If “fast funding” is the first‑position world’s battering ram, embedded capital is the locksmith. Shopify Capital, Stripe Capital, PayPal Working Capital, Square Loans, Lightspeed Capital, QuickBooks Capital—these players already sit inside your checkout, POS, and accounting stack. They don’t need a broker to “find” you. They already did.
Here’s the honest read for business owners: embedded capital is often cheaper than pure‑play online lenders—not cheap, but cheaper—because platforms have three structural advantages: (1) lower acquisition cost (they already acquired you as a customer), (2) cash dominion (repayments skimmed off sales), and (3) better data visibility (they see your revenue in real time). Those three levers reduce risk and distribution cost versus the broker‑led marketplace circus. The catch? It can still be expensive—and the “it just comes out of sales” framing can numb you to the real APR.
Why embedded can price sharper than pure‑plays
- They already paid the CAC. Stripe, Shopify, Square, Lightspeed, PayPal, Intuit: you’re a captive audience. Upselling financing is cheaper than buying leads from brokers and marketplaces. Lower distribution cost = room for a lower price.
- They control the rails. Repayment as a percent of daily card sales (or payout deductions) dramatically reduces loss severity. That “cash dominion” lowers risk.
- They see the truth. Your sales, refunds, seasonality, and chargebacks live in their dashboards. Better data → tighter underwriting → fewer surprises.
Net effect: embedded offers often pencil out below what a broker‑sourced pure‑play would quote for the same business. Not always, but often.
Term lengths: the short‑term tradeoff
The most common embedded programs are designed to recycle capital quickly. Shopify Capital, Stripe Capital, PayPal Working Capital, and Square Loans generally structure holdbacks to recover the advance in roughly 4–8 months, depending on the borrower’s sales volume. That keeps risk low for the platform—but it also means the effective cost feels higher when annualized.
By contrast, first‑position fintech lenders like OnDeck, Rapid Finance, or Kapitus will often go 12–18 months (sometimes 24 for stronger SMBs). That’s a key difference: the longer the term, the more practical it becomes to fund larger, fixed investments like equipment, expansion, or hiring. Shorter revenue‑based paybacks make sense for inventory turns and marketing—but not for long‑horizon growth.
As embedded portfolios season and default data improves, expect these platforms to extend term lengths and increase loan amounts. The trajectory mirrors what happened in the early days of online lending: 4–8 month terms were once the standard, until competition and portfolio maturity stretched them closer to a year or more.
Product snapshots (what to watch for)
- Stripe Capital. Flat‑fee pricing, with a repayment rate that withholds a slice of each sale until the total (principal + fee) is repaid. Simple, automatic, and variable with your revenue.
- Shopify Capital. MCA/loan hybrids with fixed fees and automatic remittances from Shopify payouts. Extremely convenient for Shopify storefronts—watch the true cost over 6–10 months.
- Square Loans. Offers surfaced right in your Square dashboard; repayment skimmed from daily card sales. Smaller average ticket sizes but very fast.
- PayPal Working Capital. Fixed‑fee structure, remitted as a percentage of PayPal sales. The holdback looks gentle until you time‑weight the fee.
- Lightspeed Capital. MCA offers to Lightspeed POS customers; repayments via card receipts. Great fit for restaurants/retail where Lightspeed already sees POS data.
- QuickBooks Capital. Traditional APR‑quoted term loans (not factor fees) with capped ranges and amortized payments—more bank‑like UX inside your accounting stack.
Convenience ≠ cheap: translating fees into APR
Embedded programs love fixed fees and percentage‑of‑sales repayment because it feels painless. But your cash flow comfort can hide your time‑weighted cost.
- A 1.15–1.20 payback over 6–10 months can annualize to 40–70% APR depending on cadence.
- Even when embedded beats pure‑plays, the money is still expensive compared with bank/SBA credit. Speed and simplicity carry a premium—just a smaller one.
Rule of thumb: don’t compare fees to fees—compare APR to APR and total dollars out the door.
When embedded is a smart move
- Short payback, clear ROI. Inventory turns, seasonal stock‑ups, marketing that predictably returns cash within a few months.
- You’re already on the platform. If Stripe/Shopify/Square already runs your revenue, the underwriting friction is minimal and pricing is often sharper than a broker‑sourced alternative.
- You want variable repayment. If sales dip, remittances dip—useful for restaurants/retail with seasonality.
When to hit pause
- You’re patching losses, not funding growth. A fixed fee over 6–10 months will crush a business that isn’t generating incremental cash.
- Stacking. Doubling up embedded offers with a term loan or MCA is how good businesses drown.
- You’re ignoring the APR. If you can’t state the APR and total dollar cost, you’re not ready to sign.
Rapid‑fire platform notes
- Stripe Capital: Flat fee + repayment rate deducted from sales; minimum periodic payment requirements keep you on track. Very low friction if you already process with Stripe.
- Shopify Capital: Fast offers tied to your sales; often presented as a multiple of average daily sales. Expect short durations and fixed fees.
- PayPal Working Capital: Fixed fee + sales percentage holdback. Easy if PayPal is a large share of your checkout mix; still a fee‑based structure—convert to APR.
- Square Loans: Offers triggered by your processing history; auto‑remit from daily card volume. Great UX, watch effective APR on shorter terms.
- Lightspeed Capital: POS‑native MCA; ideal for F&B and retail footprints already on Lightspeed. Translate factor rates into APR before accepting.
- QuickBooks Capital: APR‑based term loans (often 9.99%–36% APR) with amortized payments—potentially cheaper than fee‑based MCAs if you qualify and can handle fixed payments.
Where this is heading (and why brokers should worry)
We’ve been covering the drumbeat: Uber Eats + Pipe, Elavon + Liberis, Wix’s finance suite, and more. The pattern is obvious—distribution is moving inside the software. As embedded spreads, broker markups have less room to hide. That’s good for merchants.
But don’t confuse less markup with low cost. Embedded isn’t charity; it’s smart risk management wrapped in great UX.
Your next step: put real numbers on it
- Calculate your APR. Factor, fee, holdback—our APR Calculator translates platform offers into apples‑to‑apples cost.
- Sense‑check with Diogenes. Not sure if borrowing even makes sense? Ask Diogenes to stress‑test the use case, suggest lender types that fit your profile, and help you avoid stacking and junk fees.
Bottom line: If you’re going to pay for speed, embedded is often the least‑bad way to do it—cheaper than broker‑sourced pure‑plays, safer on cash flow, and built on better data. Just make sure the convenience doesn’t blind you to the true cost.