How Do Commercial Finance Brokers Get Paid?
Share
Commercial finance brokers are usually paid in one of two ways: a commission from the lender (often called a procuration fee) when your loan completes, a fee charged to you the client, or sometimes a combination of both. In many commercial deals the broker is paid by the lender, which means their service can cost you nothing directly. A professional finance firm should always be transparent about how it is paid before you commit.
Below we break down each method, when a fee applies, and why using a broker can still save you money overall.
1. Commission from the lender (procuration fee)
The most common way a commercial finance broker is paid is by the lender. When the broker introduces your deal and it completes, the lender pays them a percentage of the loan amount, known as a procuration fee or 'proc fee'. Because this is paid by the lender, it often costs you nothing extra, and the rate you are offered is not increased to cover it.
2. A broker fee charged to you
For some cases, particularly complex, specialist or higher-risk deals, a broker may charge you a fee for their work. This should always be disclosed and agreed upfront, and a good broker will explain exactly what the fee covers, such as sourcing lenders, packaging your application and managing the process to completion.
3. A combination of both
On larger or more involved deals, a broker may take a smaller lender commission plus a client fee. Again, transparency is the key: you should know the full picture before you proceed.
Does using a broker cost me anything?
Often, no. When the broker is paid by the lender, their expertise, market access and time can be free to you. Where a fee does apply, it is disclosed in advance so there are no surprises. Either way, a broker's access to whole-of-market lenders frequently secures better terms than going direct, which can outweigh any fee.
Why is transparency important?
In the UK, finance brokers are expected to be clear about how they are paid. If a broker will not explain their payment structure, that is a warning sign. At Sadi's Commercial Finance we tell you upfront how we are paid on your deal, so you can make an informed decision.
Frequently asked questions
Is a commercial finance broker free?
Often yes, when the broker is paid a commission by the lender. Some complex cases carry a disclosed client fee.
What is a procuration fee?
It is the commission a lender pays a broker when a loan completes, usually a percentage of the loan amount.
Will using a broker increase my interest rate?
No. Lender commission is paid by the lender and does not inflate the rate you are offered.
Should the broker tell me how they are paid?
Yes. A transparent, professional broker discloses their payment structure before you commit.
Ready to explore your options? Sadi's Commercial Finance arranges business loans, bridging loans and commercial property finance across the UK, and we are always upfront about how we are paid.