Embedded lending, which falls under the purview of embedded finance, is changing the way businesses access capital. Rather than relying on archaic lending models and traditional financial institutions, embedded lending provides businesses with capital precisely when and where they need it most. While this benefits both parties, we will delve deeper into how embedded lending is empowering small businesses with pragmatic and convenient working capital solutions.  

While embedded lending is gaining popularity across the UK, it offers businesses a unique advantage, especially for the acquisition of working capital. Let’s delve deeper into how embedded lending is transforming access to funding. 

Seamless, Instant Funding  

Embedded lending eliminates delays, frustration and the manual aspects of lending. Businesses can access funds within the systems and platforms that they already use. Some examples include accounting software, ERP systems, BI dashboards, e-commerce platforms, and procurement and POS interfaces. For example, a UK-based firm replaced its outdated PDF-based invoice finance with a direct integration into Xero. Now, businesses can borrow directly against invoices through their accounting tools, eliminating the need for manual uploads or month-end reconciliations. This integration accelerates funding, making it faster, easier and more convenient to access, minus the hurdles.  

AI-Powered Credit Decisions  

The traditional route for funding was slow, tedious, and usually took months. Thankfully, that’s all in the past with the advent of AI, machine learning and real-time data. These elements are gamechangers. Lenders can leverage tech solutions to redefine their entire lending process, including credit decisions. Real-time underwriting powered by machine learning enables accurate risk assessments using behavioural patterns, transaction history, and platform-specific data. 

SaaS companies like Pulse have launched their Unified Lending Interface (ULI), which transforms the lending process, from application and disbursement to follow-ups and monitoring. Banks, lenders, brokers, borrowers, and introducers can access multiple solutions through a single interface, including Pulse’s loan origination system and loan management system. Pulse has changed the face of underwriting with Einstein aiDeal, a powerful underwriting solution that is capable of decisioning 95% of deals in under 60 seconds, featuring customisable criteria and complete flexibility. On the other hand, Pulse LOS streamlines a tedious application process, reducing it to under 3 minutes. While lenders can scale volumes, embrace automation and leverage speed, small businesses stand to benefit as well.

Automated underwriting is free from human bias and considers many aspects of financial health, meaning more inclusion for neglected businesses that were denied funding through traditional means. In terms of working capital, small businesses can access the funds they need quickly and that too within the systems they use. These advancements can help SMEs grow, expand, and sustain themselves without wasting time, effort, and resources chasing funding.  

Flexibility: BNPL, Revenue-Based Financing & On-Demand Lines  

2025 has seen embedded lending expand with flexible financing models:  

• Embedded Lending in Procurement: Embedded lending in procurement systems allows businesses to access credit directly at the point of purchase, enabling them to postpone payments while suppliers are paid upfront.  

This improves cash flow, strengthens supplier relationships, and simplifies procurement by integrating finance into existing platforms like ERPs or e-commerce systems. 

• Revenue-Based Financing: A loan type where repayment is tied to actual cash flow, ideal for startups or seasonal businesses. Also, a great example of how alternative lending solutions coupled with embedded lending can help alleviate working capital challenges for small businesses.  

• On-Demand Credit Lines: Businesses draw as needed and credit scales with revenue, improving efficiency and avoiding overborrowing.   

These formats align working capital solutions with business needs and real-time challenges, eliminating mismatched loan structures.  

Expanded Access & Financial Inclusion  

Embedded lending platforms analyse alternative data like rent history, utility payments, or app usage to help assess credit risk. This allows funding access for businesses with thin or nontraditional credit profiles.   

Market data confirms the trend: embedded lending is expected to grow from USD 7.66 billion in 2024 to USD 45.74 billion by 2034 (19.6% CAGR).   

A recent Forbes report confirms that more than half (55%) of non-financial businesses are planning to offer fintech services, including embedded lending, within the next two years.  

Collaborate: Buy, Not Build  

Many businesses choose to partner rather than develop their own lending infrastructure. Embedded lending providers offer readymade technology, compliance, and capital so platforms can launch credit solutions fast without heavy investment.  

An excellent example would be Pulse and its Unified Lending Interface (ULI), which offers advanced solutions for loan origination, loan management and automated underwriting. Rather than building their own infrastructure or relying on traditional approaches, banks, lenders, accountants and SMEs can partner with Pulse and hit the ground running in terms of embedded lending solutions and working capital access. This “buy > build” approach accelerates time-to-market and keeps focus on core business operations.  

Strong Bank–Fintech Collaboration  

In 2025, banks and fintechs are cooperating rather than competing. The World Economic Forum dubs this “coopetition.” Fintechs bring agility and tech; banks contribute trust, scale, and capital. Fintech–bank partnerships are enabling DPI-enabled lending cores with continuous risk monitoring, a powerful combination for working capital financing. 

Real World Example: Pulse’s Embedded Lending: Pulse ULI  

Pulse’s ULI enables banks, lenders, brokers, introducers, accountants, and advisors to access multiple powerful embedded lending solutions through a single interface. Pulse loan origination system (LOS) reduces application time to under 3 minutes, while Pulse’s Einstein aiDeal is a powerful underwriting solution, capable of decisioning 95% of deals in under 60 seconds with flexible criteria and minimal manual intervention. Post-disbursement, Pulse’s loan management system helps track repayments, delays, and defaults. Together Pulse ULI’s solutions empower lenders and help businesses access critical working capital in a timely manner. It makes lending quick, easy, accessible, accurate and automated, transforming the entire process and benefiting both sides. To learn more about how you can leverage Pulse ULI, book a demo today.

Conclusion  

Embedded lending is no longer a futuristic concept. It’s a present-day catalyst reshaping how small businesses access and manage working capital. By merging speed, automation, and accessibility within the tools businesses already use, it breaks down traditional barriers to funding and empowers SMEs to operate more efficiently, with flexibility and inclusion. As embedded lending matures with innovations like AI-powered underwriting and DPI-enabled lending cores, it is set to redefine modern business finance, driving sustainable growth for businesses and smarter risk management for lenders.