The challenge for neobanks
Neobanks and fintechs build user trust and engagement around core financial infrastructure: current accounts, cards, payments, savings. Business lending is the logical next product. It is what users ask for, and it unlocks significant revenue.
But offering business lending directly requires either a banking licence or balance-sheet capital and FCA permissions. For most growth-stage fintechs, neither is immediately practical.
The alternative: embed lending through a commercial finance broker.
The commercial finance broker route: no banking licence required
A NACFB member commercial finance broker can be integrated into a neobank’s product as an embedded lending partner. The neobank:
- Surfaces a lending product to users (within their app or web platform)
- Routes the application to the broker’s matching engine
- Earns revenue share on every funded deal
The broker handles compliance, lender relationships and credit decisions. The neobank provides distribution and user trust.
This requires only a distribution arrangement, not a banking licence or credit broking authorisation. Fundably is a NACFB member commercial finance broker. For UK Limited company SME lending, commercial credit broking sits outside the FCA regulated perimeter, and platform partners do not need their own FCA credit broking licence for the embedding activity, provided they are not advising on specific products.
Integration within a neobank product
The optimal neobank integration uses the REST API path with banking data pre-fill:
- Pre-qualification: the neobank’s transaction and account data is sent to Fundably’s API to assess indicative eligibility
- In-app prompt: users who meet eligibility criteria see a contextual offer (“You may be eligible for up to £75,000 in business funding”)
- In-app application: the user completes a short form within the app, pre-filled with known account data
- Matching and offers: Fundably matches across 50+ lenders and returns offers, displayed in-app
- Completion: user accepts an offer, lender funds directly to their account
The entire flow can be in-app. Users never leave the neobank product.
Revenue model
Neobanks earn up to 30% revenue share per funded deal, paid within 14 days of funding completing.
At 1% of monthly active SME users applying:
| Active SME users | 1% apply | 60% approved | Avg commission £2,000 | Monthly revenue |
|---|---|---|---|---|
| 10,000 | 100 | 60 | £2,000 | £120,000 |
| 50,000 | 500 | 300 | £2,000 | £600,000 |
| 200,000 | 2,000 | 1,200 | £2,000 | £2,400,000 |
These are illustrative figures assuming mid-range adoption. Banking data-powered pre-qualification typically drives higher application rates than cold prompts.
Regulatory considerations for neobanks
Neobanks that are already FCA regulated (an EMI, PI or bank authorisation) operate within a defined regulatory perimeter. Embedding a commercial finance broker’s application flow does not typically extend that perimeter, provided the neobank is not making credit recommendations or decisions.
Neobanks that want to go further, such as managing repayment directly, offering credit within their own ledger or embedding lending under their own FCA credit licence, would need to extend their permissions.
Fundably’s compliance team can advise on structuring the arrangement correctly for your regulatory situation.
Why the broker model beats building a lending book
The instinct for a well-capitalised neobank is often to lend from its own balance sheet. In practice, that means holding capital against every loan, absorbing default risk, building a credit and collections function, and extending FCA permissions — a slow, capital-intensive route that ties up funding you could deploy elsewhere.
The embedded broker model sidesteps all of it. Lenders on the panel fund from their own balance sheets, so the neobank carries no credit risk and no capital requirement. Revenue arrives as a share of every funded deal rather than as interest income earned over the life of a loan, which means positive contribution from day one instead of after months of book-building.
For most neobanks, the right sequencing is to launch business lending through the broker model to prove demand and generate revenue, then decide later — with real conversion data in hand — whether owning any part of the lending book is worth the regulatory and capital burden.
Why a multi-lender panel matters
Neobank users expect a decision, not a rejection. A single-lender integration declines every business outside that lender’s appetite, sending your users to a dead end inside your own app. Matching each application across 50+ lenders — including iwoca, Funding Circle, YouLend and Outfund — means a decline from one lender routes to the next with appetite, so more of your users get funded and your revenue share scales with them.
For a broader look at this model, see lending as a service explained. Payment companies face similar opportunities; see how payment companies can offer business lending.
Book a technical demo with the Fundably platform team to discuss your neobank’s specific integration and regulatory setup.