The Embedded Lending Revolution: How AI-Powered Credit Is Reshaping SMB Financing

The small business lending market is undergoing a quiet but significant transformation. While traditional banks continue charging astronomical rates—averaging 61% APR for small business loans—a new breed of financial solutions is disrupting the space. Lendica, an AI-driven embedded lending platform, has just announced a strategic partnership with CSG Forte (a NASDAQ: CSGS subsidiary) to bring affordable credit directly to small and medium-sized enterprises through their software vendors.

Why Embedded Lending Is the Future

The numbers tell a compelling story. Embedded business loan originations are experiencing explosive growth at roughly 125% year-over-year, with analysts projecting the market will reach an astounding $500 billion in annual originations by 2030. This isn’t a niche trend—it’s become mainstream after companies like Amazon, Shopify, and Square proved the model works at scale.

So what makes embedded lending different? Instead of small business owners hunting down traditional banks (where they’ll likely be rejected or quoted predatory rates), they access credit directly from the software platforms they already use daily. The result: faster approvals, better terms, and seamless integration into business operations.

The Technology Edge

Lendica’s approach centers on AI-driven underwriting powered by rich, embedded datasets. As the company’s CTO/Co-founder Jerry Shu explains, this is where traditional lenders falter—they lack access to the detailed operational data that software vendors possess. By analyzing transaction history, customer performance metrics, and real-time business data, AI models can make more accurate credit decisions and price loans accordingly.

Jared Shulman, Lendica’s CEO/Co-founder, emphasizes that effective implementation can “dramatically lower rates by leveraging private datasets for more effective underwriting and better sales channels to cut customer acquisition costs.” This approach transforms the economics of small business lending.

The iBranch: Embedded Lending Made Simple

The partnership’s flagship offering, called iBranch, is an embedded financing service designed for Independent Software Vendor (ISV) partners and their merchant customers. The appeal is straightforward: property management firms can access capital for building repairs and supplies; field service companies can fund equipment purchases or expansion; and countless other verticals gain immediate access to affordable working capital.

But the benefits extend beyond borrowers. ISVs earn a portion of fee revenue from embedded lending programs while simultaneously deepening customer loyalty and lifetime value.

A New Era for SMB Growth

What emerges from this partnership is a fundamental shift in how small businesses access capital. As embedded lending becomes more prevalent, the traditional small business lending model—expensive, slow, and inaccessible—will increasingly look like a relic. For SMBs struggling under 61% APR rates, solutions like Lendica and CSG Forte’s iBranch represent genuine relief and a genuine pathway to growth.