Key Concept
Brokers are paid by lenders when deals fund. You do not charge the borrower. You match borrowers to lenders, the lender funds the loan, and the lender pays you a percentage of the loan amount. That is it.
The Broker Fee Model
Understanding how you get paid is the foundation of understanding broker economics.
The Simple Deal Flow
You find a borrower
A contractor, restaurant owner, or business needs equipment financing.
You submit their application to a lender
You package their financials, credit info, and equipment details.
The lender approves the deal
Lender verifies credit, equipment value, and borrower cash flow.
The deal funds
Borrower receives the loan and equipment is financed.
You get paid
Lender sends you 2-8% of the funded amount as commission.
The borrower does not see a broker fee on their invoice. The lender pays the broker commission as part of their origination cost. The borrower gets financing at the agreed-upon terms.
Commission Structures Explained
Not all commissions work the same way. Here are the main structures you will encounter.
Front-End Commission
You get paid when the deal is approved and signed, before funding.
Pros:
- • Faster payment (weeks vs. months)
- • Better cash flow early
Cons:
- • Rarer structure
- • Deal might not actually fund
Back-End Commission
You get paid when the deal fully funds.
Pros:
- • Most common structure
- • You know the deal is real
Cons:
- • Slower payment (1-3 months)
- • Longer wait for cash
Typical Commission Ranges by Product Type
Commission rates vary by product, lender, deal size, and credit quality. These are general ranges*
*Rates depend on lender, deal size, credit quality, and market conditions. These are not guaranteed.
Split Commissions (If You Work Under a Broker)
If you broker under an existing shop instead of going solo, commissions are split.
50/50 Split
You get 50% of what the lender pays. Shop gets 50%. Trade: Less money but more support and lender access.
70/30 Split
You get 70%, shop gets 30%. Better split but typically less support or you must hit volume targets.
80/20 or 90/10 Split
You keep most of the commission but get minimal support. You are essentially renting access to their lenders and infrastructure.
Higher split does not always mean more money. A 50/50 split with good support and faster closes can net you more than 80/20 with no support.
When Brokers Get Paid
Payment timing matters for cash flow. Here is the typical timeline.
You submit the deal
No payment yet. You are working on commission.
Lender reviews and approves
Still no payment. Deal is not done yet.
Deal funds (typical back-end commission)
Borrower receives money. Lender processes payment to you.
You receive commission
Lender pays you 30-60 days after funding. Now you have cash.
Total timeline from submission to payment: 4-6 months typically. This is why financial runway is critical. You need to cover 4-6 months of living expenses before your first check arrives.
Commission Examples (Real Math)
Here is how commission works on actual deals.
Example 1: Small Restaurant Equipment
Fast approval (2-3 weeks). Simple deal. Small payout but quick.
Example 2: Construction Equipment
Mid-market deal. Moderate approval timeline. Good payout for one deal.
Example 3: Medical Equipment
Larger ticket. More documentation. Higher dollar payout despite lower rate.
Example 4: You Work Under a Broker (70/30 Split)
Higher split but you have to manage the deal with support from the shop.
What You Pay Out of Commission
Commission is gross revenue. Your actual profit depends on expenses. Here is what most brokers pay.
Business Expenses
- •CRM & Software ($50-200/month)
- •Insurance ($100-150/month)
- •Office/workspace (varies)
- •Phone, internet, utilities
- •Marketing ($50-200/month)
Personal & Tax
- •Living expenses (rent, food, etc.)
- •Self-employment tax (~15% of profit)
- •Income tax (varies by state)
- •Health insurance (if self-employed)
- •Professional development
After all expenses, a broker earning $20,000 in commissions might take home $8,000-$12,000 depending on expenses and taxes. Track your costs carefully.
The Bottom Line on Payment
Brokers are paid commission by lenders when deals fund. The percentage varies (2-8%), payment timing varies (front-end vs. back-end), and splits vary (if working under a shop). But the fundamental model is the same: you facilitate a deal, lender funds it, you get paid a percentage.
Understand the commission structure with every lender before you start working with them. Know their rates, payment terms, and whether they pay front-end or back-end. This directly affects your cash flow and income planning.