How do platforms make money from embedded lending?
When a platform embeds lending into its product, it earns money through one of three structures, or a combination:
1. Revenue share (broker/arranger model)
The platform partners with a commercial finance broker. When a user is funded, the broker earns an arrangement fee from the lender. The platform receives a percentage of that fee.
How it works:
- User applies via the embedded integration
- Broker matches user to lender; lender funds the deal
- Lender pays broker an arrangement fee (typically 3–8% of loan amount)
- Broker pays platform up to 30% of that fee
Example calculation (£100k term loan, 5% arrangement fee):
- Arrangement fee: £5,000
- Platform’s 30% revenue share: £1,500
Characteristics:
- No balance-sheet risk for the platform
- No regulatory overhead (broker handles FCA compliance)
- Higher commission rate relative to loan amount vs NIM model
- Best for: most B2B SaaS, marketplace and platform types
Fundably’s commission: up to 30% revenue share per funded deal. Zero setup fees, zero monthly costs.
2. Net interest margin share (balance-sheet lender model)
The platform partners directly with a balance-sheet lender (such as YouLend for merchant cash advances). The lender funds deals from their own capital. The platform receives a percentage of interest income.
How it works:
- User applies via the embedded integration
- Lender makes a credit decision and funds from their balance sheet
- Platform earns a percentage of interest paid over the life of the loan
Example calculation (£50k MCA, 1.3× factor rate = £65k repayment):
- Total interest/factor charge: £15,000
- Platform’s 15% share: £2,250
Characteristics:
- Single lender = lower approval rates
- Revenue spread over the term of the loan (not paid on completion)
- Lender takes on credit risk; platform takes on concentration risk (one lender declining a large proportion of users)
- Best for: payment platforms with strong card-transaction data feeding MCA underwriting
3. Referral fee (per-introduction model)
The simplest structure: a fixed fee per customer introduced who goes on to be funded.
Characteristics:
- Simple to understand and track
- Less common for embedded integrations (more common for affiliate programmes)
- Fee is typically smaller than revenue share on large deals
Hybrid models
Some arrangements combine elements of the above. For example: a base referral fee per funded deal, plus a revenue share on deals above a certain size. These are typically negotiated for high-volume platform partners.
Which embedded lending revenue model is best for my platform?
| Your situation | Recommended model |
|---|---|
| B2B SaaS, mixed user base | Revenue share (broker model) |
| Payment platform, card-taking merchants | Consider NIM share (lender model) |
| Low-volume discovery phase | Referral fee |
| High volume, sophisticated platform | Revenue share or hybrid |
For most platforms, the revenue share model via a commercial finance broker (Fundably) delivers the highest return per funded deal across a mixed business user base, because multi-lender matching drives higher approval rates.
What commercial terms should I look for in an embedded lending partner?
Volume and tier: some brokers offer improved commission rates for high-volume partners. Fundably starts every partner at up to 30%, and there is no volume requirement to unlock the maximum rate.
Payment timing: revenue share from a broker is typically paid within 14 days of funding completing (one transaction, one payment). NIM share from a balance-sheet lender may be spread over the loan term or paid monthly.
Minimum volumes: broker models typically have no minimum volumes. Balance-sheet lender arrangements may include minimum introduction requirements.
Exclusivity: most broker-model arrangements are non-exclusive. You can run multiple embedded partners simultaneously if you choose to.
For a comparison of multi-lender vs single-lender revenue impact, see multi-lender vs single-lender embedded lending. For step-by-step integration guidance, see how to embed lending in your platform.
How payment timing affects platform cash flow
Revenue timing matters as much as the headline rate. Under the revenue share model, the broker collects an arrangement fee when the deal completes and pays the platform shortly afterwards — Fundably settles within 14 days of funding. That gives a platform predictable, lump-sum income it can recognise in the month the deal closes.
Under the net interest margin model, income arrives in line with the borrower’s repayments, often spread across 6 to 24 months. A platform forecasting revenue from embedded lending should model these two profiles separately: a smaller number of larger revenue-share payments versus a longer tail of smaller NIM instalments. For most platforms scaling quickly, the upfront revenue share profile is easier to forecast and reinvest.
Worked comparison: revenue share vs NIM on the same deal
Consider a £80,000 term loan. At a 5% arrangement fee, the broker earns £4,000 and a 30% revenue share pays the platform £1,200 on completion. The same £80,000 deal funded under a 12% net interest margin shared at 15% would pay the platform roughly £1,440 — but spread across the full loan term and dependent on the borrower not repaying early. Higher nominal totals under NIM often carry more timing and credit risk than the upfront broker fee.