Merchant cash advance brokers do not lend money, charge interest, or collect payments. They earn money by connecting a business that needs capital with a funder that approves the deal, and they are paid only when that deal funds. How much they earn, when the money arrives, and whether they get to keep it all depend on the terms in each funder’s ISO agreement.
This guide explains how MCA broker commissions work, from points and buy rates to renewals, clawbacks, and state disclosure rules. It is written for brokers, ISOs, and sales managers, and for anyone building a brokerage that needs to track what it is owed. ConvergeHub works with MCA brokers and funders on exactly this kind of deal and commission tracking, and the sections below reflect how the industry commonly describes broker compensation.
A point is 1 percent of the funded amount. Broker commissions in the MCA industry are usually quoted in points, so a 6-point commission on a $50,000 advance equals $3,000, and a 10-point commission on the same deal equals $5,000.
Points are always calculated on the funded amount, not on the total payback. If a merchant receives $50,000 and repays $67,500, the broker’s commission is still based on the $50,000.
Buy rates and sell rates determine how many points a broker earns on a deal. When a funder approves a file, it sets a buy rate, which is the lowest factor rate it will accept, and usually a maximum sell rate the broker can present to the merchant. The sell rate is the factor rate that appears in the merchant’s contract, and the difference between the two is where the broker’s commission comes from.
The illustrative example below shows how that spread works on a $100,000 advance. Actual rates and caps are set by each funder.
| Deal detail | Illustrative value |
|---|---|
| Funded amount | $100,000 |
| Funder buy rate | 1.30 (merchant repays $130,000 at this rate) |
| Maximum sell rate | 1.40 (merchant repays $140,000 at this rate) |
| Spread between buy and sell rate | 0.10, or 10 points |
| Commission if sold at 1.40 | 10 points x $100,000 = $10,000 |
| Commission if sold at 1.35 | 5 points x $100,000 = $5,000 |
The broker controls where the deal lands inside that range. Selling at the top of the range earns more, but it also makes the advance more expensive for the merchant and can make the offer less competitive against other funders. Many brokers price below the maximum to win the deal, protect the relationship, and keep the merchant in position for a renewal.
There is no single standard MCA broker commission rate. Industry sources commonly describe commissions in a range of roughly a few points up to the low teens on a first-time deal, and the actual number depends on the funder, the deal, and the broker. Treat any published range as a starting point for conversations with funders, not as a guarantee.
The factors that most often move a broker’s commission include:
Upfront commissions on new deals are the main income source, but most established brokerages earn from several streams.
When a merchant pays down an advance and takes a new one, many funders pay the original broker a commission on the renewal. Renewal commissions are often lower than the first deal, but they require far less acquisition effort because the merchant already knows the broker. Over time, a book of renewing merchants can become one of a brokerage’s most dependable income sources, which is why tracking payoff dates and renewal eligibility matters so much.
Commissions are often shared. An ISO that receives the funder’s payment may split it with a sub-broker who brought in the deal, and a brokerage may split it with the individual rep who closed it. These splits are set by the brokerage’s own agreements, so the rep’s share of a 10-point deal can look very different from one shop to the next.
Some funders offer syndication programs that let qualified ISOs invest their own capital in deals they submit. In that case, the broker earns a commission as the originator and a share of repayments as a participant, with the added risk that comes with investing. For a closer look at how these arrangements are organized, see this guide to managing MCA syndication.
Some brokers also charge the merchant a separate processing or professional fee. Many funders restrict or prohibit this in their ISO agreements, and any fee charged to the merchant should be clearly disclosed in writing before the merchant signs.
MCA brokers are usually paid after the advance funds, not when the merchant signs or when the funder approves the file. Payout timing is set by each funder’s ISO agreement and can range from a few business days to several weeks after funding.
Because timing differs from funder to funder, brokers working with a broad funder panel should record the expected payout date for every funded deal and follow up quickly on anything overdue. Keeping a record of each submission, funding date, and expected amount makes commission disputes far easier to resolve.
A commission clawback is a clause in the ISO agreement that requires the broker to return some or all of a commission if the merchant defaults shortly after funding. Clawback windows are commonly described as 30, 60, or 90 days, depending on the funder and the deal.
Clawbacks are one reason a strong month on paper can turn into a weak month later. Brokers who treat every commission as fully earned the moment it arrives can be caught off guard when a reversal hits. Tracking the clawback window on each deal, and holding back a reserve if early defaults are common in your pipeline, keeps income forecasts realistic.
MCA broker income varies widely, because most brokers are paid on commission rather than a fixed salary. What a broker actually takes home depends on deal volume, average deal size, points earned, renewal activity, commission splits, and clawbacks.
Compensation also depends on how the broker works:
The headline commission is not the same as profit. Lead costs, files that never fund, clawbacks, and splits all come out of gross commission, so the most useful numbers to watch are cost per funded deal and net commission per rep.
Broker compensation is increasingly a disclosure issue, not just a contract issue. New York’s commercial finance disclosure regulations, for example, require that when a financing involves a broker, the provider inform the recipient in writing of how, and by whom, the broker will be compensated. Several other states have passed commercial financing disclosure laws, and requirements differ by state, deal size, and product, so brokers should confirm current rules with qualified counsel.
Industry standards point in the same direction. The Small Business Finance Association, a nonprofit advocacy organization for the alternative small business finance industry, calls on its members to disclose all fees and the total amount owed, and to ensure that brokers who refer business follow the same principles of transparency and fairness.
The Small Business Borrowers’ Bill of Rights takes a similar view. As the Aspen Institute explains, its Business Ownership Initiative helped create the Bill of Rights, which sets out six financing rights for small businesses and the specific practices lenders and brokers are expected to follow to uphold them.
Commission tracking gets complicated quickly. A single funded deal can involve a funder, a buy and sell rate, an ISO, a sub-broker split, a payout date, a clawback window, and a renewal date, and all of it changes as the merchant pays down the advance. Spreadsheets struggle to keep those pieces connected.
A merchant cash advance CRM keeps them on the deal record instead. In ConvergeHub, each deal is a trackable case with an assigned owner, milestones, and live status, and the MCA workflow supports syndication and commission tracking, offer letter tracking, document follow-up, and automated renewal reminders in one system. That makes it easier to see what each deal should pay, which payouts are still outstanding, and which merchants are coming up for renewal.
For a deeper look at the mechanics, see how MCA platforms track broker commissions, including payout automation and ISO reconciliation.
Smaller shops weighing their options can also review what a small MCA broker shop should look for in a CRM.
In most cases, the funder pays the broker a commission after the advance funds. The commission is built into the deal’s pricing rather than billed to the merchant separately, although some brokers also charge a disclosed fee where funders allow it.
Ten points means a commission equal to 10 percent of the funded amount. On a $100,000 advance, 10 points is $10,000.
There is no fixed average. Industry sources describe commissions ranging from a few points to the low teens on first-time deals, depending on the funder, deal size, risk, and the broker’s volume and performance.
Often, yes. Many funders pay the original broker a commission when a merchant renews, usually at a different rate from the first advance. Terms depend on the ISO agreement.
Brokers are typically paid after the deal funds. Depending on the funder, payout can take anywhere from a few business days to several weeks.
Yes. Most ISO agreements include a clawback clause that lets the funder recover some or all of the commission if the merchant defaults within a set window, commonly 30 to 90 days.
If your team is still reconciling points, splits, payout dates, and renewals by hand, ConvergeHub can show you how those details live on each deal record in one MCA CRM. Request a demo to see it with a real deal from your pipeline.
