Warehouse brokers

How the shop is built

A warehouse broker is a sales floor with a CRM, not an underwriting room. The economics are volume. A small team of "business development" staff work a bought list — Companies House filings, HMRC late-pay signals, expired charges, Google ads on "business loan same day". They do not need to understand your trade. They need you on the phone long enough to take a fee and a signature.

Three income lines sit on the same file, and you are only shown one of them.

The fee you can see. Arrangement, "packaging", "commitment", "valuation", "broker". Sometimes deducted from the advance so it feels free. It is not free. You are paying it in the residual.

The commission you cannot see. The lender pays the broker for the introduction. Sometimes a few points of the advance. Sometimes more than the fee you were quoted. Hidden commissions is the lesson on what the courts have done with that. The practical point here: if they will not tell you the number in pounds, assume it is large enough that the product was chosen for them, not for you.

The resale of your data. Your name, mobile, turnover, and "looking for finance" flag is worth money to the next shop on the chain. That is why, 20 minutes after the first call, three other firms ring. You did not apply to them. You were sold.

A packager who is doing the job does not need to sell your mobile number to eat.

Dual charging is the business model, not a scandal at the edge

Directors are often shocked that a broker can charge them and be paid by the lender. In commercial finance that is common. It is not automatically unlawful. It becomes a problem when:

• they told you they were independent, or "on your side", or would "find the best deal";
• the terms said they may receive a fee, and would tell you the amount, and then they never did;
• the product they packed you into is the one with the fattest kickback, not the one that matches the cashflow;
• they took a fee from you for "packaging" a file they never packaged — they just sent your spreadsheet to a same-day shop.

Wood v Commercial First Business Ltd [2021] EWCA Civ 471 is the commercial case. The loans were for business purposes, so they were unregulated. The broker's terms said they would disclose the amount of any lender fee. They did not. The Court of Appeal treated the commissions as fully secret, and held that a duty to be honest and impartial was enough. You do not need a Victorian fiduciary label on the door. Read the commissions lesson for the 2025 Supreme Court overlay. The warehouse lesson is simpler: get the number in writing, or walk.

The phrases that mean they already have the product

Listen for these. They are not colour. They are the pitch.

• "We have a lender who likes this sort of deal." They will not say the name.
• "Don't worry about the accounts — they work off bank statements." Translation: this is a short-term product that prices risk by taking a sweep, not by reading the file.
• "If we don't submit today you'll miss the window." There is no window. There is a commission that pays this week.
• "It's only a soft search." Then why is the form a full application, and why does it authorise them to approach "any" lender?
• "We'll restructure the existing stack." Almost always: add another short-term facility whose collections sit on top of the ones you already cannot pay. See Stacked debt.
• "HMRC will wait if we show them a new facility." HMRC has its own process. A new sweep does not impress a debt management officer. See HMRC Time to Pay.

What a real packaging conversation sounds like

It is slower, and it is duller, and that is the point.

They name the kind of structure they think the file will bear — refinance of the short-term stack, invoice finance that does not take the whole ledger plus a personal house, a facility that can last more than a few months. They tell you what is missing from the pack. They tell you which lenders they will not approach, and why. They do not ask for a card payment to "commit". They do not need your mobile as a lead.

They will still be paid. Packaging is work. The difference is that the work is the file, not the hunt for a body to drop into a product that is already on the shelf.

Strata packages. We do not lend. If this page is doing its job, you can now tell a packager from a warehouse without looking at the logo.

The four questions, in writing, before anyone goes to market

Send them as an email. Keep the reply. If they phone instead of writing, that is a data point.

1. Who is the proposed lender, by legal name? Not "a panel". Not "a specialist". The company that would be on the facility letter.

2. What is the product, in one sentence? Term, security, how they collect (direct debit, sweep, invoice assignment), and what happens at the end of the term. If the end of the term is "we'll renew", read Products that finish companies.

3. Every fee, in pounds, paid by me or deducted from the advance. Broker, arrangement, valuation, legal, "packaging", "renewal", exit. If they say "it depends", the fee is not ready to be signed.

4. Every commission or procuration fee the lender will pay you, in pounds. If they say they are not allowed to tell you, they are. They may not want to.

If question 1 cannot be answered, they are not packaging. They are shopping you.

The broker agreement

Read it as if it will be read to you in a witness box. Look for:

• a right to submit your information to "any" lender or third party;
• a right to be paid by the lender and by you, with no duty to disclose the lender's payment;
• a term that they are not your agent, not independent, and give no advice — while the call told you the opposite;
• a "you confirm you have taken independent legal advice" clause you will be asked to tick without speaking to a solicitor;
• a term that lets them keep the commitment fee if the lender declines, or if you decline after seeing the real price.

Those clauses are not "standard". They are the business model in legal form. Terms that should stop the pen covers the facility document. The broker agreement is where the warehouse protects itself from you.

Introducer chains

You spoke to one person. Your file has already been passed to a "master broker", then to a packager they use, then to a lender's introducer desk. Each layer wants paying. The only way a file that thin can feed four layers is if the product is expensive and short. That is why warehouse deals cluster on merchant cash advances, short-term bridging used as working capital, and "renewals".

Ask: "Who else will see this file, by name?" If they cannot list them, you are in a chain.

What to do instead

Build the file once. Accounts, VAT, bank, aged debtors and creditors, HMRC position, existing facilities and their collections, personal guarantee map. Then one conversation with someone who will name lenders. If the file cannot support a structure that lasts, the honest answer is insolvency advice, not another sweep. That answer is cheaper than the third short-term facility, even though it does not feel like it on the day.

Business Debtline is free. A licensed insolvency practitioner is the person who can take an appointment. A warehouse broker is neither.