Placement fee

How a placement fee works

A placement fee pays for the placement itself: reviewing the lender, routing the loan to capital partners whose criteria it fits and coordinating funding at closing. Fee structures vary by platform, so read the schedule before you submit a loan.

Lender Capital publishes its fee schedule. For a standard lender, the placement fee is 1.00% of the loan amount on loans up to $3,000,000 and 0.75% of the whole loan amount on loans above that. Preferred lenders pay 0.75% and 0.50%. The minimum fee is $2,500. It is paid at closing from the origination points, and only when a loan funds; there is nothing to pay on a loan that doesn’t close. Capital partners pay no fees.

Why it matters to a private lender

The fee comes out of your points, not out of your spread or the borrower’s proceeds, so price your points with the fee in mind. You keep the rest of the points and earn a yield spread between your note rate and the capital partner’s rate.

Example

Hypothetical points and rates; Lender Capital’s published fee. On a $1,000,000 loan with 2 points ($20,000), a standard lender’s fee is $10,000 and it keeps $10,000. On a $4,000,000 loan the fee is 0.75% of the whole loan, $30,000. On a $200,000 loan, 1.00% would be $2,000, so the $2,500 minimum applies.

See the effect on your income in the lender spread calculator.