How do you finance the purchase of a freight brokerage?

Gross revenue is not the business

A broker bills the shipper for a load and pays a carrier to haul it. The difference, net revenue or gross margin, is what the business actually earns before paying its own staff and overhead. Brokers often quote their size in gross billings, and a buyer who prices the business on that figure will be disappointed by the loan.

A simple case: a broker bills 10,000 in a year and pays carriers 8,500. Its net revenue is 1,500. After salaries, agent commissions, software, insurance and rent of 1,100, earnings are 400. A lender sizes the loan on the 400, and asks how steady the 1,500 has been. A small change in the spread per load moves earnings a long way, which is why lenders ask for net revenue by month and by customer, not just annual totals.

The SBA lending data for freight transportation arrangement shows a trade where acquisitions are a small share of SBA approvals, well under the program-wide share, but the acquisition loans that are made are many times the industry's typical loan. SBA Express, with its smaller limit, is used heavily. For a buyer, that means few lenders have financed many brokerage acquisitions, and the file has to explain the business to a credit team that may not see one often.

Earnings across the freight cycle

Freight markets move in cycles. When capacity is tight, shippers pay more, spot loads are plentiful and a broker's spread can widen sharply. When capacity is loose, rates fall, contract freight is re-bid and spreads compress. A brokerage's best year is often the top of a cycle, and lenders know it.

Lenders look at several years and at the mix of contract and spot freight. Contract freight with established shippers is steadier; spot freight is more profitable in good markets and scarcer in bad ones. A broker whose earnings came mostly from spot loads in a tight market will be sized on something closer to its weaker years.

That matters more from 1 October 2026, when SBA requires a change of ownership to show debt service coverage of 1.25x on historical results, up from the 1.15x minimum. From the same date, change-of-ownership loans amortize over no more than 10 years except the real estate share, financial due diligence is required on every change of ownership, and acquisitions of $3 million or more excluding real estate need a quality of earnings report. For a broker, that review will test how revenue is recognized on loads in transit at year-end and how accessorial charges and claims are booked.

The broker authority and the stock-versus-asset question

A freight broker operates under federal broker authority, with a registered bond or trust and a designated process agent. That authority belongs to the legal entity. How the purchase is structured decides whether the buyer inherits it or has to obtain its own.

Because the authority, the history and the shipper approvals are so valuable, many brokerage deals are stock purchases, with representations, indemnities and sometimes an escrow to protect the buyer from the company's past. Lenders finance both structures, but the file has to address the liabilities the buyer is taking on. See asset vs stock purchase financing, change-of-control consents and escrows and holdbacks.

Shippers, agents and who owns the relationship

Brokerages are built in two ways, and lenders read them differently. In an employee model, salaried or commissioned brokers work shipper accounts that the company owns, with non-solicitation agreements and a shared system. In an agent model, independent agents bring their own shippers and carriers and share the net revenue with the brokerage. Agent-driven revenue can walk out the door with the agent.

• Shipper concentration. Lenders look at net revenue by shipper. A brokerage where one or two shippers produce a large share is exposed to a single re-bid. See customer concentration.
• Agent concentration. Lenders ask how much net revenue each agent produces, what the agent agreements say about non-solicitation and termination, and whether the top agents have committed to the new owner.
• The seller's own book. Where the seller personally manages the largest shippers, the transition matters. In a complete change of ownership financed by SBA, the seller may not stay on as an owner, officer or employee, but may consult for up to 12 months, or up to 24 months under SOP 50 10 8.1 from 1 October 2026.

Working capital: paying carriers before shippers pay

Carriers expect to be paid quickly, and many brokers offer quick pay to attract capacity. Shippers pay on their own terms, often much later. The broker funds the gap, and a growing brokerage needs more cash every month it grows. The acquisition loan does not solve this; a receivables facility does, and lenders financing the purchase expect one to be in place at closing.

Many small brokers use factoring rather than a line. SBA will not refinance an active factoring agreement, so the seller's factor is paid off out of the seller's proceeds at closing, not refinanced with the SBA loan, and the buyer starts with its own facility. A brokerage large enough to support a borrowing base usually does better on a line than on factoring; the comparison is in factoring vs asset-based lending and lines of credit for freight brokers.

The purchase agreement must also settle working capital. Most deals are priced cash-free and debt-free with a working capital target, so the buyer receives a normal level of receivables net of carrier payables. A target set too low leaves the buyer funding carriers from day one; see the working capital peg.

Set up the receivables facility with the acquisition loan. A broker that cannot pay carriers on time loses capacity, and then shippers.

The risks lenders price

• Fraud. Double brokering, identity theft of carriers and fictitious pickups have become common. Lenders ask how the broker vets carriers and whether it has taken losses.
• Cargo claims and liability. Lenders want contingent cargo and contingent auto liability insurance, and a record of how claims have been handled. Brokers can be drawn into lawsuits over the carriers they select.
• Shipper credit. A broker that extends credit to a failing shipper still owes the carrier. Bad-debt history in a soft market tells the lender a lot.
• The cycle. Earnings built on a tight market fade when capacity returns.
• Technology. The transportation management system, load boards and tracking tools are licensed to the seller; the buyer needs them on day one.

How the deal is usually structured

Under SBA's limits, the usual structure is a 7(a) term loan for the goodwill, up to $5 million, with a separate receivables line or factoring facility, and an intercreditor agreement between the two lenders over the receivables. For a complete change of ownership the buyer injects at least 10% of total project costs; a seller note can supply up to half of it only on full standby, with no principal or interest payments, for the life of the SBA loan. A seller note with payments is allowed but counts as debt. See seller notes and SBA's full-standby rule.

Brokerage deals outside SBA are often priced with an earnout on future net revenue. SBA prohibits an earnout to the seller in a change of ownership it finances, so under SBA the risk-sharing has to come from the price or a seller note; see earnouts and acquisition debt. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, SBA requires an independent business valuation, and the loan for the purchase cannot exceed it.

Larger brokerages move to conventional debt: senior cash-flow lenders to lower-middle-market companies commonly lend 2x to 3.5x EBITDA, beside an asset-based line on the receivables, and banks commonly look for debt service coverage of at least 1.25x. The comparison with trucking, where the trucks are the collateral, is in financing a trucking company acquisition.

What goes in the file

Start with the standard SBA acquisition documents in what lenders need to finance an acquisition: two to three years of business tax returns, P&L, balance sheet, year-to-date P&L, debt schedule, personal returns and a personal financial statement for each owner of 20% or more, the letter of intent and the brokerage's latest full year of figures, never an older year. The receivables line adds an AR aging by customer with days outstanding, an AP aging and the existing liens. For a brokerage, lenders also want:

• Gross revenue, carrier cost and net revenue by month, and by shipper, for at least two years.
• Load counts and the split between contract and spot freight.
• Net revenue by agent or broker, with agent agreements.
• The broker authority, bond or trust, and insurance certificates, with claims history.
• The factoring agreement or line of credit, and a payoff figure.
• Carrier vetting procedures, and any fraud losses.

Transparent builds the lender package, the financing model, lender presentation, blind teaser and underwriting memo, in a day once the documents are in. Its book holds 278 lenders that write SBA 7(a) and 504, 235 that write asset-based loans and lines, and 116 that write factoring, so the purchase loan and the working capital facility can be placed together.