“Not every broker is a shark—some are lab-trained goldfish confined to a glass bowl of federal regulations.”
— Diogenes, Your Cynical Funding Guide
1. Two Very Different Species of “Broker”
| SBA Broker | MCA / Fintech Broker |
|---|---|
| Works on government-backed 7(a) & 504 loans. | Peddles revenue-based advances, daily-debit loans, factor-rate products. |
| Federally capped compensation (see Section 2). | Zero federal caps; commissions often hidden in the rate factor. |
| Must disclose fees on SBA Form 159—you sign it. | Frequently buries fees inside repayment terms you’ll never decode. |
| Gets paid out of loan proceeds you already negotiated. | Often stacks 10–15 % on top of lender’s price—without telling you. |
| Legit value on complex real-estate or multi-entity deals. | Adds “value” mainly by being first to cold-call when you Google “quick cash.” |
Key takeaway: SBA brokers are the strict-uniform private school kids; MCA brokers are the trench-coat clique selling homework answers behind the gym.
2. SBA’s Hard Fee Caps (Straight from SOP 50 10 8)
| Loan Slice | Max Broker Fee |
|---|---|
| First $50 k | 3 % |
| $50,001 – $1 m | 2 % |
| Above $1 m | 0.25 % |
| Absolute ceiling | $30 k |
Source: SBA SOP 50 10 8, Subpart A, Ch. 4 (Ethics, Fees & Agents).
If your SBA broker tries to sneak past those numbers, they’re not an SBA broker—they’re moonlighting as an MCA shark.
3. Real-World Math (A Calm Example, Not a Horror Story)
Scenario: $100,000 SBA 7(a) loan, no other lender fees
Broker’s max fee:
• 3 % on first $50 k = $1,500
• 2 % on next $50 k = $1,000
Total: $2,500
| Item | Amount |
|---|---|
| Gross loan approved | $100,000 |
| Minus broker fee (wired at closing) | – $2,500 |
| Borrower nets | $97,500 |
You still pay interest on the full $100 k—because math. But at least you knew the haircut before you signed.
4. Timing & Paper Trail
- Closing: Fee appears on settlement sheet.
- Wire: Lender disburses broker fee and your net funds simultaneously.
- Within 30 days: Lender files Form 159 with the SBA (and sends you a copy).
If a broker waives paperwork or says “we’ll do that later,” congratulate them on their upcoming audit.
5. When an SBA Broker Earns Their Keep
- Multi-layer ownership (LLCs inside trusts inside holding companies).
- 504 construction projects with 14 subcontractors and a CFO who just quit.
- Founders who’d rather pass a kidney stone than compile a lender-ready package.
In those cases, paying 1-2 % for a genuine SBA whisperer can shorten underwriting by weeks and raise approval odds.
6. General Advice on Broker Commissions
- Expect: Competent SBA brokers to price at or below the SBA caps.
- Suspect: Anyone quoting extra “consulting” or “packaging” fees on top.
- Run: If it’s an MCA deal priced with a factor rate and they want an upfront fee— that’s double-dipping.
Remember: The needier you appear (“I’ll go broke Friday!”) the fatter their cut will be. Maintain a “nice-to-have” posture and watch the quote slim down.
7. Questions to Ask Any Broker (SBA or Otherwise)
- “How much are YOU making? Show me Form 159 or its equivalent.”
- “What other fees does the lender deduct at funding?” (Origination, guarantee, etc.)
- “Did you shop banks & PLP lenders—or only MCA mills?”
- “What’s my true cost of capital (APR), not just the factor rate?”
- “Can I see competing term sheets?”
- “If I waited 30 days, could we pivot to a bank or SBA option?”
If the answers get hand-wavy, you’re dealing with the trench-coat brigade.
8. The Donation-Based Alternative (Hi, That’s Us)
Diogenes charges exactly $0 to diagnose whether you qualify for SBA, bank, fintech—or none of the above. No hidden percentages, no fishing expeditions with MCA lenders. If we save you time, money, or a migraine, toss a donation our way. If not, enjoy the free education.
Final Thought
SBA brokers operate inside bright-yellow boundaries. MCA brokers operate in permanent twilight. Know which playground you’re in before you slide down the money chute.