How can payment companies offer business lending?
Payment companies can offer business lending to their merchants by embedding a commercial finance broker, without needing a banking licence or taking on lending risk. Here is why payment platforms are well-positioned and how the model works.
- Transaction data: card and payment data provides a real-time view of a merchant’s revenue and trading patterns
- Existing relationships: merchants who process payments through you already trust you with their financial infrastructure
- Natural touchpoint: the payment dashboard is where business owners already check their financial performance
Shopify Capital, Square Loans and Stripe Capital have all demonstrated that payment data can power business lending at scale. But these are balance-sheet lenders. They lend their own money. For most payment companies, taking on lending risk is not an option.
The embedded broker model: how to offer lending without lending
The alternative is the embedded broker model:
- You integrate a commercial finance broker (like Fundably) into your platform
- Your merchants apply for funding within your platform
- The broker matches them to lenders from a 50+ panel including iwoca, Funding Circle, YouLend, Outfund and Triver
- Lenders fund the deals from their own balance sheet
- You earn revenue share, up to 30% per funded deal
No banking licence required. No lending risk. No capital requirement. No compliance overhead.
The broker (Fundably) is a NACFB member commercial finance broker and handles all broker obligations. You provide the distribution (your merchant base) and earn accordingly.
How payment companies differ from other platforms
Payment companies have unique advantages:
Transaction-based eligibility: merchants with sufficient payment volume can be pre-qualified automatically, without any manual credit assessment. The broker can present an indicative offer before the merchant even applies.
Real-time revenue verification: rather than asking for bank statements, the broker can use payment data to verify revenue in seconds. This dramatically speeds up underwriting.
Contextual placement: a “You’re pre-approved for up to £50,000” prompt inside a payments dashboard converts at a significantly higher rate than a generic funding widget.
Revenue potential for payment companies
At 30% revenue share per funded deal:
| Monthly active merchant volume | 1% apply for funding | 60% approval rate | Avg commission £2,000 | Monthly revenue |
|---|---|---|---|---|
| 5,000 merchants | 50 applicants | 30 funded | £2,000 | £60,000 |
| 20,000 merchants | 200 applicants | 120 funded | £2,000 | £240,000 |
| 100,000 merchants | 1,000 applicants | 600 funded | £2,000 | £1,200,000 |
These figures assume conservative application rates. Payment-led pre-qualification typically doubles or triples application rates versus cold prompts.
Integration
Payment company integrations typically use the REST API path, with payment transaction data passed as part of the Fundably application payload to support pre-qualification and data-accelerated underwriting.
For teams wanting faster deployment, the iFrame or Web Component can be live in under 48 hours, with the data enhancement added in a second phase.
What compliant embedding looks like
You are not advising merchants on credit products. You are integrating a commercial finance broker’s application flow. The key rules:
- Do not tell merchants which specific loan product to take
- Do not compare products or rates on behalf of merchants
- Do not assist merchants in completing applications
- Do present the funding option and hand off to the broker’s application flow
Why a multi-lender panel outperforms a single lender
The balance-sheet lenders that pioneered payment-data lending — Shopify Capital, Square Loans, Stripe Capital — each lend their own money against a single risk model. A merchant who falls outside that model is simply declined, with no alternative. For a payment company routing its own merchants into a funding product, that is a poor outcome: a decline inside your dashboard reflects on your brand.
The embedded broker model matches each application across a 50+ lender panel including YouLend, iwoca, Funding Circle, Outfund and Triver. Different lenders have different appetites — for merchant cash advances, revenue-based finance, term loans and early-stage businesses — so a merchant declined by one is routed to the next with appetite. More of your merchants get funded, and your revenue share scales with them, without you taking on any lending risk.
Payment data makes this even stronger: because the broker can verify real-time revenue from transaction data rather than waiting on bank statements, lenders across the panel price and approve with more confidence and speed.
For a similar approach tailored to challenger banks, see how neobanks can offer lending without a licence. For a full comparison of single-lender vs multi-lender models, see multi-lender vs single-lender embedded lending.
Book a technical demo with the Fundably platform team to discuss your payment platform’s integration.