Embedded lending

Definition

Embedded lending is a distribution model: credit or working capital is offered inside software the merchant or consumer already runs (vertical SaaS, a marketplace, a POS, a payments dashboard), instead of a standalone apply-on-the-lender-site flow. The software company typically refers or hosts the offer. A bank, licensed lender, or MCA provider underwrites, funds, and services. The underlying product can be a term loan, a merchant cash advance, receivables finance, or consumer installment credit. Embedded is how it is offered, not what is owed.

This page is the in-product distribution model. Adjacent terms are Vertical Fintech’s. They are not this page. Merchant cash advance (one product shape), card issuing, and KYB sit next to this definition.

Why it matters

If you run vertical software, embedded lending is how you take a rate or a fee on capital without becoming the lender. Merchants already trust your product for payments or ops. An offer in that workflow converts better than a cold apply. You also inherit brand risk if the capital is expensive, the holdback is stiff, or servicing is ugly. Ask who the credit agreement names, who holds the license, whether you take a bounty or a revenue share, and whether your customers think you are the bank. There is no public take-rate on this page. If the job is only card acquiring, you are still on payments. If the job is consumer checkout credit, read those listings as a different cluster than SMB working capital.

Related on Vertical Fintech

• Lending: Embedded credit and capital offered through the software the merchant already runs.
• Merchant cash advance: One product shape often distributed this way. Not a synonym for embedded lending.
• Parafin: White-labeled working-capital program for platform merchants. Parafin runs underwriting and the lending stack.
• Stripe Capital: Working capital for connected merchants on a Connect platform. Partner originators, not consumer installment credit.
• YouLend: White-labeled or co-branded SME working capital for platforms and payment providers.

FAQ

Does embedding lending make my company the lender?

Usually no. The named bank or licensed originator is the lender or the receivables purchaser. You are a platform, referrer, or program marketer unless the contract says you originate. Confirm the name on the credit agreement and on customer-facing offers.

Is embedded lending the same as a merchant cash advance?

No. Embedded lending is the channel (inside software). An MCA is one capital product that can be offered in that channel. Bank loans and consumer installment plans can be embedded too. Pick the listing for the product and the license, not for the word embed.