Financial inclusion
Financial inclusion
Embedded finance
Embedded finance

Business financing embedded into e-commerce and payment platforms should fill the bank shaped hole

Payment service providers and ecommerce platforms are well positioned to fill the bank shaped hole and offer business financing to their merchants.

Executive summary

  • Throughout history risk-taking has accelerated following macroeconomic shocks. This was the case following the black plague in medieval times and the same is the case today. As lockdowns ease new business incorporations are rising with incredible speed, e.g., UK saw 52% growth in company starts in March and April 2021.
  • These new entrepreneurs need capital to grow but banks have unfortunately rejected an increasing amount of loan application, e.g., UK banks rejected 23% more loan applications in Q4 2020 and the trend continues.
  • We believe that several different company types are ideally positioned to help the entrepreneurs overcome the bank shaped hole by making business finance available to their user base.
  • We partner with many of the world’s leading e-commerce platforms, tech companies and payment service providers enabling them to extend their value proposition by offering business financing in their own branding to their merchants, without capital at risk.
  • By joining forces, we are able to approve 91%+ of all application for business finance with product flexibility and speed matching the need of entrepreneurs.

What does history teach us?

Anecdotal evidence points to people being increasingly willing to take more risk after the plague, the Spanish flu and the two world wars. This resulted in significant increases in business incorporations as well as innovation. After all, if you experienced a pandemic or a world war, jumping into the deep end of innovation, or starting your own business probably seems less daunting.

What does the data tell us about the near-term future?

As we emerge from COVID-19 this pattern appears to be repeating itself. Business starts are rising as the economy recovers from extensive lockdowns. In fact, new company incorporations in the UK is up by almost 1/3rd in 2021 to date compared to the same period in 2020 while the number of voluntary dissolutions are largely unchanged.

In March and April 2021, there was a 52% increase in UK company starts, while Irish company starts in March 2021 are up 55%.

The rise of entrepreneurship results in lower average age of companies and increased need of growth financing, both in the form of equity and debt. These young businesses can be difficult to assess by traditional bank underwriting standards and recent data points to this.

60% of small and medium sized businesses sought external finance over last 3 years. 33% of SMB owners report that they inject personal funds into the business.

After expiration of Government support schemes, banks are rejecting an increasing amount of loan applications from entrepreneurs and small and medium sized businesses.

UK banks rejected 23% more loan application from small businesses in Q4 2020 and the trend continued into 2021.
EU banks reported 25% tougher loan approval criteria in Q4 2020 and the trend continued into 2021.

We enable our partners to extend risk free business financing in their own branding and UX to their user base and approve more than 91% of applications for business financing.

Product inflexibility and lack of speed are additional pain-points for the entrepreneurs

Getting business financing is just the first step. Entrepreneurs face many other pain points when seeking funding. We asked a number of businesses what obstacles they face.

44% of merchants see product features like flexible repayment options would be encourage them to take out financing with a non-bank. Fixed repayments can be difficult to manage when sales fluctuate with the season or government regulation.

Our business financing have a variable repayment structure. The amount your merchants pay back each month is proportional to their revenue.

45% of merchants had issues with the speed at which their current bank was able to make them an offer or execute lending. Merchants may lose business opportunities if they cannot raise funds fast enough.

Businesses that apply for financing through partners powered by our platform will get a decision within 24 hours, and can be funded the same day.


In conclusion, we believe e-commerce platforms, tech companies and payment service providers are ideally positioned to help their businesses overcoming the bank shaped hole by making business finance available to their user base. We would love help.

Learn more about partnering with YouLend here.


Office for National Statistics, UK.

Data from CRIF VisionNet Limited, Ireland.

Credit Conditions Survey, 2021 Q1, Bank of England.

British Business Bank Finance Survey 2020.

The euro area bank lending survey, April 2021, European Central Bank.

Data from Youlend and its affiliates.

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