The short version
- Commercial finance brokers are usually paid by the lender, not by you. It's an upfront commission worked out as a percentage of the loan amount.
- Commercial commission is far less standard than home loan commission. It often sits around 0.5% to 1.5% of the loan, but it varies a lot by lender, product and deal size.
- A broker may also charge you a direct fee on complex or low-commission deals. That fee has to be disclosed in writing, in the Credit Guide, before you commit.
- The bigger risk is lender tier status, more than the commission. Brokers earn more and get faster service from their top-tier lenders, and that can quietly sway where your deal goes.
Most business owners know their broker gets paid. Few know how, how much, or by whom, and the broker rarely brings it up. That isn't always a bad sign. Broker commission is a normal, legal part of how finance gets sold. But normal isn't the same as open. Of course your broker gets paid. What you want to know is whether the way they're paid changes which lender gets your deal. Below is how commercial finance brokers earn, where the real conflicts are, and the questions that bring them out.
How commercial finance brokers actually get paid
In almost every case, a commercial finance broker is paid by the lender that funds your deal, not by you. The lender treats it as a cost of selling loans, the same as running a branch network. It comes in three forms.
Upfront commission
Upfront commission is a one-off payment from the lender to the broker when your loan settles. It's a percentage of the loan amount.
Home loan commission rates are fairly well documented. Commercial rates vary widely and are rarely published. As a rough guide, upfront commission often sits somewhere between 0.5% and 1.5% of the loan amount. It depends heavily on the lender, the product and the size of the deal. A large, clean term loan and a small, complex equipment facility can pay the broker very differently.
For you, the point is that the lender funds the commission, but it isn't free money. It's a cost the lender carries, and like any cost it shows up somewhere in the loan's pricing. That's one reason the real cost of a business loan is rarely just the headline rate.
Trail commission (where it applies)
Trail commission is an ongoing yearly payment from the lender to the broker for as long as the loan is running. It's often around 0.1% to 0.4% a year of the balance owing.
Trail is standard on home loans and common on some asset finance. On commercial term loans it's much less consistent, and many commercial products pay upfront only. Where trail applies, it gives the broker a small reason to keep you with your current lender rather than refinance you. Keep that in mind when a broker reviews a facility they first set up.
Trail is a small number, so it's no cause for alarm. It's still fair to ask about it. Ask whether your broker earns trail on the loan, and whether that affects their view when a refinance comes up. A broker who answers plainly has nothing to hide. A broker who gets prickly about it has told you something.
Direct broker fees (when they apply)
A direct broker fee is charged to you, the borrower, rather than paid by the lender.
It isn't the norm in commercial finance, but it's legitimate. It shows up in two cases: a complex deal that takes a lot of work to structure and place, or a deal where the lender pays little or no commission. A broker who charges a fee has to tell you in writing, upfront, before you're committed. In Australia that goes in the broker's Credit Guide. A fee that turns up late, or only in the fine print at settlement, is a red flag whatever the amount.
If you're quoted a fee, ask two things. Is it a fixed amount or a percentage of the loan? And what work does it cover? A fee for real structuring work on a hard deal is reasonable. A fee with no clear reason on a simple deal isn't. The amount matters less than whether it was disclosed early and explained clearly.
Why commercial finance broking is different from home loan broking
Commercial finance broking and home loan broking look alike from the outside. The rules underneath are very different.
Home loans are consumer credit. They sit inside the National Consumer Credit Protection Act (the NCCP Act), which gives borrowers a set of protections and puts duties on brokers. Most commercial finance doesn't. A loan taken wholly or mainly for business purposes is generally exempt from the NCCP Act, so the legal protections a homebuyer relies on aren't there for a business borrower.
The Best Interest Duty gap (NCCP scope)
The clearest example is the Best Interest Duty.
The Best Interest Duty (BID) is a legal duty brought in in 2021. It requires mortgage brokers to act in their clients' best interests when helping with consumer credit, and ASIC enforces it. It's a real, enforceable standard, and it covers home loans and other consumer credit.
It doesn't cover commercial finance. Because most commercial lending sits outside the NCCP Act, the broker arranging your business loan is generally under no legal best-interests duty at all. Plenty of brokers are excellent and principled. Where that's true, it comes from their own professionalism. It isn't a legal minimum you can count on.
This is the most useful thing a business borrower can know about broker rules: the protection you'd have as a homebuyer doesn't carry over to a commercial deal. That makes the broker's own standards, disclosures and professional memberships matter more.
Most reputable commercial brokers belong to CAFBA, the Commercial & Asset Finance Brokers Association, or the FBAA, the Finance Brokers Association of Australia. Both have codes of conduct that go past the legal minimum. Membership doesn't guarantee quality, but if a broker isn't a member, ask why.
How lender tiers can bias broker recommendations
The real conflict in how brokers are paid is lender tier status, more than the commission.
Lenders rank the brokers and broker groups that send them business. The labels vary (accredited, preferred, silver, gold, platinum), but it works the same way. The more a broker writes with a lender, the higher their tier, and the higher the tier, the more they get. Higher tiers usually mean a better commission rate and faster, more senior credit assessment. Sometimes it means a dedicated contact who can get a borderline deal approved.
That creates a pull. A broker on platinum tier with one lender has a quiet reason to send deals there, because they earn more and the process is quicker and smoother. Neither of those helps you. The lender that pays the broker best and answers the phone fastest isn't automatically the one that prices or structures your deal best. The bank versus non-bank choice under every commercial deal should be made on its merits, not on a broker's tier status.
That doesn't mean brokers act in bad faith. Most don't. It's just how the system pulls. A good broker knows about that pull and works against it. To find out whether yours does, ask.
Questions every business owner should ask their broker
Six direct questions bring out almost every conflict in how a broker is paid. A broker worth using will answer all of them without a pause.
- How are you paid on this deal: lender commission, a fee from me, or both? You're entitled to a straight answer before you commit, not at settlement.
- Which lender are you recommending, and how many did you really consider? "I took it to three" is a different answer from "I sent it to my usual lender".
- Do you have preferred or top-tier status with the lender you're recommending? That doesn't rule the lender out, but you should know the relationship exists.
- Is there trail commission on this loan, and does it change your advice if I want to refinance later? This matters whenever a broker reviews a facility they first set up.
- Will you show me your Credit Guide and any fee disclosure in writing? The Credit Guide is the formal document. The broker should offer it without you asking.
- Are you a member of CAFBA or the FBAA? It doesn't settle things on its own, but it's a fair baseline for a commercial broker.
If a broker dodges any of these, especially the first and third, that tells you what you need to know.
How Aurelius approaches this
We're paid the way every commercial finance broker is paid: by the lender, on settlement. We won't pretend otherwise. The model is fine. Keeping it hidden is the problem.
So we set out how we're paid in writing, in the Credit Guide we publish, before you're committed to anything. If a deal ever needs a direct fee, you'll know the number before you decide. We place deals across the full panel rather than defaulting to a lender we have tier status with, and we'll tell you which lenders we looked at and why we picked the one we did. Aurelius Capital is a member of both CAFBA and the FBAA, the baseline professional memberships for a commercial broker in Australia. You can read more about how the brokerage works on our about page. This is just the disclosure a business borrower should be able to expect. If that's what you want on your next deal, start an application.