For brokers to charge a psf is ok as long as it is reasonable to the deal. Selling a deal making 10-15 points then charging a 10% fee on top of that is not good. You are making the money even more expensive for the merchant and making more money than the funder that is taking the risk and waiting several months to get there money back. If the deal defaults within the crawl back period and the broker does payback the commission they just lost the money they did not have if the deal was declined and keeps the 10% psf yet the funder looses there money.

Funders that charge a 10% origination fee are the chop shops of the industry that only deal with high risk files that other funders do not want and want to take advantage of merchants which is wrong. Funders that charge 2-5% depending on the risk of the file is fine. We have to cover the cost of the broker in the factor rate all the defaults that happen and the fees involved to go after defaults. We also have to cover all the credit reports and background searches for all the deals that get funded and not funded. We need to cover the cost of all operations salary the reps compensation. Every institution that provides funding charges and orgination fee to cover background cost.