What is embedded lending?
Embedded lending is a financing model where businesses can access loans or revenue-based financing directly inside the platforms they already use, such as PSP dashboards, online marketplaces, e-commerce platforms, or SaaS tools.
Instead of applying for financing through a bank or a separate website, merchants receive pre-approved, data-driven offers seamlessly within their everyday workflow.
Embedded lending is part of the broader trend of embedded finance, where financial services are integrated into non-financial products through APIs.
How Embedded Lending Works
Embedded lending connects three elements:
- The Merchant - the business that needs financing.
- The Partner Platform - PSP, POS provider, e-commerce system, or SaaS.
- The Financing Provider (Softloans) - the technology that analyzes data, generates offers, funds and services the merchant.
Here’s the typical flow:
- The merchant uses a partner platform (e.g., PSP or e-commerce platform).
- With consent, real business data (revenue, settlements, cash flow) is shared securely with the financing provider.
- Softloans evaluates this data using automated scoring models.
- The merchant receives an instant financing offer directly inside the partner platform.
- If accepted, funds are disbursed quickly.
- Repayments are collected automatically through existing payment flows.
This creates a fast, frictionless financing experience without separate applications or paperwork.
Why Embedded Lending Is Growing
Embedded lending solves the biggest problems SMEs face with traditional financing:
No long applications
Merchants do not have to prepare documents or wait weeks for approval.
Data-driven decisions
Underwriting is based on real revenue, not outdated credit scores.
Higher approval rates
Small businesses often receive financing that traditional banks cannot or will not provide.
Fast access to capital
Decisions and disbursements are fast because integrations automate the entire process.
Seamless repayment
Repayments are collected automatically through the partner platform’s payment flow.
What Types of Financing Can Be Embedded?
Embedded lending can support different funding models:
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Revenue-Based Financing (RBF) - repayment through a small percentage of merchant sales.
-
Fixed-Schedule Financing - repayments occur on predictable daily/weekly schedules.
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Merchant Cash Advance (MCA) - repayments via a holdback percentage from card sales.
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Working Capital Loans - short-term capital based on business performance.
Platforms can choose which models best suit their merchants.
Benefits for SMBs (Merchants)
Fast Approval
No long forms - underwriting uses live business data.
Higher Eligibility
Merchants underserved by banks are often approved through data-driven scoring.
Cash-Flow Friendly
Repayments can be linked to real revenue.
Available Where They Work
No switching websites or logging into a bank.
Benefits for Partner Platforms
Partner platforms (PSPs, marketplaces, SaaS providers) use embedded lending to:
Increase merchant retention
Merchants who get financing through a platform stay longer and transact more.
Increase revenue
Platforms earn a share of financing outcomes (commission model).
Improve merchant performance
Financed merchants grow faster, run campaigns, buy inventory, and increase transaction volumes.
Strengthen ecosystem value
Financing becomes a competitive advantage for the platform.
How Softloans Powers Embedded Lending
Softloans provides the end-to-end technology and underwriting engine for embedded lending across the Baltics and Europe.
Key components:
1. High-quality data integrations
Bank statement analytics
PSP transaction data
POS settlement data
Cash-flow analysis
2. Automated underwriting
Softloans evaluates revenue patterns, risk indicators, and affordability in minutes.
3. Real-time offer generation
Partner platforms can display funding offers instantly.
4. Seamless repayment
Through PSPs or POS terminals.
5. Lightweight API integration
Fast to implement, flexible, and partner-friendly.
Softloans enables banks, PSPs, marketplaces, and fintechs to launch financing services without building lending infrastructure themselves.
Embedded lending is built for the digital economy, where merchants expect speed, automation, and convenience.
Why Embedded Lending Matters for Europe
Many European SMEs:
- operate seasonally
- have thin credit files
- sell through online and POS systems
- cannot meet traditional loan requirements
Embedded lending gives these businesses a modern, inclusive path to working capital using technology and real business performance.