What is the difference between a business loan broker and a direct lender?

A direct lender (bank, credit union, online lender) provides the funds themselves from their own capital. A business loan broker connects you with multiple lenders, helps package your application, and submits it to lenders most likely to approve — in exchange for a referral fee (typically 1-5% of the loan, paid by the lender). Brokers are useful when you don't know which lenders fit your profile, but always verify the broker's fee structure upfront.