Glossary term
Buy Rate
The buy rate is the factor rate at which a funder is willing to do your deal, quoted to the broker who submitted your file, before that broker adds any markup of its own.
Here is the sequence. A broker submits your file, the funder's underwriters read it, and the approval that comes back names a buy rate: the price the funder wants for the risk it just measured. The funder also sets a cap on what the broker may present to you. The number the broker actually quotes is the sell rate, and anything between the two is the spread.
Work an invented approval through it. Suppose a funder approves $50,000 at a 1.25 buy rate, so the funder's price is a $62,500 payback. If the broker presents 1.33, your payback amount becomes $66,500. In that invented example the extra $4,000 did not go to the funder and did not reflect anything about your risk. It is broker compensation, collected through your factor rate.
Spread is not the only way brokers get paid, and it is not automatically the worst way. The other common structure is points, where a point is one percent of the funded amount, paid by the funder to the broker at closing. Many shops combine a base commission with a share of any spread. What actually matters to you is whether your broker's pay rises when your rate rises, and that is a question with a plain answer. How MCA brokers get paid sets out the whole structure with worked numbers, including ours.
For your file, the buy rate is the reason the printed factor is often the most negotiable figure in front of you. Part of it is the funder's risk price, which moves only when your file moves, and part of it may be markup, which can move today. A competing approval in hand is the strongest lever there is, because a real alternative makes flexibility appear that a captive applicant never sees.
You can always ask for the buy rate. Some funders contractually restrict brokers from disclosing it, so no is a legitimate answer, but a broker can still tell you whether their compensation increases with your rate, and how they are paid on your specific deal. A defensive or offended reaction to the question has answered it. Broker versus direct funder covers what each side of that choice actually buys you.
The confusion to avoid: the buy rate is not the funder's cost of money, and it is not a discount you were cheated out of. It is one price in a chain, set by underwriting, and the funder is running a business at that number too. Nor is the buy rate the rate on your contract; that is the sell rate, and it is the only one you are obligated to. Compare final numbers, not decimals, in the offer comparison tool.
Related terms
Where this shows up in practice
Trust & Transparency
How MCA Brokers Get Paid, and Why You Should Ask Yours
Points, buy rates, sell rate spreads and broker-side fees explained with worked numbers, how our own compensation works, and what to ask any broker you use.
Comparisons & Alternatives
Should You Use a Broker or Go Direct to a Funder?
What a broker really does, how brokers get paid, the conflicts nobody mentions, and the situations where going direct to a funder genuinely serves you better.
Trust & Transparency
Why We Won't Promise a Rate Before Seeing Your File
Why a firm rate before underwriting is a number someone invented, what actually sets business funding pricing, and how to use quotes as a test of honesty.
MCA & Merchant Cash Advance
How Factor Rates Work (and Why They Aren't Interest Rates)
Factor rates decoded: the multiplication, why 1.40 is not 40% interest, how buy rates and fees change the real cost, and how to annualize any offer yourself.
Reading an offer with this in it?
Bring it to us and we will walk through the numbers with you, or see your options with one application.