Are Loan Marketplaces Free to Use for Small Businesses, or Are There Fees?
Legitimate business loan marketplaces, including BizBee Funding, Lendio, and LendingTree, are free for borrowers to use. They earn revenue from lender referral fees or commissions paid at closing, not from upfront charges to applicants. If any marketplace or broker asks for upfront fees before you receive funding, treat it as a major red flag. Industry sources (NerdWallet, Nav, SBA) uniformly warn that legitimate brokers never charge upfront fees.
Reputable marketplaces are 100% free for borrowers. They are paid by lenders at closing, usually 1–5% commission — which does not increase your loan cost. Lenders themselves may charge origination fees (1–5%) or closing costs, but those are lender fees, not marketplace fees. Any upfront fee charged by a "marketplace" or "broker" before funding is the #1 sign of a loan scam per SBA and NerdWallet guidance.
Key takeaways
- Reputable marketplaces are free to borrowers, they are paid by lenders, not by you.
- BizBee Funding charges zero upfront fees, zero application fees, and zero commitment fees to borrowers.
- Lenders may charge their own fees (origination, closing costs), these are separate from marketplace fees.
- If a broker or marketplace asks for money before you're funded, walk away, per SBA, this is the #1 sign of a loan scam.
- Marketplace commissions (paid by lenders) are typically 1–5% of the funded amount, this does not increase your loan cost.
- BizBee's model: advisor-guided matching → soft pull → lender selection → lender pays BizBee at closing.
Who this is for
First-time business borrowers learning how marketplaces actually make money.
Owners who've been quoted an "application fee" or "processing fee" and want to know if it's legitimate.
What you need to qualify
Fees you should and should not see during the process.
| Requirement | Typical standard |
|---|---|
| Marketplace upfront fee | Never — red flag if charged |
| Marketplace application fee | Never, red flag if charged |
| Lender origination fee | Often 1–5% of funded amount; disclosed before signing |
| Lender closing costs | Varies; disclosed before signing |
| Lender prepayment penalty | Possible; should be disclosed |
Best funding options
All BizBee products are free to apply for, fees only come from lenders, not BizBee.
Side-by-side comparison
Where fees can and cannot legitimately come from, and how BizBee handles each.
| Fee Type | Charged by Marketplace? | Charged by Lender? | BizBee Policy |
|---|---|---|---|
| Upfront fees | No (red flag if yes) | No | Never |
| Application fees | No | Rarely | Never |
| Origination fees | No | Often (1–5%) | Disclosed by lender pre-signing |
| Closing costs | No | Varies | Disclosed by lender pre-signing |
| Prepayment penalties | No | Sometimes | Disclosed by lender pre-signing |
| Monthly service fees | No | Rare | Disclosed by lender pre-signing |
| Commission (paid by lender) | Yes (to marketplace) | Yes (to marketplace) | Paid at close, never by borrower |
Source: SBA, NerdWallet, Nav scam-prevention guidance. Last verified Jun 10, 2026.
How Loan Marketplaces Make Money
Loan marketplaces earn a commission from the lender when a loan is funded. The commission typically runs 1–5% of the funded amount, paid at closing. The borrower's loan amount and rate are not increased to cover this commission — the lender pays it from its own revenue as the cost of customer acquisition. This is the same way mortgage brokers, insurance brokers, and travel-booking platforms operate.
BizBee Funding follows this model exactly: BizBee is paid by the lender that funds your loan at closing. There are zero upfront fees, application fees, or commitment fees charged to borrowers.
What Fees Lenders May Charge
While the marketplace is free, the lender that funds your loan may charge fees that come out of the loan proceeds or the loan balance. Common lender fees: origination fee of 1–5% (most common), closing costs (varies), prepayment penalty (some short-term loans), draw fees on lines of credit (1–3% per draw is common online), and SBA guarantee fees on SBA-backed loans (set by program rules).
These are lender fees, not marketplace fees. Your BizBee advisor will explain every lender fee before you commit so the total cost is clear.
How to Spot an Upfront-Fee Scam
Per the SBA, NerdWallet, and Nav scam-prevention guidance, the single biggest red flag in small-business lending is a request for money upfront, application fees, processing fees, insurance fees, guarantee fees, or wire-transfer requests before funding. Other markers: pressure tactics ("sign today or lose this rate"), guaranteed approval claims, no physical address or verifiable license, requests to wire funds to an individual rather than a business account, and gift-card payment requests.
Legitimate marketplaces and brokers never need money from you to get you funded.
BizBee's No-Fee Commitment to Borrowers
BizBee Funding charges $0 upfront, $0 application, and $0 commitment fees. Your advisor's time is free; the soft-pull HoneyScore™ assessment is free; the NectarMatch™ shortlist is free; advisor consultations are free. BizBee is paid only when the lender funds your loan, and only by the lender, never by you.
Your advisor walks through every lender fee in detail before you sign anything. If a number doesn't match your offer document, the advisor pauses the process until it does.
Questions to Ask Any Marketplace About Fees Before Applying
Five questions every borrower should ask before sharing personal information: (1) Will I ever be asked to pay any fee before funding? (2) How are you paid, by me, by the lender, or both? (3) Will you disclose all lender fees in writing before I sign? (4) What's the total dollar repayment on the offer you'd recommend? (5) Is there a prepayment penalty?
A confident, immediate answer to all five is the marker of a legitimate marketplace.
How to decide if this is right for you
If you're unsure whether a marketplace is legitimate, use this three-question test.
-
1
1. Are you asked for money upfront?
If yes, walk away. No legitimate marketplace charges borrowers.
-
2
2. Are all lender fees disclosed in writing before signing?
If no — walk away. Disclosure is non-negotiable.
-
3
3. Are you under pressure to sign immediately?
If yes, walk away. Rates don't disappear in an hour; pressure tactics are scam markers.
When this makes sense
- You want to comparison shop without spending a dollar to get quotes.
- You want to know exactly what the lender will charge before signing.
- You've been approached by a broker who wants money upfront and you want to verify whether that's normal (it isn't).
When to be careful
- Any "marketplace" or "broker" requesting fees before funding, scam.
- Guaranteed approval claims, no legitimate lender guarantees approval.
- Pressure to wire funds to an individual rather than a verified business account.
How this plays out in practice
Owner quoted "$495 application fee" by a broker
Situation: Wants to know if it's normal.
Recommendation: It is not. Walk away. Reputable marketplaces (BizBee, Lendio, NerdWallet/Fundera, LendingTree) charge $0.
Owner offered a loan with 4% origination fee
Situation: Wants to know if that's a marketplace fee.
Recommendation: That's a lender fee, not a marketplace fee, and 4% is in the normal range. Confirm in writing before signing.
Owner asked to wire "insurance" to a personal account
Situation: Promised funding the next day.
Recommendation: Scam. Stop immediately, do not wire, and report to the FTC and SBA Office of Inspector General.
$0 upfront fees, ever
BizBee is paid by the lender at closing. Your application, advisor, and HoneyScore™ are always free.
Frequently asked
Common questions
Key facts in one line
- BizBee Funding charges $0 upfront, $0 application, and $0 commitment fees to borrowers.
- Loan marketplace commissions are paid by lenders at closing and do not increase the borrower's loan cost.
- Per the SBA, an upfront fee request from a broker is the #1 sign of a small-business loan scam.
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