What are typical MCA broker fees by state in 2026?

Full answer

Broker commission basics in 2026. (1) MCA brokers (ISOs) earn commission from the funder, paid as a percentage of the funded amount at close. (2) Commission is built into the factor rate quoted to the merchant — you pay it indirectly through higher pricing, not as a separate fee. (3) Direct-funder application typically saves the entire broker commission (or most of it). (4) Some brokers also charge separate 'packaging' or 'closing' fees to the merchant directly — these are over and above the funder-paid commission and should be a red flag.

How state disclosure laws shape broker fees. (1) New York Commercial Finance Disclosure Law (effective 2023, refined 2024–2025) — requires APR-equivalent disclosure and broker commission disclosure on MCA deals to NY merchants. Broker fees trend 4–8% in NY because merchants see them at signing. (2) California SB 1235 (effective 2023) — similar disclosure regime; broker fees trend 4–9% in CA. (3) Virginia (effective 2024) — disclosure required; broker fees trending 5–9%. (4) Utah (effective 2023) — disclosure required; broker fees trending 5–9%. (5) Connecticut (effective 2024) — disclosure required; broker fees trending 5–9%. (6) Disclosure correlates with downward pressure on broker commission because merchants can shop or push back.

States with high broker fee ranges in 2026. (1) Florida — high broker concentration, no MCA-specific disclosure law, typical broker fees 8–15%, with boutique brokers charging 17–20% on hard-to-place deals. (2) Texas — similar dynamics to FL, fees 7–14%. (3) Georgia — fees 7–13%. (4) New Jersey — high broker density (many MCA brokerages headquartered there), fees 8–15%, some 17–20% on distressed merchants. (5) Tennessee, Alabama, Mississippi — fees 7–13%, low merchant sophistication = wider broker margins. (6) Ohio, Pennsylvania — fees 6–12%.

States with mid-range broker fees in 2026. (1) Illinois — fees 6–11%; disclosure law proposed but not enacted as of mid-2026. (2) Massachusetts — fees 5–10%; sophisticated merchant base. (3) Washington — fees 5–10%. (4) Colorado — fees 5–10%. (5) Arizona — fees 6–12%. (6) North Carolina — fees 6–12%. (7) Maryland — fees 5–10%; emerging disclosure framework discussion.

Why broker fees vary by deal type within a state. (1) A-paper deal (strong credit, clean profile) — broker fees lower (4–7%) because deal would fund anywhere and competition compresses commission. (2) B-paper deal (mid credit, moderate profile) — broker fees mid-range (7–10%). (3) C-paper / hard-to-place deal — broker fees higher (10–15%), occasionally 17–20% because broker work is harder and fewer funders will fund. (4) Stacking situations — broker fees often elevated because risk to placement is higher. (5) Industry-specific (trucking, cannabis-adjacent, etc.) — broker fees elevated where funder selection is limited.

How to estimate broker commission on your specific deal. (1) Ask your broker directly — in NY/CA/VA/UT/CT, they must disclose at signing. In other states, they often won't disclose voluntarily but it's a fair question. (2) Compare quotes — apply direct to one funder and via broker to the same funder; the spread is approximately the broker commission. (3) Use the factor rate spread as a proxy — direct factor 1.30, broker factor 1.37 implies ~7% commission impact. (4) Request commission disclosure in writing as a condition of working with the broker. (5) Reputable brokers will disclose; opaque brokers won't.

How to use this knowledge to negotiate. (1) In disclosure states, you can see the commission and negotiate the broker's take directly. (2) In non-disclosure states, request commission disclosure as a condition of engagement — many brokers will agree to compete on transparency. (3) Apply direct to 1–2 funders in parallel with broker submission — gives you leverage and a direct-pricing benchmark. (4) Push back on factor rates that imply 12%+ commission unless deal is genuinely hard-to-place. (5) Watch for brokers charging separate 'packaging fees' or 'closing fees' on top of funder commission — generally not justified and should be a red flag.

Broker fee trends in 2026. (1) Overall direction — slight downward pressure as disclosure laws expand. (2) NY/CA/VA/UT/CT compressed commission spreads roughly 200 bps versus pre-disclosure baseline. (3) States considering disclosure bills in 2026 — Illinois, Maryland, New Jersey (interestingly), Pennsylvania. (4) Federal-level discussion — CFPB exploring commercial financing disclosure framework; no rule yet but watch for movement. (5) Industry self-regulation — Small Business Finance Association (SBFA) published voluntary commission disclosure guidelines that some funders adopted; not yet majority practice. (6) Multi-merchant aggregator platforms (Lendio, Fundera, Nav, Fundnode) — commission generally disclosed by Fundnode and a few others; opaque at most.

Red flags on broker fees regardless of state. (1) Broker refuses to discuss commission at all — opacity is a structural red flag. (2) Broker charges separate fees to merchant (packaging, closing, application) — over and above funder commission and rarely justified. (3) Broker pressures fast signing without commission disclosure. (4) Broker discourages you from applying direct to funders — protecting their commission, not your interests. (5) Broker quotes wildly different factor rates than direct application would yield (more than 0.08 factor markup). (6) Broker promises specific funder approval before submission — fabricated promise often coincides with elevated commission.

Bottom line for 2026: MCA broker fees range 4–15% of funded amount nationally, with disclosure states (NY, CA, VA, UT, CT) trending lower (4–8%) and high-broker-density states (FL, TX, GA, NJ) trending higher (8–15%). Broker commission is built into your factor rate, not charged separately — applying direct typically saves the commission amount. In disclosure states, use the required disclosure as negotiation leverage. In non-disclosure states, demand commission disclosure as a condition of engagement and apply direct to 1–2 funders as a benchmark. Avoid brokers charging separate merchant fees on top of funder commission. Watch for federal CFPB action on commercial financing disclosure — likely directional in 2026–2027.

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