Broker exclusivity agreements: what you are signing

An exclusivity agreement says one broker is the only one arranging your financing for a set period, and usually that they are paid if you close a covered loan during that time. It is fair when the broker is about to invest weeks of real work, as on an SBA loan or a commercial real estate deal. It is not fair when the term is open ended, the fee is due no matter who finds the lender, or the deal is a simple working capital advance that should take days.

What an exclusive engagement letter usually contains

Most letters are one to three pages. These are the clauses that decide what you are committing to.

Two kinds of exclusive, and why the wording matters

Courts treat these differently, and the difference can be worth tens of thousands of dollars.

Exclusive agency. The broker is the only broker. If you find a lender on your own, you owe nothing.

Exclusive right to arrange financing. The broker is paid on any covered loan that closes in the term, even one you found yourself through your own banker.

A 2025 New York appellate decision shows how this plays out. In Angelic Real Estate v. Aurora Properties, a property owner engaged a commercial financing broker "exclusively" for 120 days. During that period the owner obtained a $16.75 million commitment from a bank on its own and closed without paying the broker. The court held the letter created at most an exclusive agency, because New York requires clear and express language before a broker is owed a fee on a deal it did not procure. The owner owed nothing.

The same court pointed to an earlier case where the agreement did say, in plain words, that the broker was owed a commission during the exclusive period regardless of who found the financing. That broker was paid.

The lesson for you: if you plan to keep talking to your own bank, make sure the letter is an exclusive agency, or name your bank as an excluded lender.

When exclusivity is fair

A good broker asking for exclusivity is protecting real work. Agree to it, on clear terms, when:

• The deal is an SBA loan. Packaging an SBA 7(a) or 504 file takes weeks. Lenders also want one clean submission, not the same file from three agents.
• The deal is large or structured. Commercial real estate, an acquisition, an asset based line with field exams.
• The broker is doing work you can see. Financial spreads, a written credit memo, a lender plan with named banks.
• The broker is approaching lenders who expect one source. Many lenders protect the submitting broker for a period. One funder agreement deBanked reviewed in 2025 still paid the broker if the funder's own sales team closed the deal within 30 days of submission.

For a worked example, a dental practice buying a second location with an $850,000 SBA loan might reasonably give a broker 60 to 90 days of exclusive agency, with the owner's existing bank excluded and a fee due only at funding.

When to refuse it, or push back

Say no, or ask for changes, when you see:

• No end date, or an automatic renewal that runs until you cancel in writing.
• A fee due at signing, or at term sheet, rather than at funding.
• An exclusive right to arrange financing when you are already in talks with your own bank.
• A broad scope such as "any financing of any kind," which could catch your next equipment lease.
• A long tail on every lender in the market, rather than only lenders the broker introduced.
• Exclusivity on a simple product. A $40,000 working capital advance should not need it.

Long tails are not just a theory. The New York State Bar Association reviewed investment banking disputes where tail periods ran 12 months after termination. In one, a bank invoiced a $2.52 million fee for a deal that closed just over a week before the tail expired. In another, a court entered a $3.75 million judgment plus about $1.2 million in pre-judgment interest. Business loan engagements are smaller, but the mechanics are the same, and courts apply them as written.

SBA deals have their own rules

If your broker is paid on an SBA loan, the fee goes on SBA Form 159, the fee disclosure and compensation agreement. According to Starfield & Smith, an SBA compliance firm:

• An agent generally cannot be paid by both you and the lender on the same loan.
• Applicant paid fees calculated as a percentage are capped at $30,000.
• Compensation over $2,500 needs supporting documentation of the work done.
• SBA can find an applicant paid fee unreasonable, and the agent must then reduce it and refund the excess.
• The lender must tell you in writing that you do not need an agent to get an SBA loan.

So an SBA exclusivity letter should match what will appear on Form 159. If it promises a fee that would not survive that form, ask the broker to fix it. Our SBA Form 159 guide walks through the form line by line.

Clauses to ask for

Copy these into an email to the broker before you sign:

1. "Exclusivity is an exclusive agency. I may close financing I arrange myself without a fee."
2. "The following lenders are excluded: [your bank], [any lender already approached]."
3. "The term ends on [date], with no automatic renewal."
4. "Any fee is earned only when the loan funds, and will match the lender's disclosure and, on an SBA loan, Form 159."
5. "Any tail is limited to [30 to 90] days and to lenders you introduced in writing during the term."
6. "Either of us may end this agreement with seven days' written notice."
7. "You will send me a list of every lender that receives my file."

A professional broker will accept most of these. The ones they push back on tell you where their real risk is, and that is a fair conversation to have.

A quick decision table

Next step

Before you sign anything, read what your broker engagement letter should say for the full clause list. If you want brokers who show their terms up front, use the match form. Verified entries on the register show fees in writing, so you can compare engagement terms before the first call.