As more SMBs turn to embedded finance as a solution, the benefits for providers cannot be ignored. Adobe Stock

Access to capital has always been a key concern for small and medium-sized businesses (SMBs), but recent changes to the Small Business Administration’s (SBA) lending policies, combined with various macroeconomic factors, are further complicating the situation.

As a result, small businesses are increasingly turning to embedded financing options for convenience, operational efficiencies, and speed in lending. This shift underscores the importance of transparent marketplaces that enable them to confidently navigate new capital sources and compare options side by side.

SaaS platform providers have an excellent opportunity to step in as industry leaders by providing embedded lending options as a resilient, tech-forward solution that strengthens their customer relationships, keeping them growth-oriented and satisfied.

Here are four reasons why SaaS platform providers should take a critical look at embedded lending options.

1. SMBs Likely Already Use Software to Manage Their Business

Many business owners today rely on various technologies and tools to manage their operations, like Customer Relationship Management (CRM) systems, accounting platforms, or payroll providers. For instance, a yoga studio might use scheduling software, while a construction company would require invoicing tools to facilitate its daily operations.

Embedded financing integrates with the software programs that small business owners rely on daily, enabling them to gain a deeper understanding of how their business operates. When a SaaS platform provider integrates an embedded lending solution into their current product, the data they already collect about the company’s health, including revenue, debt, and transaction history, can be analyzed to unlock potential loan opportunities.

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If there is a good match with a loan product, lenders can present prequalification for tailored loans directly to the SMB, and all within the SaaS ecosystem.

In most cases, the integration may already have access to the SMB’s profile. If this is the case, it can pre-fill much of the loan application information, reducing friction for the business owner and creating a smoother experience.

This approach is practical because it analyzes the business’s data and funding needs to source appropriate lending options. We’ve built Lendio’s Embedded Marketplace with this in mind: an AI-driven marketplace that can be easily implemented into a SaaS product without requiring a large development team.

2. Embedded Finance Works Hard for SMBs When They Need It Most

Business owners are incredibly busy, and the streaming financial monitoring functionality paired with the simplicity of the loan application process is one way embedded finance has helped streamline their operations. For example, when profit margins are narrow, embedded financing tools can help assess their seasonality by comparing busy and non-busy periods. Instead of waiting until the slow season, when an owner may be desperate for funds, it could proactively anticipate a downturn three months in advance and advise on the best time to secure capital.

Embedded finance has the potential to identify opportunities and offer recommendations to help.

The embedded finance revolution envisions a future for SMBs, where applying for credit is seamless and funding is readily available. Think “always on” working in the background to help the SMB make informed decisions about when and what loan to secure. An SMB might be approved for $50,000 one month, but the following month, that amount could rise to $75,000 based on the business’s performance. The financing offered changes according to the business’s needs.

Our vision for the future of lending is that it should work for the business, not the other way around.

3. Embedded Lending Helps Grow Customer Relationships

As macroeconomic conditions continue to shift, the ability for SMBs to efficiently access capital could mean the difference between sink or swim for their business. While there is a significant lack of education about alternative lending options for SMBs, embedded finance is emerging as a strong solution.

Embedded finance can significantly improve an SMB’s chances of success and survival. Platforms that have yet to integrate embedded lending options for customers aren’t simply missing a feature; they’re missing a huge opportunity.

4. Embedded Marketplaces Benefit SaaS Platform Providers, Too

Embedded marketplaces offer substantial advantages not only to borrowers, but also to SaaS platform providers, because small businesses always require access to capital. By providing financing solutions within their ecosystems, these providers meet a crucial need, while fostering healthier, more long-lasting relationships.

Lendio’s Embedded Marketplace is a white-label solution connected to a vast network of over 75 lenders, enabling financing options to be accessed in seconds. By simply embedding a single line of code into their platform, SaaS providers can enhance user engagement and unlock new revenue opportunities for their clients.

While embedded lending solutions are complex and cannot be built overnight, the opportunity remains great. With over 800 CRM platforms and thousands of merchant service tools available today, there is still much work to be done to ensure that 34 million small businesses in the United States have equal access to these integrated technology sources.

Many SMBs have faced challenges securing financing before discovering alternative options. Fortunately, those alternatives continue to grow and evolve, including Lendio’s Embedded Marketplace. Small business lending marketplaces offer comprehensive alternative financing solutions, creating new opportunities for SMBs. They are likely to stay. B2B platforms with a log-in state would do well to enable embedded financing options to further support the clients who rely on them day-to-day.