Embedded Lending Is Everything Brokers Aren’t
I’m a fan of embedded lending. Always have been. It’s efficient, data-driven, and it’s quietly killing off the broker model — which, for anyone who’s watched that circus from the inside, is poetic justice.
Embedded finance lets merchants get funding offers right where they actually run their business — their POS system, e-commerce dashboard, or SaaS platform. No phone calls, no “exclusive programs,” no middlemen. Just data and underwriting.
But there’s one thing I hate about it. I’ve seen it actually make the stacking epidemic worse.
The Problem: Platforms Don’t See the Whole Picture
The funding options built into payment processors or vertical SaaS tools rarely have your banking linked. They underwrite using their own data silo — your platform sales and deposit activity — not your full financial picture.
That means they can (and often do) miss the fact that you already have another working capital loan or merchant cash advance.
What I Saw Working in E-Commerce Funding
When I worked in e-commerce funding, I saw this constantly.
Take Shopify Capital. It doesn’t seem to care whether a seller already has funding elsewhere.
So when Shopify starts pulling 10–15% of your daily sales to repay its advance, that repayment often stacks right on top of another lender already taking 10–20%+ of sales. Suddenly, 25–35% of your gross receipts are gone before you even see them.
This Isn’t Just a Shopify Problem
This isn’t about picking on Shopify — it’s a structural issue across the embedded finance ecosystem.
Platforms have cash dominion over your payment flows. They know they’re first in line to get paid, which means they don’t have much incentive to worry about your other obligations.
That’s great for them — but brutal for merchants who don’t realize they’re stacking debt until their cash flow collapses.
What Platforms Should Be Doing
Embedded lending is supposed to make capital access smarter, not just faster.
If these platforms really want to empower merchants, they should:
- Build systems that detect existing obligations before funding, and
- Coach users to think twice before layering on another “easy” advance.
The tech is already there. The discipline isn’t.