Parafin, Pipe and Lili Push Capital Closer to Merchants

Key Points

• Parafin, Pipe, and Lili are all pointing to the same shift: small business lending is moving directly into the platforms business owners already use.

• Parafin is scaling embedded capital through major partners such as Amazon, DoorDash, Gusto, TikTok Shop, and Walmart.

• Pipe is arguing that the most useful AI in small business lending may not be an LLM, but better revenue forecasting that helps size offers more accurately.

• Lili is now embedding business credit solutions directly into its small business banking platform through partners including Fundbox and Lendio.

Embedded Lending Is No Longer a Side Feature

The small business lending market is moving deeper into the platforms where merchants already run their businesses.

That is the common thread among three recent developments: Parafin’s push to close the small-business finance gap, Pipe’s argument that better revenue forecasting may be more useful than flashy AI chat tools, and Lili’s new embedded business credit solutions within its banking platform.

These are not identical companies. Parafin is focused on embedded financial infrastructure. Pipe is focused on capital inside software platforms and more advanced revenue forecasting. Lili is a business banking platform now bringing credit options directly into its customer experience.

But the direction is the same.

Capital is being pulled into the merchant workflow.

Instead of asking a business owner to leave their dashboard, find a lender, fill out a separate application, and explain their business from scratch, more platforms are trying to surface financing where the business already operates.

For the funding industry, that is not a small change. It changes who controls the customer relationship.

Parafin’s Model: Capital Through Trusted Platforms

Parafin’s story is a strong example of where embedded lending is headed.

According to Future Nexus, Parafin co-founder Sahill Poddar once visited an auto body shop owner and asked whether he had thought about adding a second lift. The owner had considered it, but he did not trust the financing offers he had received from unfamiliar institutions.

When Poddar asked what would happen if the offer came from the owner’s payment processor, the answer changed. The owner said he would take it because he trusted that company and believed it understood his business.

That is the embedded lending story in plain English.

Small business owners may ignore random financing solicitations. But when a funding offer comes from a platform they already use every day, the trust level is different.

Parafin has built its business around that idea. The company has funded more than 50,000 businesses and has partnerships with major platforms, including Amazon, DoorDash, Gusto, TikTok Shop, and Walmart. It also announced in May 2026 that it had funded more than $2 billion to small businesses to date.

The important part is not only the amount of capital. It is the distribution.

Parafin is not relying on merchants going out and searching for financing. It is reaching them through platforms that already have the relationship, the data, and the trust.

Pipe’s View: The Best AI May Be Better Forecasting

Pipe’s recent article makes a different but related point.

A lot of the AI conversation in finance gets pulled toward LLMs, chatbots, and automation tools. Pipe’s argument is more practical: in small business lending, one of the most useful forms of AI may be revenue forecasting.

Pipe says its model looks at monthly revenue patterns from small businesses and forecasts future performance. The model is not relying on personal credit scores, repayment history, or traditional credit bureau data. It is reading the way revenue moves.

That matters because small businesses can be messy.

Two merchants may show the same trailing revenue, but one may have steady recurring sales while another may have had a temporary spike from a few large jobs. A basic average may treat them the same. A better forecasting model should understand that one business has more predictable revenue than the other.

For MCA, revenue-based financing and small business lending, that is a major point.

The industry has always cared about cash flow. Funders look at deposits, average balances, seasonality, negative days, existing positions, and sales consistency. Pipe argues that better models can read those patterns with more precision and help make offers that better fit the business.

In other words, embedded lending is not only about faster access to capital. It is about smarter offer sizing.

Lili Adds Another Example: Credit Inside Business Banking

Lili’s new announcement adds another layer to the story.

The company announced that it is embedding Business Credit Solutions directly inside the Lili platform. The offering gives small businesses access to a revolving line of credit inside Lili, along with additional financing options through partners including Fundbox and Lendio.

That means a business owner using Lili for banking can potentially apply in minutes, receive a fast decision and draw approved funds into their Lili business checking account.

Again, the pattern is familiar: the business owner does not have to start somewhere else.

Lili is positioning credit as part of the banking experience, not a separate journey. The company says the goal is to reduce friction, remove disconnected applications, and help small businesses access capital through the tools they already use.

Fundbox’s role is also worth noting. In the announcement, Fundbox says it has helped more than 170,000 small businesses unlock more than $6.5 billion in capital since 2013. That gives Lili an embedded capital partner with real small business funding volume behind it.

For the market, Lili’s move is another sign that banking platforms, payment platforms, marketplaces, and software platforms are all moving toward the same destination.

They want to be the place where the business owner manages money and gets capital.

This Fits the Trend Funder Intel Has Been Covering

This is also why the recent Funder Intel coverage fits directly into the larger story.

In “Lending Is the New Lock-In,” Funder Intel covered how major commerce platforms are no longer just processing payments or building websites. Shopify, Block, PayPal, and Fiserv are building funding deeper into their merchant ecosystems. Shopify Capital originated $1.4 billion in MCAs and loans in Q1 2026 alone. PayPal has crossed $30 billion in cumulative small business lending. Fiserv is scaling Clover Capital as part of the broader Clover ecosystem.

That article’s point was simple: lending is becoming a lock-in tool.

If a merchant uses one platform for payments, banking, analytics, payroll, inventory, and financing, that merchant becomes harder to lose. Capital becomes part of the reason they stay.

Then, in “More Embedded Lending, Less Deals for Brokers?” Funder Intel covered two more partnerships: LendingFront and Priority Commerce embedding MCAs, term loans and sales-based financing directly into the MX Merchant dashboard, and NewtekOne partnering with Payroc to bring banking, lending, insurance, and payroll into Payroc’s merchant platform.

That piece raised the right question for the industry: if more funding offers are appearing inside the platforms merchants already use, does that mean fewer deals flow through traditional broker channels?

The answer is not all or nothing.

Brokers, ISOs, and independent funders are not disappearing. Many merchants still need guidance, multiple options, larger approvals, debt restructuring, SBA alternatives, factoring, equipment finance, or a human who can actually explain what is best for their situation.

But the competition is changing.

The new competitor is not only another funder. It is the platform that already owns the merchant relationship.

The Market Data Supports the Shift

This is not just a string of random announcements.

Bain & Company and Bain Capital previously projected that the value of U.S. embedded finance transactions would rise from $2.6 trillion in 2021 to $7 trillion in 2026. The same analysis projected revenue opportunities for platforms and embedded finance enablers to more than double, from $21 billion in 2021 to $51 billion in 2026.

BCG has also pointed to the size of the opportunity, estimating the total addressable market for embedded finance in North America and Europe at about $185 billion across payments, capital solutions, accounts and card issuing. BCG also noted that more than 80% of the embedded finance market remains in play.

Those numbers explain why so many companies are moving in this direction.

Embedded lending gives platforms a way to increase revenue, deepen customer relationships and make their software more valuable. For merchants, it can reduce friction and make capital feel less disconnected from daily operations.

For funders and brokers, it raises the bar.

Merchants are getting used to faster approvals, fewer forms and funding offers that show up inside their normal workflow. That does not mean every embedded offer is the best option. It does mean the traditional funding experience has to improve.

Where This Leaves the Funding Industry

The bigger story is not that Pipe, Parafin, or Lili are doing the same thing. They are not.

Parafin is showing how embedded capital can scale through trusted platform partnerships. Pipe is showing how revenue forecasting can make underwriting more intelligent. Lili is showing how business banking platforms can turn credit into a native part of the customer experience.

Together, they show the newer phase of small business lending.

The offer is moving closer to the merchant. The underwriting is becoming more connected to real operating data. The platform relationship is becoming more valuable. And capital is becoming less of a separate product and more of a built-in business tool.

For the independent funding world, the opportunity is still there. But it may require a sharper value proposition.

Speed alone may not be enough. Access alone may not be enough. Brokers and funders may need to win on advice, structure, flexibility, transparency, and the ability to solve situations that platform-based offers cannot.