Before the rise of SaaS platforms and fintechs, millions of small- and medium-sized businesses (SMBs) secured financing, stored balances, and paid for business expenses by developing their own relationships with lenders and banks.

The unmet financial needs of SMBs are an opportunity for your platform. Your users already trust that you understand their business operations. By taking care of financial services as well, you can significantly grow revenue by increasing your share of users’ wallets as you monetize offerings such as lending, issuing, and balance storage. This growth is especially significant for platforms with a narrow vertical focus and limited total addressable market (TAM).

So how do you get started? And how do you chart a course through embedded finance that stays true to your core offering and value proposition?

Why a lending program should be part of any platform’s strategy

When we surveyed businesses on Stripe about their growth obstacles, access to financing was their number one answer—even more than other key areas such as finding the right talent or managing bandwidth. That’s why we recommend launching a financing program as your first embedded finance expansion beyond payments.

The opportunity

On average, SMBs have only 27 days of cash on hand, and traditional financing options are often slow and unreliable. The process can take months, and it frequently ends in disappointment with only 53% of small businesses fully approved for the financing they’ve sought. Other options, such as personal credit cards or loans, might come with unnecessarily high interest rates or collateral requirements.

Your platform is in a great position to help. You already have the key business information that financial institutions would need to approve loans for your users—and even greater insight into transaction patterns—so you can offer custom-tailored financing packages. Even better, you can be proactive with these offers, encouraging growth beyond what your users might have imagined. And they can get faster access to these funds: with Stripe Capital, funds typically arrive the next business day after approval.

The strategy

User demand for financing is clear, but many platforms get stuck on how to offer it. Building a lending program from scratch can be resource-intensive, with regulatory compliance, credit risk, and support challenges that small teams might struggle to handle.

Stripe Capital lets you offer access to financing without wading into any of this complexity. You can activate it in the Dashboard in days. We handle the risk, the underwriting, and the support—and share the revenue with you. Many platforms on Stripe report that Capital is their number one revenue-generating Stripe product, even above Stripe Payments.

Meanwhile, you become a trusted source of financing for your users, and build a stickier platform: we’ve found that over 80% of customers accept repeat financing when they have the chance.

How a custom strategy for storage and card issuing can help you scale

No matter the vertical, platforms share a simple core ambition: help users grow successful businesses. To build trust as your users’ financial services provider, we recommend enabling them to accept payments and setting them up with easy-to-access financing.

What comes next is less clear-cut. While most user businesses will benefit from additional support managing and spending their funds, rushing to expand to money storage and card issuing solutions isn’t always advisable. Expansion to these additional embedded finance solutions depends heavily on your overall product and go-to-market strategies. Adding financial accounts or credit cards that are poorly aligned with your value proposition risks a poor return on investment, or worse—confusing your users and losing their trust.

When aligned with your product and go-to-market strategies, these additional embedded finance offerings keep users in your platform for key business activities they’d otherwise outsource, differentiating you as a true one-stop shop for your users. In the remainder of this section, we’ll give you practical tips on identifying the right opportunities for expansion.

Aligning embedded finance with your product strategy

A successful platform is built with a deep understanding of user needs. As you add features and components, you’re constantly asking: “Who is using this? What problem are we solving for them?” Embedded finance is no different, though the questions you’ll want to ask are more specific:

• Are your users trying to grow, but struggle with cash flow?
  
• Would your users benefit from instant access to earnings?
  
• Do your users struggle to reconcile payments across multiple processors and channels?
  
• Do your users need easy ways to keep tabs on expenses and analyze trends?
  

Growing adoption with your go-to-market strategy

Just as important as an effective product strategy are your plans for presenting and monetizing your embedded finance offerings. You’ll want to ask:

• How frequently do users interact with your platform? Do they rely on it for everyday operations, or for specific activities?
  
• What is a typical workflow for your user? What can they accomplish within your platform, and when do they need to leave?
  
• How does your user currently pay for your platform’s services? How do they perceive your value delivered, and how might this change with additional offerings?
  

Embedded finance: A unique opportunity for platform monetization

Embedded finance is the rare opportunity that can improve monetization of your existing market share without requiring significant investment from your team. Your users are looking for financial solutions, and they will spend more time off of your platform if they can’t access them through you. And for SaaS platforms serving ever more specific niches, embedded finance can be significant for maintaining growth.

As you add more components, the benefits to your users compound. Moving money between financial institutions can be slow and expensive, but the same transactions clear quickly within your platform. For example, the funds you acquire from customers settle instantly and are immediately available as a funding source for your spending card. Once approved, your financing settles in your storage account the very next business day.

If you’d like to learn more about embedded finance, download the full guide.