Guide

Two deals fell through and the next closing is six weeks out. How does a brokerage fund the gap?

For a brokerage or a team with a business account, a working capital loan on twelve months of commission deposits — funded in one to three business days, repaid weekly as the pipeline closes — is usually far cheaper than the commission advances sold to individual agents, which take 10 to 30 percent of a single check. Send the pipeline report with the statements; pending contracts with closing dates are the strongest document a brokerage can show.

The gap is the business model, not a failure of it

A brokerage's revenue arrives in closings, and closings cluster, slip and occasionally die a week before the table. Two fall-throughs in a month and a six-week wait to the next is a normal bad quarter, and the rent, the transaction coordinator, the marketing and the agents' draws do not pause for it. Banks read that irregularity as risk. A funder reading twelve months of deposits reads a pattern, and prices the pattern.

The expensive option agents are sold

Commission advance companies pay an individual agent 70 to 90 percent of a pending commission before closing, for a fee that runs from around 10 to 30 percent of the commission depending on the size of the deal and how long until it closes, and collect from escrow at the table. It needs no business history and no credit check, which is why first-year agents use it. It is also, per dollar, among the most expensive money in this whole site, and if the deal dies the agent still owes it.

For a solo agent with no business account it may be the only door. For a brokerage or a team with deposits, it is the wrong one.

What your deposits support

MONTHLY DEPOSITSTYPICAL OFFER RANGE$30Ka month$15K$45K$50Ka month$25K$75K$75Ka month$38K$113K$100Ka month$50K$150K$200Ka month$100K$300KNEWER BUSINESS, SHORTER HISTORYLONGER TRADING, STEADIER DEPOSITS
Most revenue-based funders advance between 50% and 150% of one month's bank deposits. Where you land inside that band is decided by time in business and how consistent the deposits are — not by which end of it you ask for. Deposits below $30K a month generally do not qualify, and $15K is the smallest amount placed.

The cheaper option a brokerage has

A working capital loan or a cash advance on the brokerage's last twelve months of deposits, sized to the gap to the next closings, decided in about a day and funded in one to three business days. Amounts run half to one and a half times a typical month's deposits — and which month is typical is what the full year of statements decides, so send the year, not the quarter with the fall-throughs in it.

Send the pipeline: every pending contract with its expected closing date and commission. An underwriter reading $90,000 of commissions scheduled over the next eight weeks next to a $40,000 request is reading a receivable. Ask for weekly payments and ask what early repayment saves, because the next closing will clear most of the balance in one week.

A line of credit is the shape of a brokerage that has stopped worrying about this

Drawn in the quiet weeks, repaid at the next closing, costing nothing in the months the pipeline is smooth. A brokerage with two years of returns and a year of clean deposits should have one, and the time to apply is a quarter with three closings in it, not the one with two fall-throughs.

Sources

Related questions.

Can an individual agent get a working capital advance?
Only with a business account showing six months or more of commission deposits, which many agents set up as an LLC or an S corp for exactly this reason. Without it, the commission advance is the available product, at its price.
Will a funder count a pending contract as revenue?
Not as a deposit. It counts as the reason for the request and it raises the offer; the deposits carry the underwriting. A pipeline with dates is far better than a pipeline described in a sentence.
Does a slow market hurt the application?
A market where closings take longer shows in the statements as wider gaps between deposits. Twelve months of statements and a pipeline report put that in context. A year of falling deposits with an empty pipeline is a different file.

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