What is Lending as a Service and how does it work?
Lending as a Service (LaaS) lets platforms offer business loans to their users without building a lending operation. A third-party provider handles the infrastructure, lender relationships and compliance, while you provide the distribution and earn revenue share on funded deals.
The term covers at least four distinct models, and choosing the right one matters for your revenue, regulatory burden and time to market:
1. Balance-sheet LaaS (single lender)
The provider (such as YouLend for merchant cash advances) maintains their own lending book. They underwrite and fund deals from their balance sheet. The platform is a distribution channel.
Characteristics: single product type, single credit appetite, approval rate limited by one lender’s risk parameters, NIM share revenue model.
2. Broker-as-a-Service / multi-lender LaaS
The provider (e.g. Fundably) is a commercial finance broker connecting applicants to multiple lenders. The platform embeds the broker’s application flow. Multiple lenders compete for each deal.
Characteristics: multi-product, multi-lender, higher approval rates, revenue share model.
3. BaaS-enabled lending
Banking-as-a-Service providers (e.g. ClearBank, Modulr, Railsbank) provide ledger, accounts and payments infrastructure. Platforms use this to construct lending products, but the platform must arrange their own lender capital or balance-sheet partner.
More complex, more regulatory overhead, primarily relevant to fintechs building their own lending product from the ground up.
4. Programme lending
A credit fund, challenger bank or traditional bank provides capital under a portfolio arrangement. The platform originates deals; the capital provider funds them. The platform takes a margin or origination fee.
Higher revenue potential but significant regulatory and operational complexity. Effectively running a lending operation.
Which model fits most platforms?
For the majority of UK B2B platforms evaluating embedded lending, model 2 (broker-as-a-service) is the most practical starting point:
| Criteria | Balance-sheet LaaS | Broker-as-a-Service | BaaS lending | Programme lending |
|---|---|---|---|---|
| Time to live | Weeks | Days | Months | Months–years |
| Regulatory burden | Low–medium | Low | High | High |
| Revenue per deal | Medium | High (up to 30%) | High | Highest |
| Approval rate (mixed users) | 20–35% | 60–70% | Depends | Depends |
| Engineering complexity | Medium | Low–medium | High | High |
| Product breadth | Single | 8+ types | Custom | Custom |
Broker-as-a-service offers the fastest time to market, the lowest regulatory overhead and the highest approval rates for a mixed SME user base. The trade-off is that the platform does not control the underwriting or lender relationships.
For platforms, especially those considering a balance-sheet lender LaaS as their first integration, the multi-lender broker model deserves serious comparison on total revenue per user, approval rate and time to market.
How to choose a Lending as a Service model
The right LaaS model depends on three questions about your platform and your users:
- How varied is your user base? A platform serving only card-taking retailers can pair well with a single balance-sheet lender focused on merchant cash advances. A platform serving a mix of sectors, ticket sizes and credit profiles will leave money on the table with a single lender, because each declined application is lost revenue. A multi-lender broker model matches each user across many credit appetites, which is why it returns 60–70% approval rates against the 20–35% typical of a single balance-sheet lender on a mixed base.
- How much regulatory and operational load can you carry? Broker-as-a-service keeps the regulated activity with the provider, so the platform avoids holding its own FCA permissions for credit broking or lending. BaaS-enabled and programme lending push significant compliance, capital and underwriting responsibility onto the platform.
- How fast do you need to be live, and with how much engineering? An iFrame or hosted embed under a broker model can be live in under 48 hours with no engineering. A REST API or Web Component integration gives more control over the user experience but takes longer. Programme lending is a multi-month build.
For most UK B2B platforms, the answer points to broker-as-a-service first, with the option to add a balance-sheet partner later for specific user segments once volume justifies it.
What does Lending as a Service cost a platform?
Pricing models differ sharply between LaaS types. Balance-sheet and programme providers often share net interest margin or charge setup and platform fees. Broker-as-a-service providers typically charge the platform nothing and instead pay a revenue share on each funded deal. Fundably, for example, charges zero setup fees and zero monthly costs and pays up to 30% revenue share per funded deal. Always confirm setup costs, recurring fees and the revenue share basis before integrating, because a high headline share on a low-approval single-lender product can earn less per user than a lower share on a high-approval multi-lender product.
The Fundably LaaS model
Fundably operates as a broker-as-a-service / multi-lender LaaS provider:
- NACFB member commercial finance broker
- 50+ lenders across SME product types including iwoca, Funding Circle, Nucleus Commercial Finance, Outfund, Uncapped, Triver and YouLend
- Integration via REST API, Web Component or iFrame
- Up to 30% revenue share per funded deal
- Zero setup fees, zero monthly costs
- White-label with full brand customisation
For an overview of how platforms earn from this model, see how platforms generate revenue from embedded lending. For a full provider comparison, see best embedded lending providers for UK platforms.
Frequently asked questions
What is Lending as a Service (LaaS)?
Lending as a Service lets a platform offer business loans to its users without building a lending operation. A third-party provider supplies the infrastructure, lender relationships and compliance, while the platform supplies the distribution and earns a revenue share on funded deals. The term covers at least four models: balance-sheet LaaS, broker-as-a-service, BaaS-enabled lending and programme lending.How is LaaS different from Banking as a Service (BaaS)?
BaaS providers such as ClearBank, Modulr or Railsbank supply the ledger, accounts and payments rails. They do not provide lender capital or underwriting, so a platform building on BaaS must still arrange its own balance-sheet partner or lender relationships. LaaS — particularly the broker-as-a-service model — provides the lenders and the credit decisioning as well, so the platform does not have to source capital.Which LaaS model gives the highest approval rates?
For a mixed SME user base, broker-as-a-service (multi-lender) gives the highest approval rates, typically 60–70%, because each application is matched across many lenders with different credit appetites. A single balance-sheet lender is limited to one risk profile and typically approves 20–35% of a mixed base.Does a platform need FCA authorisation to use LaaS?
Under a broker-as-a-service model the regulated activity stays with the provider, so the platform usually does not need its own credit broking or lending permissions. BaaS-enabled and programme lending models place more regulatory responsibility on the platform. Always take your own regulatory advice for your specific arrangement.Book a technical demo with the Fundably platform team to explore which LaaS model fits your product.