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Commission
Also called points, broker commission, origination commission.
The broker's pay on a funded transaction, expressed as points on the amount funded or earned as the spread over the funder's buy rate.
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 point is one percent of the amount funded. A broker paid five points on a 100,000 advance receives 5,000. Alternatively, or additionally, the broker earns the difference between the funder's buy rate and the rate the merchant signs, which is economically the same money collected differently.
Commission is normally paid by the funder within days of funding, subject to clawback if the merchant defaults or pays off inside a defined window. Funder-broker agreements cap the maximum points or maximum markup, and those caps are the only structural limit in most of this market.
The incentive structure is worth stating plainly, because it explains a great deal of behavior. Commission scales with size, with price, and with frequency of refinancing. It does not scale with whether the funding suited the business. A broker who moves a merchant into a larger, more expensive advance every four months is optimizing exactly what the compensation model rewards.
On SBA and bank transactions, packager and referral compensation is regulated differently: the SBA restricts what agents may charge and requires disclosure of agent fees on a prescribed form, which is a meaningfully tighter regime than the cash advance market operates under.
Where this one catches people
Points are charged on the gross funded amount, not on the cash you receive, and where they are netted at closing you are financing the broker's fee at the transaction's own cost of money. Five points netted from a 100,000 advance repaid at 1.40 does not cost 5,000; it costs 5,000 you never received plus the 2,000 of factor applied to it.
Worked through
A broker earns 4 points on a 120,000 advance, 4,800, plus a 0.06 factor uplift over the funder's buy rate, adding 7,200 to the purchased amount. Total broker compensation on the transaction is 12,000, of which the merchant sees an itemized fee only for the first part, if at all.
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
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Commission — common questions
What does commission mean?
The broker's pay on a funded transaction, expressed as points on the amount funded or earned as the spread over the funder's buy rate.
Where does commission catch people out?
Points are charged on the gross funded amount, not on the cash you receive, and where they are netted at closing you are financing the broker's fee at the transaction's own cost of money. Five points netted from a 100,000 advance repaid at 1.40 does not cost 5,000; it costs 5,000 you never received plus the 2,000 of factor applied to it.
Is commission the same as an interest rate?
Commission 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 commission apply to?
Merchant Cash Advance, Working Capital, Business Line of Credit, SBA Loan, Equipment Financing.
Is there a worked example of commission?
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 commission?
Backend fee, Broker, Buy rate, Clawback, Closing costs.
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.