Independent Sales Organization (ISO)
Definition
An Independent Sales Organization (ISO) is a third-party company or individual that acts as an intermediary between business borrowers and lenders or funding companies. ISOs do not lend their own capital — they originate deals by finding businesses that need funding, submitting applications to their network of lenders, and earning a commission on funded deals. ISOs play a significant role in the alternative lending industry, particularly in the MCA space. A reputable ISO provides value by matching businesses with the most appropriate funding product, negotiating better terms, and guiding borrowers through the application process.
Example
A business owner contacts an ISO to find working capital. The ISO submits the application to 5 different funders, receives offers from 3, and presents the best option — a $75,000 MCA with a 1.28 factor rate. The ISO earns a commission of 8% ($6,000) from the funder when the deal closes.
Related Terms
Factor Rate
A factor rate is a multiplier used to determine the total cost of a merchant cash advance or short-t...
Merchant Cash Advance (MCA)
A merchant cash advance is a financing arrangement where a business receives a lump sum of capital i...
Advance Rate
The advance rate is the percentage of an asset's value or a business's monthly revenue that a lender...
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