Guest Article

The way small and medium-sized businesses access finance has changed fundamentally over the past few years. Entrepreneurs and business owners no longer want to fill in lengthy bank applications and wait weeks for an answer. They want financing from within the environment where they already work: in their online business account, in their accounting software, on the marketplace where they sell. That simple shift, from “go to the bank” to “bring the bank to me”, is what the industry calls Embedded Lending. And it’s quietly rewriting the rules of SME finance in Germany.

The numbers tell the story. Embedded Finance currently accounts for around 5 to 6 percent of European SME lending. By 2030, that share is projected to reach 20 to 25 percent. Within five years, as much as a quarter of all small-business lending in Europe could happen inside someone else’s platform. In Germany specifically, the alternative lending market is forecast to grow at over 14 percent per year, nearly doubling from around $4.7 billion in 2025 to $8 billion by 2029. In other words, the question is no longer whether Embedded Lending will become mainstream, but who will be best positioned when it does.

What “Point of Need” actually means

The principle behind Embedded Lending is straightforward: financial products should be available exactly at the moment, and inside the digital environment, where the customer’s need arises. A retailer selling on eBay should be able to pre-qualify for working capital based on their platform turnover. A founder running invoices through a bookkeeping tool should see a financing offer right next to the cash-flow gap the software has just flagged. Especially in small businesses, owners often take care of financing matters themselves, on top of running the day-to-day business. Time is scarce, and the option to apply for a credit line from inside a business banking app, without ever leaving the screen, is a substantial win in efficiency.

This is more than a simple UX improvement. It changes who gets financed, and how fast. By drawing on the data that already lives inside these platforms, like verified revenue, bookkeeping records, and transaction history, embedded lenders can underwrite faster, more accurately and at smaller ticket sizes than traditional credit processes allow. For an SME that needs 30,000 euros in three days to seize an opportunity, that difference is existential.

And this individual impact scales: When capital reaches thousands of small businesses at the right moment, the aggregate effect becomes visible in national economic data. Independent research links our financing to roughly 11,000 new jobs created in Germany in a single year, €280 million in additional tax revenue and €760 million in added economic value. When small businesses get the capital they need at the right moment, the effects ripple through the entire economy.

What we see in our business

At iwoca, we now finance more than 12,000 small businesses in Germany, with a loan book of more than €300 million. Three trends stand out in our daily business.

1. Point of need wins. Customers who come to us through an embedded partner, whether a marketplace, a banking app or a finance tool, convert dramatically better than those who have to seek out a credit provider on their own. They are already in the right mindset, the data is already there, and trust has been pre-established by the partner brand.

2. Partnerships have become one of the fastest-growing parts of our German business. In the first half of 2026 alone, we channelled more than €90 million to German businesses through our partners and brokers. That is more than double the same period a year earlier. Behind that sits a wave of demand: over 60,000 financing requests reached us through partners in six months, roughly 500 every working day, and more than twice as many as a year ago.

3. Embedded partnerships can scale astonishingly fast. When both sides commit to deep technical integration from day one, partners can become strong channels to new customers extremely fast. Tide, the British FinTech that we only launched with in early 2025, became one our top 5 partners in Germany within a year.

Today we work with both embedded partners as well as a network of more than 1,000 brokers in Germany: banks, business-banking apps, marketplaces, comparison portals and accounting software, meeting businesses wherever they already manage their money.

Why Berlin matters in all of this

Embedded Lending only works if you sit close to the platforms that generate the customer journeys. And in Germany, that means Berlin. Many of our most important partners, from broker networks and banking apps to accounting software providers and e-commerce platforms, are headquartered here or run large international teams in the city. Building deep technical integrations is not something you do over email: it requires constant face-to-face conversations between product teams, joint roadmap sessions and a shared sense of direction.

Berlin is home to more of the fintech partners we build with than anywhere else in the country. That is exactly why we added a Berlin office alongside Frankfurt.

But proximity to partners is only part of the equation. As embedded lending grows, so does the complexity of what it takes to run these partnerships well. A single integration combines API engineering, data science for real-time underwriting, product design that fits seamlessly into a partner’s user experience, and commercial minds who understand both the partner’s business model and the needs of the end customer. That mix of deeply technical and deeply commercial talent is not easy to assemble, and Berlin is where we find it most readily.

The road ahead

The direction of travel is clear. The tailwind for embedded lenders is real, but it carries only those who can build deep integrations, scale technologically, operate cleanly within the regulatory framework and genuinely understand the German SME business owner.

For us at iwoca, sitting where our partners and customers actually work, meaning both in Berlin and in our German headquarters Frankfurt, is the most concrete way to honor that requirement. Embedded lending is no longer a niche distribution channel. It is becoming the new default of SME finance.