The Invisible Engine: Why Embedded Lending Is the Unsung Hero of SME Growth

Author: Egle Petrosiute, Co-CEO of Softloans

If you’ve ever walked into a local bakery at 7am, you know the chaos that comes before the first customer even steps through the door: last-minute supply runs, staff sorting receipts, someone quietly worrying about next week’s rent. For most small and medium-sized businesses (SMEs), that’s just business as usual - right up until they need capital.

The truth? Access to finance still isn’t simple, even in 2025. The problem isn’t always about whether a loan exists; it’s about whether financing is there when a business needs it most, delivered in a way that matches the everyday rhythms of actual people running actual businesses. This is where embedded lending moves from being fintech’s latest buzzword to becoming the silent backbone behind thousands of growing companies across Europe.

Beyond the Hype: Embedded Lending’s Human Edge

Let’s be honest: it’s easy to promise “seamless access to capital” or “one-click financing” on a slide deck. The reality, though, is that most traditional loan models still miss the mark for SMEs. Fixed repayment plans, rigid approval processes, and an endless parade of paperwork - these are friction points that stifle growth and add stress when it’s least needed.

What SMEs need isn’t just money. It’s flexibility. It’s timing. It’s the ability to seize a spike in orders after a viral campaign, to restock shelves before the weekend rush, or to make payroll when the slow season hits. Embedded lending, done right, doesn’t interrupt these moments - it powers them quietly in the background. While this approach has been a game-changer for SMEs in the USA and Western Europe for years, it remains underused or even nonexistent in many other parts of Europe. As Daniela Dragnea, our Country Lead in Romania, explains:

"Embedded lending and revenue-based financing aren’t experimental ideas anymore – they’ve been proven to work for years in the USA and Western Europe, helping thousands of SMEs grow on their own terms. What excites me is bringing that same opportunity to the rest of Europe, where so many ambitious businesses still don’t have access to financing that truly fits their reality. In Romania and across Central and Eastern Europe, we’re not just introducing a product – we’re unlocking a model that has already transformed other markets, and giving local entrepreneurs the chance to turn their plans into progress."

Why Revenue-Based Financing Is Changing the Game

Here’s where the real innovation is happening: revenue-based financing. Instead of forcing a one-size-fits-all approach, repayments flex with the business’s actual income - usually as a percentage of sales. No more sweating over fixed monthly dues when cashflow dips. For example, think of a neighborhood restaurant gearing up for terrace season. With embedded financing connected to their POS data, they get pre-qualified offers based on real sales patterns. They can invest in outdoor seating or stock up on local produce - and then repay as the summer rush comes in, automatically, in sync with each day’s takings.

It’s a model built for the messy, beautiful unpredictability of running an SME. And it’s exactly why so many businesses that wouldn’t (or couldn’t) take out a traditional loan are finally finding the confidence to grow.

Tech Is Only Half the Story: The Power of Partnerships

But here’s the thing - none of this works in a vacuum. The most effective embedded lending isn’t about inventing new tech and hoping merchants show up. It’s about meeting business owners where they already are: the PSPs they trust, the SaaS tools they use daily, the banks they’ve built relationships with for years.

At Softloans, we don’t see ourselves as just another lender. We’re the rails and the intelligence beneath the surface, enabling our partners - banks, PSPs, software providers - to offer financing that actually fits. Our partners bring the trust and the relationship; we bring the data-driven underwriting, seamless integrations, and a relentless focus on making lending useful, not just available.

Real Numbers, Real Impact

This isn’t a thought experiment - it’s what we see in the data, day in and day out. Nearly nine out of ten merchants come back for more funding after their first round with us. Why? Because it works. On average, merchants who access revenue-based financing through our partners see their sales jump by 30%. They already know how to grow - they just needed the right capital, at the right time, to put their plans into motion.

It’s not just merchants who benefit. For our partners - the PSPs, banks, and platforms working closest with SMEs - the impact is even more tangible. When a merchant taps into revenue-based financing, the revenue that partner earns from that business climbs by 60% on average, thanks both to our fee-sharing model and the merchant’s own growth. When you bring flexible finance into the ecosystem, everybody wins - and the results speak for themselves.

“When you give small business owners access to capital on their terms, you see something remarkable: ideas turn into action, and potential turns into growth,” says Audrius Griskevicius, co-founder and CEO of Softloans. “We don’t just want to make financing available. We want to make it invisible - so entrepreneurs can focus on what they do best, while we quietly clear the path ahead.”

It’s Not All Smooth Sailing - and That’s a Good Thing

Of course, embedded lending has its growing pains. Real impact depends on the quality of data, on privacy and compliance, and on understanding the right moments to offer capital (not just the earliest ones). The line between support and pressure is thin. That’s why thoughtful design - knowing when not to prompt an offer, or how to tailor repayment plans - is as important as any algorithm.

The Quiet Revolution You’ll Only Notice in Hindsight

Here’s what excites us: when embedded lending is working, it fades into the background. Merchants aren’t thinking about “applying for a loan” or “navigating onboarding.” They’re just growing, adapting, and making decisions, supported by capital that’s there - quietly, reliably, almost invisibly.

That’s the future we’re building at Softloans. Not another headline about “disrupting finance,” but a deeper shift: financing that finally bends to the shape of SME life, rather than the other way around. For the baker, the restaurateur, the founder with a new idea - this is capital that simply fits.

If the next decade of SME growth is going to be written by bold entrepreneurs and tireless teams, then let’s give them the tools to do it their way. Not louder, not flashier - just smarter, simpler, and always right where it matters. At Softloans, we believe the best capital doesn’t steal the spotlight. It helps the real stars - Europe’s SMEs - take the stage.