Build, Buy, or Partner? The True Cost of Standing Up a Lending Program

You can take three approaches to creating an embedded lending program: building, buying, or partnering. An analysis of each option reveals one to clearly stand ahead of the pack.

By 
Jon Fry
 | 
 | 
January 14, 2022

So you’ve decided to create an embedded lending program. That’s great — you’ve taken the first step toward reaping the many business benefits offered by such a program. But now it’s time to figure out how to create that program and get it up and running as soon as possible.

One of the biggest misconceptions about an embedded lending program is that you must build the program yourself. But building is just one of three approaches you can use to create an embedded lending program, and it’s rarely the easiest or best course of action. 

After all, why would you build or buy something that is not part of your core competency when you can get a best-in-class solution for a fraction of the cost?

Option One: Building an Embedded Lending Platform

Although building your own embedded lending program may appear appealing at first glance, it’s important to note that building a full-stack solution yourself requires a lot of work (and resources) and doesn’t automatically boost your business or enhance your valuation. It simply creates a new and needless headache. 

But building the platform isn’t the only time-consuming part of the process — ongoing, consistent maintenance is required to keep your platform up and running once installed. You must write code, navigate contractual agreements with lenders, deal with a wide variety of legal ramifications, and so much more. As a result, your embedded lending program takes resources away from your core competencies and can actually negatively impact your company. It’s no wonder, then, that investors usually frown upon companies that take this route.

Instead, it’s best to do what you do best and leave the embedded lending program to the experts.


Option Two: Buying an Embedded Lending Program


Buying an embedded lending program also presents many challenges. Because embedded lending is such a new space, there aren’t a lot of embedded lending companies for sale out there — let alone many that offer quality embedded lending solutions — and those that are for sale are likely highly valued and too expensive for SaaS companies to buy. 

If you do choose to spend millions of dollars on a ready-made solution, you’re likely acquiring a product that won’t scale with your company or evolve with industry best practices. Purchased embedded finance solutions also rarely enhance your current suite of offerings, but rather function as standalone products that require their own set of resources and expertise to maintain. The result? You end up running two separate companies — your own, and the newly acquired embedded lending company.

The issues with buying aren’t limited to SaaS companies either. Banks, lenders, and credit unions may be tempted to purchase an embedded lending platform that offers its own marketplace in order to increase their reach and find more SMB customers. And yet, buying still presents more problems than benefits. Because just like a SaaS company, they’ll be stuck managing a product they lack sufficient expertise for. 

Option Three: Partnering with an Embedded Lending Expert

So if it doesn’t make sense to build and it doesn’t make sense to buy, what’s the best way to create an embedded lending program? Try finding the right partner! 

When you partner with a company like Lendflow, you get a product created by industry experts that is ready to go right out of the box. Our state-of-the-art technology is constantly improving to provide a service that enhances your core competencies, not detracts from them. Plus, you’ll benefit from simple and transparent pricing on a product that grows with your company so you never pay beyond your current needs. 

As an industry leader in the embedded lending space, we take a consultative approach to our work. Our experts will help you implement best practices and connect you to other tech partners in the space to ensure you’re getting the most out of our service offerings. We also deliver the data and capital program insights you need to expand your financing capabilities and set yourself apart from the competition.

Confidently Kick-Start Your Embedded Lending Services

At Lendflow, we saw the problems in the embedded lending space and set out to tackle them head on. We’ve devoted five years, a full team of engineers, thousands of hours, and millions of dollars to building multiple iterations of our industry-leading product. 

At Lendflow, embedded lending is what we do. Leverage our expertise so you can focus on yours. Get started with Lendflow today

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