How Loan Brokers Get Paid to Put You in the Most Expensive Loan

TL;DR: Your loan broker is not neutral. They get paid more when you take a worse loan, and that is not a flaw in the system, it is the system.

• Brokers earn a commission on the funded amount, 5 to 15 points and sometimes as high as 19. On a $150,000 deal that is $7,500 to $22,500, baked into what you repay even though the lender cuts the check.

• The commission is biggest on the most expensive products, so the broker's incentive points at your costliest option, not your cheapest. Their best payday is your worst loan.

• A tighter SBA and a regional-bank pullback push more owners toward fast, expensive money, which makes the broker steer worse, not better.

• On a $150,000 need, the gap between the loan a broker pushes and a bank-rate loan is routinely $40,000 to $50,000 in a single year.

• Frank searches 11,000 US lenders in under 60 seconds, surfaces your three best-fit options, and is paid the same no matter which one you pick. No panel, no kickbacks, no reason to steer.

You needed $150,000 to cover a payroll stretch and some inventory. You filled out one form online. Within the hour your phone rang, and a friendly voice told you that you were approved, that the money could be in your account by Friday, and that all you had to do was sign. You signed. It felt fast and it felt good.

What you did not see was the other side of that call. The person who placed you just earned somewhere between $7,500 and $22,500 on your signature, paid the day the deal funded. And the reason they were so quick, so confident, and so cheerful is that the loan they put you in was the one that paid them the most. Not the one that cost you the least.

This is how most small business lending gets sold in America. It is worth understanding exactly how, because once you see the incentive, you cannot unsee it, and you will never take one of those calls the same way again.

How your broker actually gets paid

Most small business loan brokers earn a commission on the funded amount, quoted in points, where one point equals one percent.

On the cheaper products that commission is small. On the most expensive ones it commonly runs 5 to 15 points, and some lenders advertise payouts as high as 19. On a $100,000 loan at 10 points, the broker made $10,000 the day you signed. On your $150,000, the same 10 points is $15,000, and at the high end it is $22,500.

Here is the part that matters. The commission is paid by the lender, not by you, and brokers lean on that line hard: "It does not cost you anything." That is cosmetic. The commission is built into the cost of the loan. The lender prices your rate to cover what they paid the broker, which means you repay every dollar of that commission, with the lender's markup on top. The broker's paycheck is not free money from the lender. It is your money, routed through the lender, on its way back out of your account.

A bank term loan or an SBA 7(a) works differently. The fees a broker can earn on those are a fraction of an MCA payout, sometimes nothing. So when a broker has your file in front of them, two products are on the table: the cheap one that pays them little, and the expensive one that pays them a lot. Guess which one comes back as "great news, you're approved."

Why the loan they push is rarely your cheapest

The broker's biggest payday and your worst loan are the same transaction. That is the entire problem in one sentence.

When the person advising you earns more as your cost goes up, their advice is not advice. It is a sales pitch dressed as a favor. They are not lying to you, exactly. They are just answering a different question than the one you asked. You asked, "What is the best way to fund my business?" They are solving for, "What is the most I can earn on this file?" Those two questions have different answers, and the gap between them lands on your books.

This is why so many owners end up in a cash advance they did not understand. A restaurant owner takes $120,000 to open a second location and finds a daily debit eating the new revenue before it clears. A contractor bridges a slow month with $80,000 and spends the next nine months working to pay back $112,000. A dental practice or an ecommerce store needs inventory or equipment, qualifies for a real bank loan, and never hears about it, because the bank loan does not pay the broker enough to mention.

The broker's biggest payday and your worst loan are the same transaction.

None of these owners were stupid. They were sold. The product was chosen for the broker's benefit and presented as if it were chosen for theirs.

The SBA just got tighter, and that makes this worse

In the last year the SBA tightened its rules, banks pulled back, and getting a clean yes from a single lender got harder. That sounds unrelated to brokers. It is not. It is the fuel.

When your own bank takes four to eight weeks to say no, and the SBA file feels like a wall of paperwork, the fast cash advance call starts to look like a rescue. Tightening at the top of the market pushes more owners toward the expensive bottom, because the expensive bottom answers the phone first and funds by Friday. The harder it is to get a good loan from one place, the more valuable the broker's speed feels, and the more that speed gets used to steer.

The answer to a tighter market is not to give up and take the costliest money in the room. It is to see more of the market, not less. One bank saying no does not mean you do not qualify anywhere. It means you have not looked in enough places yet.

What "paid the same no matter what you pick" changes

Frank is a broker too, in the sense that we sit between you and the lenders. The difference is the incentive, and the incentive is everything.

Frank searches 11,000 US lenders in under 60 seconds: banks, credit unions, CDFIs, SBA-preferred lenders, equipment specialists, asset-backed lenders, invoice financers, and specialty funders. We surface your best-fit options, we negotiate the terms, and we help you choose. You pay nothing. There is no credit check to start. And here is the line that makes it work: we get paid the same way no matter which lender you choose.

No panel. No exclusivity. No kickbacks. We do not earn more if you take the expensive option, so we have no reason to point you at it. When our paycheck is flat across every choice, the only thing left to compete on is getting you the right loan, so you come back and you tell other owners. The traditional broker makes money once, on your worst deal. We make money when you get funded well, repeatedly, for years. Those are opposite business models that happen to share a job title.

That is what transparency actually means here. Not a friendly tone. A structure where we cannot win by selling you the wrong thing.

It also changes what you get to see. A single broker shows you the one or two products their desk is set up to sell. Searching 11,000 lenders means the equipment specialist, the CDFI, the SBA-preferred bank, and the invoice financer all get a look at your file at once, and they effectively compete for it. Competition is what pushes your rate down. You are not taking the first yes that calls you. You are taking the best yes out of thousands, and you can see why it won.

The math, side by side

Put a real number on it. You need $150,000 in working capital.

The expensive option the broker pushes: at a 1.4 factor rate, you repay $210,000. That is $60,000 in cost, pulled out in daily debits over roughly ten to twelve months. Buried inside it is the broker's commission, your $15,000 to $22,500, which you are funding.

The bank-rate alternative: a working capital line or term loan in the range of 10% APR, built on today's prime rate of 6.75%, costs you something closer to $8,000 to $15,000 in interest over the same year, and you keep the option to pay it down early to save more.

Same $150,000. A difference of $40,000 to $50,000 in twelve months. That is not a rounding error. That is a hire you did not make, a truck you did not buy, a quarter of runway you set on fire, all because the first person to call you got paid to make sure you never saw the cheaper option.

You do not have to play that game. We will search all 11,000 lenders, show you the three that actually fit, and tell you what each one really costs, in plain numbers, before you sign anything. We are paid the same whichever you pick, so the recommendation is the honest one. If you want to see what your business actually qualifies for, start the 60-second conversation