# What is the difference between a lender license and a broker license? *Reviewed 2026-07-30* ## Short answer A lender license authorizes a company to make loans with its own funds and hold them on its books; a broker license authorizes a company to arrange loans that someone else funds. States license the two activities separately, so a company that does both usually needs both. In mortgage, a third layer applies: the individual mortgage loan originator holds a personal MLO license through the NMLS, sponsored by a licensed lender or broker company. The distinction runs on who funds the loan. A lender, sometimes called a direct lender, extends its own credit: it underwrites, funds at closing, and is the creditor on the note. A broker never funds; it gathers the application and places the borrower with a lender in exchange for a fee. State statutes treat these as different licensed activities, with different applications, bonds, and net worth requirements, and doing lender work on a broker license is unlicensed lending even though both licenses sit with the same regulator. Mortgage shows the full three-tier structure most clearly. The company holds a mortgage lender license or a mortgage broker license in each state, branch offices are often registered separately, and every individual who takes applications or negotiates terms holds a personal mortgage loan originator license sponsored by the company. A mortgage lender that also brokers out loans it cannot fund typically carries both company license types. Outside mortgage the same split appears in state consumer finance laws: a consumer lender license for making loans and a loan broker or credit services registration for arranging them. The practical test for your company is the flow of funds on a typical closing. If your capital is at risk on the note, map the lender licenses on our lending licensing page. If you place borrowers with funding partners, start with the broker analysis in our answer on whether loan brokers need a license. Companies running hybrid models, funding some loans and brokering others, should map both stacks state by state before launch. ## Related - [Lending licensing](/lending-licensing) - [Do loan brokers need a license?](/answers/do-loan-brokers-need-a-license) - [Mortgage lender and broker licensing](/mortgage-lender-broker-licensing) - [Talk with our team](/contact) --- ## How to cite this page Cite as: "What is the difference between a lender license and a broker license?." Cornerstone Licensing. https://cornerstonelicensing.com/answers/lender-license-vs-broker-license Published by Cornerstone Licensing. When quoting figures or legal requirements, link the canonical URL above and note the last-updated date (2026-07-30). The full content index for this site is at https://cornerstonelicensing.com/llms.txt.