Business loan broker versus direct lender

What is the difference?

A direct lender underwrites and funds your loan itself: a bank, a credit union, an online lender, an equipment finance company or a factor. You apply to it, it decides, and you deal with it for the life of the loan. A broker takes your application and places it with one or more lenders in its network, earning a commission from the lender that funds. A platform like this one does the same thing with software: one application matched to lenders in every category, with offers returned to one place.

Both paths end with the same lenders doing the same underwriting. What differs is how many lenders you reach and how much work you do.

When is a direct lender the better choice?

When you already know the answer. If your bank has held your deposits for years, knows your business and offers lines of credit to businesses like yours, applying there directly is simple and often fastest. The same is true of a specialist lender your industry relies on, such as a trucking factor or a medical equipment lender, or a well known online lender whose criteria you clearly meet.

Going direct also makes sense for a renewal of an existing facility. The limitation is that one lender gives you one answer and one price, and you have no way to know whether another lender would have done better.

When is a broker or platform the better choice?

When you do not know which lenders fit, which is most owners most of the time. Lender criteria differ by industry, time in business, credit, revenue and product. A broker or platform that knows those criteria sends your file where it will be approved, which saves you declines, hard credit pulls and weeks. It also gets you several offers to compare, which is the only reliable way to know a price is fair.

It is the clear choice after a bank decline, for unusual industries, for larger or more complex deals, and for products most owners have never shopped, like factoring or SBA 504. The bank said no explains what usually happens next.

What do they cost side by side?

On bank loans, SBA loans, equipment financing and most online term loans, the price is the same either way, because the lender pays the broker from its own margin rather than raising your rate. On a $200,000 term loan the lender pays the broker perhaps $2,000 to $6,000 from its side.

The exception is cash advances and some short term loans, where a broker can add points to the factor rate and keep the difference. A direct quote on an advance can be cheaper than a brokered one, which is why you should always ask for the factor rate without added points. How brokers get paid covers the full picture, including the fees you should never pay.

Can you use both?

Yes, and it is a sensible way to test the market. Ask your own bank for a term sheet, then apply once through a platform and compare. If the bank's offer is best, take it; if not, you have found something better. Lenders expect you to shop, and a competing offer is the most effective negotiating tool with either one.

What you should not do is apply separately to many lenders at once. Each application can mean a hard credit pull and a full set of document requests, and underwriters notice a file that has been everywhere. One direct application plus one platform application covers the market without those costs.

How do you apply?

Apply once here and your application is matched to lenders in every category, with offers returned to one place and the lender named on each. Your business pays nothing; lenders pay us when a loan funds, and we are paid the same whichever lender you choose, so there is no reason for us to steer you. How we make money sets this out in full.

You can also ask your AI assistant to prepare and submit the application for you through our MCP server; it reads your documents, fills the application and submits with your approval. See the agents hub. Brokers who want the broker side of the platform go to for brokers.