The three models, defined

Direct lender

A direct lender uses its own money, or money it controls, to fund you. Banks, credit unions and many online lenders are direct lenders. You apply to that one company. Its underwriters decide, and it offers only its own products on its own terms.

Broker

A broker is an intermediary. It does not fund loans. It collects your application and documents, presents your file to lenders it has relationships with, and helps you compare what comes back. A person usually handles your file. The broker is typically paid by the lender, by the borrower, or both, when a deal funds.

Marketplace

A marketplace is an online platform that connects one application to a panel of lenders. Matching is driven largely by software. Some marketplaces add phone support from a representative. Like a broker, a marketplace does not lend its own money.

The lines blur. Some direct lenders also refer files to partners. Some marketplaces assign you a person. What matters is knowing which role the company in front of you is playing.

Side-by-side comparison

Direct lender: pros and cons

Pros

• No intermediary. You talk to the company that decides.
• Clear accountability for the offer and the servicing.
• An existing relationship, such as your own bank, can help.
• Banks and credit unions often have the lowest total cost for those who fit their rules.

Cons

• One set of rules. If you do not fit, the answer is no and you start over somewhere else.
• One set of products. You will not hear about an option the lender does not sell.
• You do the comparing yourself, one application at a time.
• Bank processes can take weeks.

The SBA model is a useful example. The SBA says you apply for a 7(a) loan directly through a lender and always work with that lender rather than with the SBA. It also runs a free Lender Match tool that connects borrowers with participating lenders.

Broker: pros and cons

Pros

• One application reaches several lenders.
• A person who knows which lenders fit your industry, size and timing.
• Help reading offers and comparing the total amount repaid and the term.
• Useful when your file is unusual or a bank has said no.

Cons

• Quality varies widely. Some brokers add real value. Some only pass files along.
• Compensation can affect which offer is recommended. Ask how the broker is paid.
• Some send your file to many lenders without telling you. That can lead to a flood of calls.
• A broker can only show you lenders in its network.

Our guide on how to choose a business funding broker lists the signs of a good one.

Marketplace: pros and cons

Pros

• A wide panel of lenders from one online form.
• Convenient and available at any hour.
• Good for a first look at what is out there.
• Many list a broad range of products, from lines of credit to SBA loans.

Cons

• Less personal guidance, depending on the platform.
• Matches are driven by data fields, which can miss context a person would catch.
• You may be contacted by more than one party.
• You still need to read each offer closely yourself.

What the data says about where owners apply

The Federal Reserve Banks’ 2026 Report on Employer Firms gives a neutral view of the choices owners make. Among firms that applied for loans, lines of credit or cash advances, applicants most often went to large banks, followed by online lenders and small banks. The share that sought financing at online lenders grew from 17% in the 2020 survey to 29% in the 2025 survey.

Outcomes differed by source. Applicants at small banks were the most likely to be fully approved, at 57%. Satisfaction was higher among credit union and bank applicants than among online lender and finance company applicants. And 60% of firms that borrowed from online lenders said actual borrowing costs were higher than expected.

The lesson applies to every model. Wherever you apply, understand the full cost before you sign. Faster funding usually costs more in total than bank financing. Compare the total amount repaid and the term.

Questions to ask any of them

1. Are you the lender, or do you place my file with other lenders?
2. How are you paid, and by whom?
3. Which lenders will see my application? Will you tell me before you send it?
4. Will I have one point of contact from start to finish?
5. What is the total amount I will repay, over what term, and on what payment schedule?
6. Is there any cost or saving if I pay early?
7. What documents do you need, and how is my information protected?
8. If I am not a fit, will you tell me plainly and suggest where to go?
9. Does my state require a financing disclosure? See disclosure laws by state.

Clear, direct answers are a good sign. Vague answers, pressure to sign today or promises that approval is certain are reasons to slow down.

Which model fits your situation

• You have years of history, strong tax returns and time: start with your bank, a credit union or an SBA lender. See SBA loans.
• You know exactly which online lender you want: apply direct.
• You want to browse options yourself online: a marketplace is a reasonable start.
• You want a person to explain options and manage the process: a broker or dedicated-specialist model fits.
• A bank declined you: read what to do after a bank decline.
• You need funds this week: pick a route that gives decisions quickly, and send a complete file. See fast business funding.

Where RAN Funding sits

RAN Funding is a business financing company based in Pembroke Pines, Florida, that works with a network of lenders. We do not lend our own money. In the terms of this guide, we sit in the intermediary category, with a specific approach: one application for our lender network and one dedicated specialist who stays with your file from first call to funding.

The facts:

• Built for established businesses: most clients have 1+ year in business and $20,000+ in monthly revenue.
• Amounts of $20,000–$500,000+, with decisions in hours on complete files and funding in as little as 24–48 hours once approved.
• Larger requests of up to $2 million funded in as little as 72 hours once approved.
• Business lines of credit of $20,000–$2,000,000, open in 48–72 hours once approved.
• SBA loans up to $10 million, typically 30–60 days.
• Documents: a short application and the last 3 months of business bank statements (4 months in California, New York and Virginia).

Approval depends on each lender’s review. If a bank or a direct lender is the better route for you, we will say so. Call 1-877-522-6045, Monday–Friday 9am–6pm ET.

Common questions