Quick answer: A direct lender funds your business with its own capital, sets the rate, and decides in-house — no middleman. A broker shops your application to multiple lenders and adds a commission (typically 0.10-0.15 to your factor rate), which can cost $5,000-$7,500 extra on a $50,000 advance. For standard MCA, line of credit, or term loan requests, going direct is faster and cheaper.
Questions This Guide Answers
- What is the difference between a direct lender and a broker?
- How much more does a broker actually cost?
- How fast is funding with a direct lender vs a broker?
- When does using a broker make sense?
- How can I spot broker markup in my offer?
- Why does Solvic Capital work direct?
Key Facts
- Direct lenders fund from their own capital; brokers match you to third-party lenders.
- Broker commissions typically add 0.10-0.15 to a factor rate — often not fully disclosed.
- On a $50,000 advance, a broker can add $5,000-$7,500 in extra cost.
- Direct funding decisions come in 24-72 hours; brokered deals take 3-10+ days.
- The FTC has warned that broker markups in small business financing are often not fully disclosed.
- Going direct means your rate is the lender's actual rate — no commission layer.
Table of Contents
- Introduction: Two Paths to Funding
- What Is a Direct Lender?
- What Is a Broker?
- Direct Lender vs Broker: Key Differences
- The Cost Difference: Real Numbers
- Speed Difference: Direct vs Broker
- How to Spot Broker Markup in Your Offer
- When Does a Broker Make Sense?
- Why Solvic Capital Is Different
- Frequently Asked Questions
- Conclusion
Introduction: Two Paths to Funding
When you need business financing, you have two main paths: apply directly with a lender, or go through a broker. Most business owners do not know the difference — until they see their final cost. Choosing the right path can save you thousands of dollars and weeks of waiting.
A direct lender like Solvic Capital funds your business with its own capital. A broker, on the other hand, acts as an intermediary who shops your application to multiple lenders and adds a commission to your cost. This guide breaks down the direct lender vs broker difference so you can make an informed decision before you sign anything.
What Is a Direct Lender?
A direct lender like Solvic Capital funds your business with its own capital. We make the approval decision, we write the offer, and we send the money. There is no one between you and the funding source.
What this means in practice
Your application goes directly to the underwriting team — not through multiple hands at different firms. Because there is no intermediary, the rate you receive is the lender's direct rate. There is no broker commission added to your factor rate or APR.
Benefits of going direct
- Transparent pricing: The rate quoted is the rate you pay.
- Faster decisions: Underwriting is in-house; no waiting for third parties.
- Direct communication: You talk to the people making the decision.
- Accountability: One party owns the entire process from application to funding.
For more on how direct lending works, read our guide on what a merchant cash advance is and how it works.
What Is a Broker?
A broker acts as an intermediary. They collect your application, shop it to multiple lenders, and collect a commission — typically a percentage of the funded amount — when you get approved. That commission comes from your offer, meaning your rate is marked up above what the lender would have charged directly.
The convenience trade-off
Brokers can offer convenience: you fill out one application and they do the shopping. However, that convenience comes at a cost. The broker's commission is built into your pricing, and you may not even see it disclosed in your terms. The Federal Trade Commission has warned that broker markups in small business financing are often not fully disclosed to borrowers, making it difficult to compare offers.
Direct Lender vs Broker: Key Differences
| Factor | Direct Lender | Broker |
|---|---|---|
| Funding Source | Own capital | Third-party lenders |
| Pricing | Direct rate, no markup | Marked up with commission |
| Approval Decision | In-house, fast | Passed to third-party |
| Communication | Direct with underwriter | Through intermediary |
| Time to Fund | 24“72 hours | 3“10+ days |
The Cost Difference: Real Numbers
A direct offer from a lender might carry a 1.25 factor rate. By the time a broker adds their commission, that same advance might cost 1.35 or 1.40. On a $50,000 advance, the math is clear:
| Scenario | Factor Rate | Total Repayment | Extra Cost vs Direct |
|---|---|---|---|
| Direct Lender | 1.25 | $62,500 | " |
| Broker-Aided | 1.35 | $67,500 | $5,000 |
| Broker-Aided | 1.40 | $70,000 | $7,500 |
That $5,000-$7,500 difference is money that stays in your business when you go direct. Over multiple funding cycles, the savings compound — a business that funds twice a year through a broker can give up $10,000-$15,000 per year to markups.
Speed Difference: Direct vs Broker
When you apply through a broker, your application passes through multiple hands before reaching a lender. Each step adds time: the broker reviews, reaches out to potential lenders, lenders evaluate and respond, the broker compares offers, and finally delivers one to you.
The typical brokered timeline
- Broker reviews your file (1-2 days)
- Broker shops to 3-10 lenders (2-5 days)
- Lenders underwrite and respond (2-7 days)
- Broker compares offers and delivers (1-2 days)
- Funding after acceptance (1-3 days)
With a direct lender like Solvic Capital, your application goes directly to our underwriting team. Decisions come faster, and funding typically happens within 24-72 hours. For businesses with urgent capital needs — a payroll deadline, a supplier invoice, an equipment breakdown — that speed difference can be critical.
Read our guide on how to qualify for a business line of credit for another fast funding option.
How to Spot Broker Markup in Your Offer
Ask three questions before signing
- Who is the actual lender? If the offer names a third party, a broker is involved.
- What is the base factor rate before any commission? A broker should disclose this in writing.
- Is any fee being paid to the person presenting the offer? If yes, that fee is built into your cost.
Red flags
- Pressure to sign quickly before you can compare offers.
- Unwillingness to put the rate and total repayment in writing.
- Vague language about "partner lenders" or "our network."
- Fees described as "processing" or "administrative" that a direct lender would not charge.
If an offer is not clear about total repayment and who is being paid, walk away. A direct lender can answer all three questions in one sentence.
When Does a Broker Make Sense?
There are situations where a broker adds value — typically when your business has a complex financial situation that does not fit a single lender's criteria. A broker who knows multiple lending markets can help find the right match, especially for unusual industries, mixed credit profiles, or larger structured deals.
However, for standard MCA, line of credit, or term loan requests, applying directly to a lender like Solvic Capital is faster and cheaper. If your situation is straightforward — steady revenue, standard documentation — the broker layer only adds cost and delay.
Why Solvic Capital Is Different
Solvic Capital is a direct lender. We fund businesses with our own capital. Your application goes directly to our team. Your money comes directly from us. No broker in the middle, no broker fee on your offer.
Because we are the lender, we can tell you exactly what your rate is, what your total repayment will be, and when your funds will land — all before you commit. For more information about our products, see our business working capital guide.
Frequently Asked Questions
For standard funding requests — MCAs, lines of credit, and term loans — a direct lender is typically better because there is no broker commission added to your rate. Direct lending is faster and more transparent.
Brokers typically add 0.10-0.15 to your factor rate. On a $50,000 advance, that is $5,000-$7,500 in extra cost compared to the same deal through a direct lender.
Direct lenders typically decide within 24-72 hours and fund within 1-3 business days after approval. Brokered deals usually take 3-10+ days because the application passes through multiple parties.
A broker can help match unusual or complex situations to a suitable lender. But for standard applications, brokers add a commission layer, so the direct offer is almost always cheaper.
No. Solvic Capital is a direct lender and funds businesses with its own capital. There is no broker in the middle and no broker fee on your offer.
Ask three questions: who is the actual lender, what is the base factor rate before commission, and is any fee being paid to the presenter? If the answers are unclear, the offer likely includes markup.
Conclusion
The direct lender vs broker decision comes down to one question: do you want to pay for a middleman? For most small businesses, the answer is no. Direct lending gives you transparent pricing, faster decisions, and a rate that reflects the lender's actual offer — not a commission layer.
Before your next application, ask who the lender is, what the base rate is, and who is being paid. If you cannot get clear answers, go direct.
Related Topics
- Direct Lender
- Broker
- Merchant Cash Advance
- Business Funding
- Factor Rates
Why You Can Trust This Guide
Every measurable claim in this guide is either sourced to public data or framed as an industry-standard range based on direct lending practice. Figures such as factor rates, approval timelines, and cost savings reflect typical underwriting bands and representative calculations — not guaranteed quotes.
References
- [R1] Federal Reserve Small Business Credit Survey — fedsmallbusiness.org/survey
- [R2] U.S. Bank small business cash flow study (82% failure attribution figure)
- [R3] Federal Trade Commission guidance on small business financing disclosure — ftc.gov
- [R4] Consumer Financial Protection Bureau materials on MCA cost comparison — consumerfinance.gov
Ready to Apply Directly?
Solvic Capital — the direct lender. No brokers, no middlemen, no markup.
Apply Directly Now