaque. A single application can be placed with dozens of funders whose credit boxes differ by industry, position, state, time in business and deposit profile. A competent broker knows which funder buys which file and can save a business weeks.
The economics deserve to be understood plainly. The broker is paid by the funder, from the transaction, usually as points on the amount funded or as the spread between the funder's buy rate and the rate the merchant signs. The broker is therefore paid more when the transaction is larger and more expensive, and is paid again on a renewal or refinance. That is not a reason to avoid brokers; it is the reason to ask what they are being paid.
Licensing is thin. Most states do not license commercial finance brokers at all. California requires a license under its Financing Law to broker commercial loans, a small number of states operate registration regimes for commercial loan brokers, and several of the newer commercial financing disclosure statutes impose registration or disclosure duties on brokers as well as providers. The FTC Act and state unfair-practices statutes apply everywhere regardless of licensing.
The market's own vocabulary distinguishes an ISO with a direct contract with funders from a sub-broker or agent working through someone else's relationships. Merchants rarely see which they are dealing with.
Where this one catches people
Sending one application to a broker can mean it is submitted to twenty funders at once, which is how a business ends up fielding calls for months and, worse, receiving multiple offers designed to be stacked. Ask before submission how many funders will receive the file, whether your details will be resold, and get the answer in writing. A broker who cannot name the funder before you sign is not representing you.
Where you will meet this term
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Broker — common questions
What does broker mean?
An intermediary who takes a business's application, submits it to funders and is paid by the funder that closes, typically as commission points or a rate spread.
Where does broker catch people out?
Sending one application to a broker can mean it is submitted to twenty funders at once, which is how a business ends up fielding calls for months and, worse, receiving multiple offers designed to be stacked. Ask before submission how many funders will receive the file, whether your details will be resold, and get the answer in writing. A broker who cannot name the funder before you sign is not representing you.
Is broker the same as an interest rate?
Broker 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 apply to?
Merchant Cash Advance, Working Capital, Term Loan, Business Line of Credit, Equipment Financing, Invoice Financing.
Is there a worked example of broker?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside broker?
Backend fee, Broker agreement, Buy rate, Commission, Conversion rate.
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.