How much commission does an ISO broker make on a typical MCA deal?

On a $50K advance, broker total compensation typically lands between $4,000 and $7,500 — that's 8–15% of the funded amount, with the higher end on C-paper deals where the funder pays more to compensate for risk and difficulty placing. The split is usually base commission (4–8%) plus markup retained on factor rate (3–7%).

Do brokers add markup to the factor rate?

Yes — almost always, and rarely disclosed. A funder may approve a deal at a 1.32 factor, the broker shows the merchant 1.42, and pockets the 0.10 spread on top of base commission. On a $50K deal that markup alone is $5,000. Marked-up deals are how brokers make 12–15% total instead of the 4–8% base.

What's a residual on an MCA renewal?

Most funders pay the originating broker a smaller commission (1–3%) on every renewal, indefinitely — even if the merchant works with a different broker on the renewal itself. This is why brokers push hard to be 'the broker on file' on the first deal; the renewal residuals compound for years.

Are there laws that require brokers to disclose commission?

Limited. California SB 1235 and New York's NYDFS 803 require commercial financing disclosures including total cost, but commission disclosure is not yet a federal requirement. The CFPB has flagged broker compensation transparency in small-business lending guidance but has not yet mandated it.

How do I find out what commission my broker is earning?

Ask directly: 'What is your base commission on this funder, and are you marking up the factor rate?' A trustworthy broker will tell you. If they refuse or get defensive, that's a signal. You can also request the funder's term sheet (the version before broker markup) — some funders will send it on request.

Is going direct to the funder cheaper than going through a broker?

Sometimes, but not always. Funders that fund both direct and broker-channel often quote merchants the same factor — the difference is internal accounting. Funders that only work through the broker channel won't even talk to you direct. The real question is whether your broker is honest about commission and whether they're marking up the rate.

ISO broker economics explained — commission, markup, and the merchant-side cost

MCA brokers make 8–15% of every funded deal — but the math is more interesting than the headline. Base commission, factor-rate markup, renewal residuals, and the merchant-side cost of broker channel pricing, all laid out without the sanitized marketing version.

The three streams of broker compensation

An ISO (Independent Sales Organization) or broker working a merchant cash advance deal earns money in three distinct ways. Almost no broker explains this to the merchant, and most merchants assume there's one number — a commission rate the funder pays. The reality is structural and usually adds up to more than the merchant guesses.

1. Base commission (paid by the funder)

The funder pays the broker a percentage of the funded amount on closing. Industry ranges in 2026:

A paper (clean credit, 12+ months in business): 4–6%
B paper (mid-tier credit, some history): 6–9%
C paper (challenged credit, thin history): 9–12%
Renewals (originated by the same broker): 1–3%

On a $50,000 B-paper deal, the broker's base commission is roughly $3,000–$4,500. The funder pays this from the spread between what they collect from the merchant and what their cost of capital plus default reserves consume.

2. Markup on factor rate (paid by the merchant, invisibly)

This is the part that gets sanitized out of every funder marketing page and most industry write-ups. Funders typically allow brokers to mark up the factor rate by 0.05–0.15 on top of the funder's approval, with the broker keeping the spread.

Worked example: a funder underwrites a deal at 1.32 factor on $50,000. The broker quotes the merchant 1.42. The merchant signs. The merchant pays back $71,000 instead of $66,000 — and the extra $5,000 is the broker's markup, in addition to their base commission.

Markup is invisible because the merchant only sees the final factor. The funder's underwriting decision (the unmarked version) is not disclosed to the merchant unless they specifically ask, and most don't know to ask.

3. Renewal residuals (compound forever)

Most funders pay the originating broker a residual commission on every renewal — even if the merchant doesn't go back through that broker. This is why brokers push hard to be "broker on file." A merchant who renews 3 times over 24 months at the same funder generates $4,000–$8,000 in residual commission to the original broker without doing any further work.

How the math works on a real deal

Walk through a representative B-paper restaurant deal: $50,000 advance, 12-month term, the merchant has 580 FICO, 18 months in business, $35K/month gross deposits.

The funder's actual approval is 1.32 factor. The broker quotes 1.42. Here's the full economics.

Amount funded to merchant: $50,000
Total payback at 1.42 (merchant-facing): $71,000
Funder's actual approval at 1.32 (broker can see): $66,000
Markup retained by broker: $5,000
Base commission paid by funder at ~7%: $3,500
Total broker compensation on this deal: $8,500
Effective broker compensation as % of funded amount: 17%

If the merchant renews 12 months later for another $50,000 at the same funder, the original broker also pockets a 2% residual on the renewal — even if a different broker actually arranges the renewal. That's another $1,000–$1,500 with zero additional work.

Why the markup game exists

The honest answer: it works. Merchants almost never know to ask for the pre-markup approval. They evaluate the offer against their own pain — "I need $50K, the daily ACH is $282, can I survive it" — and not against an alternative quote from another broker at the same funder, which would expose the spread.

Funders allow it because the broker channel originates 60–80% of MCA volume industry- wide. Without competitive markup latitude, brokers would migrate to funders that allow more aggressive pricing, and the funders that allow it would win volume. It's a coordination failure that the merchant pays for.

The four broker behavior patterns to watch for

Broker incentives shape broker behavior. The patterns that hurt merchants most:

Quote one funder, hide alternatives. A broker is often appointed by 8–20 funders. They have an incentive to place the deal where they earn the highest commission, which is often not the cheapest funder for the merchant. If the broker only shows you one option, they're optimizing for their commission, not your cost.
Push longer terms to inflate factor. A 9-month term at 1.30 looks similar to a 12-month term at 1.35 on the daily payment line. The longer term retains a bigger factor and a bigger commission. Brokers will steer toward longer terms when it serves them.
Renewal aggression. Brokers will start calling 60% of the way through your current MCA term to set up a renewal. They make residual on the renewal regardless of merchant economics. Many merchants get talked into renewals that don't serve them.
Refuse to quote APR-equivalent. If a broker won't convert their factor quote to an APR or won't share the funder's pre-markup approval, they're hiding the markup. This is the single most reliable signal of broker behavior.

What good broker behavior looks like

Not every broker is predatory. Good brokers exist and they tend to share these traits:

They quote APR-equivalent without being asked.
They tell you which funders they're appointed by and why they're recommending one over another.
They're willing to share the pre-markup approval from the funder.
They actively warn you about stacking and don't push you toward MCAs when an LOC would fit.
They explain renewal mechanics before you sign the first deal, including the renewal-double-dip math.

These brokers exist. They make less per deal but build long-term referral business from merchants who come back voluntarily. They're harder to find because they don't buy as much Google traffic — they don't need to.

What you can do as a merchant

Three practical moves to protect yourself from broker channel markup.

Get two quotes from two unaffiliated brokers on the same funder. If both brokers can place you at, say, Credibly, ask each what factor they're quoting. The spread is the markup. Take the lower one or use it as leverage.
Ask for the funder's pre-markup approval in writing. Phrase it: "Can you share the funder's term sheet before any broker adjustment?" Honest brokers will. Dishonest ones will deflect — that's your answer.
Verify the broker's funder list. A broker appointed by 3 funders is not shopping your deal — they're placing it wherever they get paid the most. Brokers appointed by 15+ funders are doing real shopping.

Regulatory direction

State commercial financing disclosure laws are slowly closing the markup transparency gap. California SB 1235, New York NYDFS 803, Virginia's MCA disclosure law, Utah's commercial financing law, and emerging Ohio, New Jersey, and Texas frameworks all require some version of total-cost disclosure to the merchant. Commission and markup disclosure remains spotty — most laws require the merchant to see total payback and APR-equivalent, but not the broker's commission breakdown.

Federal action is slower. The CFPB's small-business lending rule (Section 1071) requires data collection on commercial credit but doesn't mandate commission disclosure. Industry expectation is that the next 2–3 years will bring more pressure on commission transparency, but no near-term federal rule.

Bottom line

ISO broker economics are designed to be invisible to the merchant. Base commission, markup, and renewal residuals routinely add up to 12–17% of your funded amount on a typical deal. The system isn't illegal, isn't always predatory, and brokers provide real value when they're honest about placement and pricing. The merchant's job is to ask the questions that surface the math: pre-markup approval, APR-equivalent, funder list, and renewal mechanics. Brokers who answer cleanly are worth working with. Brokers who deflect are not.

Frequently asked questions

How much commission does an ISO broker make on a typical MCA deal?: On a $50K advance, broker total compensation typically lands between $4,000 and $7,500 — that's 8–15% of the funded amount, with the higher end on C-paper deals where the funder pays more to compensate for risk and difficulty placing. The split is usually base commission (4–8%) plus markup retained on factor rate (3–7%).
Do brokers add markup to the factor rate?: Yes — almost always, and rarely disclosed. A funder may approve a deal at a 1.32 factor, the broker shows the merchant 1.42, and pockets the 0.10 spread on top of base commission. On a $50K deal that markup alone is $5,000. Marked-up deals are how brokers make 12–15% total instead of the 4–8% base.
What's a residual on an MCA renewal?: Most funders pay the originating broker a smaller commission (1–3%) on every renewal, indefinitely — even if the merchant works with a different broker on the renewal itself. This is why brokers push hard to be 'the broker on file' on the first deal; the renewal residuals compound for years.
Are there laws that require brokers to disclose commission?: Limited. California SB 1235 and New York's NYDFS 803 require commercial financing disclosures including total cost, but commission disclosure is not yet a federal requirement. The CFPB has flagged broker compensation transparency in small-business lending guidance but has not yet mandated it.
How do I find out what commission my broker is earning?: Ask directly: 'What is your base commission on this funder, and are you marking up the factor rate?' A trustworthy broker will tell you. If they refuse or get defensive, that's a signal. You can also request the funder's term sheet (the version before broker markup) — some funders will send it on request.
Is going direct to the funder cheaper than going through a broker?: Sometimes, but not always. Funders that fund both direct and broker-channel often quote merchants the same factor — the difference is internal accounting. Funders that only work through the broker channel won't even talk to you direct. The real question is whether your broker is honest about commission and whether they're marking up the rate.