Which trends are driving embedded lending solutions and why they’re winning over SMBs

Embedded payments are solidifying their place in B2C, and B2B companies are joining the trend to automate payroll, invoicing, and procurement workflows.

Embedded solutions are also taking off in the SMB lending space, as businesses move away from direct borrowing through traditional financial institutions toward more integrated solutions.

37% of SMBs are interested in switching to providers that offer embedded lending options, according to a recent survey. This is SMBs’ preference is for SMBs for their own needs and those offering embedded lending to their customers.

Anchit Singh, Chief Business Officer at Fundbox, believes this shift toward embedded lending solutions is because SMBs are served by a broader and more fragmented set of financial institutions, creating a “fatter tail” of providers compared to the consumer segment.

Fundbox helps SMBs manage their working capital by offering embedded lending and payment solutions that integrate directly into their financial workflows. The loans and lines of credit offered by Fundbox are originated by its banking partners First Electronic Bank and Lead Bank, subject to their respective credit and risk policies.

“Small businesses, like everyone else, have historically relied on their banks to meet their financial needs,” says Singh. “However, the landscape for SMBs differs significantly from that of consumers.”

What’s driving SMBs toward embedded lending solutions?

Singh shares 3 key reasons why SMBs increasingly turn to embedded finance solutions:

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