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Pipe's cash advance model creates several advantages for SMBs, including simplicity, flexibility, and speed. Here’s a closer look at Pipe Capital, how it differs from traditional MCAs, and what it means for business owners and embedded partners.

Our cash advance structure allows for agility and speed, launching faster than a typical traditional loan product. Pipe Capital is built with speed and convenience in mind for both our embedded partners and the small businesses that access capital through their platforms.

One of the major hurdles in traditional small business financing is the lengthy applications and extended waiting periods. Because Pipe Capital underwrites SMBs based on secure, live transaction data, we can streamline the process down to a few simple steps, utilizing data that already exists on the partner platform. The result? Partners can launch in as little as a few weeks, and business owners can access capital in days. 

Merchant-friendly funding for safer growth

We believe companies in the financial industry have an obligation to build proactive policies into their products and protect their customers, whether it’s legally mandated or not. While we’re not a lender, Pipe Capital complies with federal fair lending laws, state disclosure laws, and the full KYB/sanctions regime. Our program maintains robust protection for SMBs, helping our partners deliver high customer satisfaction. This also allows us to keep the cost of capital down, by minimizing risks, making the program more attractive to our capital markets partners. 

In the past, many small business owners have put their business 

 assets at risk, in an effort to secure the funding they needed to grow. At Pipe, we never require personal guarantees from business owners and do not have “confessions of judgment” and other abusive contractual terms some have used to seize assets or freeze accounts with little recourse for the business owner. 

We also work to protect against dangers like stacking by issuing only one advance at a time and monitoring for outstanding financing from another provider at onboarding. Our goal is always to help SMBs access the capital they need, as quickly and sustainably as possible.  

Payments that flex with changes in revenue 

Some MCA providers have given the product a bad name in the past by taking advantage of the flexible MCA payment schedule, with accelerated payments for any contract infraction, which resulted in effective APRs in the hundreds. This is why we’ve worked hard to prevent excessive APRs and have built a product that goes out of its way to help preserve the customers’ cash flow. 

Pipe Capital payments decrease with dips in revenue, with no monthly minimum, protecting SMBs during slow times. With one flat, transparent fee (paid over the life of the advance) there are no surprises, and our hold rates (the portion of the customer’s revenue held back to pay their MCA) are lower than many alternatives—15% or below—preserving cash flow for businesses.  

A cash advance product that equals more capital access

Small business owners and the software companies that serve them often compare the benefits of cash advance products with traditional loans. While there are pros and cons to both, our advance structure makes it possible to give capital access to more SMBs when they need it. 

The primary advantage of traditional term loans is that they can be less expensive overall, often because they’re securitized and offered only to the lowest-risk population of prospective borrowers. Unfortunately, many factors can place immigrant-, minority-, and women-owned businesses in the “higher-risk” categories, locking them out of the financial access they need to grow their businesses to their full potential. 

For example, Black-owned businesses were denied loans nearly twice as often as white business owners, according to  Federal Reserve statistics.

 Women-owned businesses also have a harder time being approved for loans, even when their businesses are comparable to their male-owned counterparts.

Unlike traditional financing options based primarily on credit scores and lengthy business histories—which often disproportionately exclude these underserved populations—Pipe’s Capital advance is based on anonymized live revenue data, giving a real-time picture of the health of a business with as little as 3-6 months of history. This allows smaller and younger businesses—many of which are women-, minority-, and immigrant-owned—better access to working capital.

Pipe is underwriting the future of small business with an evolved cash advance model that allows simple,  unbiased financial access to be seamlessly integrated into the tools SMBs use every day. 

https://www.commerce.gov/news/fact-sheets/2024/06/fact-sheet-us-department-commerce-support-minority-business-enterprises

https://www.federalreserve.gov/publications/2021-november-consumer-community-context.htm

See how Pipe's evolved cash advance model is creating more capital access for small business owners across industries.

See how Pipe's evolved MCA model is creating more capital access for businesses across industries.

Pipe Capital: A merchant-friendly MCA model built to improve capital access for SMBs

Pipe Capital: A merchant-friendly cash advance model built to improve capital access for SMBs

Pipe Capital: A customer-friendly MCA model built to improve capital access for SMBs

If you’re weighing multiple options or are currently working with an embedded partner and wondering if it makes sense to switch, here are a few reasons Pipe stands out from the crowd.

With Pipe Capital, launching a new product offering is incredibly fast and straightforward. Our seamless integrations help you accelerate your growth and your customers’ access to the capital they need. Choose from Pipe-Hosted, Embedded UI, and full API options and leverage Pipe’s expertise to transform your financial ecosystem and drive revenue growth effortlessly. We’ll manage all risk and capital markets, so you can launch without financial investment or risk to your business. Our expert team will walk you through integration and support your go-to-market launch to help you get the best possible results.

We achieve a 9.4% first month activation rate for our vertical SaaS partners through:

Our partners report significantly higher activation rates compared to other embedded options, thanks to our tailored underwriting models, expert GTM support, and dedicated revenue team. Our underwriting models can be trained to your customer base—and are based on business performance, not FICO scores—allowing us to serve more of your customers than many competitors. With our comprehensive launch playbooks, you'll achieve optimal customer activation through personalized strategies, including email, direct mail, in-product banners, and more. 

Offer a seamless experience your customers will love

Merchants give Pipe a 92 net promoter score

By embedding with Pipe, you give your customers access to frictionless financing that feels native to your platform. Pre-approved offers, flexible and transparent payment terms, and merchant-friendly support are all reflected in our outstanding NPS score (average NPS is 44 for financial services and 30 for banking according to 

Pipe distinguishes itself through three key advantages:

: Typically require 1-3 months or longer for frontend development and API integration.

: Multiple options let you find the perfect balance of speed and customization. Our Pipe-hosted pilot can launch within a few days with no engineering lift. The Embedded UI provides a quick route to unlocking higher funnel metrics, while our full API solution lets you take complete control of the user journey on top of Pipe’s infrastructure.

: More rigid and less user-friendly in terms of integration and customization options. Pre-qualifications that are not indicative of final approvals and subject to additional credit checks.

: Select the embedded option that works best for your timeline and resources, with zero engineering lift for Pipe-hosted. We also offer multiple revenue flow options like Split Pay and FBO, so you choose the right experience. 

Customers can apply in minutes, and payments are automatically handled as revenue flows through your platform. Our multi-draw structure lets them take exactly what they need, returning for additional advances as needed. 

a large number of customers, they have a steep drop-off from additional checks. Pipe offers

with no additional credit checks, with 98% of pre-approvals translating to full approval.

Partners benefit from our extensive expertise. We've conducted numerous tests to optimize user experience and funnel metrics from day one. Our tailored underwriting evolves with each partner, while our models continuously learn from partner interactions and direct business. For partners, this translates into more addressable customers, higher conversion rates, and more advances executed.

: While competitors are limited to email campaigns, Pipe offers a range of activation options, including SMS, direct mail, ads, and white-labeled sales support, resulting in superior conversion rates. Our Go-to-Market team is here to help ensure the success of your launch and beyond.

: Launch a branded card offering powered by Pipe’s underwriting and integrated UI. Your customers can apply in as little as a few minutes and benefit from unlimited virtual cards, unlimited 1.5% cash back rewards, spend insights, and more. We take care of all the compliance, risk, capital markets, and heavy lifting.

: This feature enables customers to connect additional payment sources, providing valuable insights into wallet share percentages and incentivizing customers to utilize a partner for more of their payment volume. These insights help partners accelerate payment revenue, increase their share of wallet, and improve customer engagement and retention.

Partner with Pipe to offer your customers the financial tools they need to grow and thrive. Experience the difference with fast, seamless integration, outstanding activation rates, and exceptional customer satisfaction.

See why partners are choosing Pipe over other embedded capital providers, and why merchants choose Pipe too. 

Learn why Payfacs, vertical SaaS, and other platforms are choosing Pipe as their embedded capital partner. 

See what sets Pipe apart from other embedded finance partners

Why Pipe? See what sets Pipe apart from other embedded finance partners

Why Pipe?

When it comes to your company’s finances, security is key. Protecting your data and financial information is a top priority, and—whether you’re a Pipe customer or one of our embedded capital partners—it’s our top priority, too. That’s why we’re excited to share about our recent SOC2 Type II completion and why it matters.

At Pipe, we’re committed to keeping our customer’s data safe while helping them access capital to grow on their terms. To guarantee that our systems and processes align with this goal, we turned to external experts for an independent review. A SOC 2 report is the result of that review.

Obtaining a System and Organization Controls (SOC) 2 report is one way for a service organization to prove the security of its digital environment. Completing a SOC 2 examination through an 

 does not result in a certification. Instead, the resulting CPA’s report is an independent attestation, not unlike an external financial audit. It’s a tool to help an organization communicate whether the internal controls governing the security of customers’, partners’, and stakeholders’ data are properly designed, implemented, and maintained.

In simpler terms, a SOC 2 report helps current and potential stakeholders assess risk by giving them a closer look at the policies and procedures put in place to ensure the organization’s services are provided safely and reliably. And while our security team loves to burn the midnight oil (looking at you, Kyle*), it’s these processes that truly work 24/7 to keep your data safe.

* Our fearless Manager of Infrastructure & Security, Kyle Polley

Why SOC 2 matters and why we went through this process at Pipe

Completing a SOC 2 examination is a big step for any company. It demonstrates your commitment to data security and ensures that you’re prepared to face the challenges of the ever-changing cybersecurity landscape.

"Pipe’s SOC 2 report not only confirms the robust controls we've set up but also stands as a testament to our formidable technical infrastructure and our unyielding promise to 

prioritize and fortify security across our IT processes, ensuring the safeguarding of our customers' data,

SOC 2 assessments are overseen by certified CPA entities. An auditor tests the effectiveness of the organization's internal controls and then maps those controls to one or more Trust Services Criteria established by the 

American Institute of Certified Public Accountants (AICPA)

For Pipe, these vital criteria encompass:

A SOC 2 report's breadth can fluctuate based on the time frame examined.

As a part of our commitment to the highest levels of security, Pipe's recent SOC 2 Type II report spanned from June 1, 2023, to August 31, 2023, and included all five of the criteria listed above. 

detailed breakdown of how to read a SOC 2 report

, including where to find the most important and relevant information for your situation.

Current and prospective customers interested in obtaining a copy of Pipe’s latest SOC 2 report can 

Last but certainly not least, a big thank you to everyone in Engineering, Security, and IT for their diligence and thoughtfulness in keeping our customers safe.

Find out what a SOC 2 review covers and why it's crucial for an embedded finance partner.

Why SOC 2 Compliance is a Must-Have for Your Capital Partner

Access to financial services is critical for small businesses. And increasingly, those small businesses are looking for easy-to-access financial tools right inside the platforms they use every day. Products like Square Banking and QuickBooks Capital are raising the customer expectation bar, but it’s not too late to take advantage of this shift. 

If you're looking to scale your business, increase revenue streams, and deepen customer engagement, embedded finance could be the solution. In this article, we'll walk you through the steps to 

embed finance in your product or service 

in a way that benefits both your business and your customers.

Before you can embed finance in your product or service, you have to assess your needs. There are a variety of 

 options out there, and not all of them will be relevant for your business and your customer base. Here are some things to consider:

Anyone starting a business needs an understanding of their target market. Fortunately, if you’re considering adding embedded finance to your product or service, you likely already have a well-established customer base and a good understanding of their needs. Now, you just need to step into their shoes.

Embedded finance encompasses everything from 

 and revenue advance products, to payment processing, to insurance. The products that will add value for your customer base will depend on whether they’re businesses or individuals and where they are in their financial journey. For example, if your customer base are small businesses, they likely need access to working capital, and an embedded capital product would be a high value-add for them.

Speaking of your customer’s journey, the next step is to figure out where your customers’ needs intersect with your offering. What financial needs do your customers have at the specific point where they’re interacting with your product or service? Analyzing how your customers use your offering will help guide your choice of which financial services to embed. 

Returning to our earlier example, if you’re a payment facilitator serving small business owners, what can you do to make your merchants’ lives easier? As they go about their day-to-day operations, concerns about payroll, inventory, and other costs are top of mind. Providing them with access to embedded capital allows them to run their business more efficiently without ever having to leave your platform. 

Now that you’ve thought about your target market and analyzed how they use your product or service, you can determine which financial features to embed. 

It's important to prioritize the financial features that will have the biggest impact on your customers and your business. Consider the cost and feasibility of implementing each feature, as well as the potential ROI.

Finally, don't forget to test and iterate on your financial services offering. The data you collect from your embedded finance customers can allow you to continuously improve and optimize your offering, identifying new opportunities to serve them even more.

Step 2: Choose the right embedded finance platform

Choosing the right embedded finance platform is crucial in ensuring the success of your offering. Financial partners play a vital role in providing the necessary infrastructure and support to help your business grow. 

When selecting a financial partner, it's important to consider a range of factors that will impact the success of your partnership. Below are some things to keep in mind as you evaluate potential partners:

There are various types of financial institutions to consider when embedding finance in your product or service. These include banks, fintech companies, and other financial service providers. Each type of partner has its own unique strengths and weaknesses.

For example, banks may offer a broader range of financial products and services, while fintech companies will likely be more agile and innovative in their approach and offer more tech and engineering support to help you build out your embedded offer. It's important to evaluate each potential partner to determine which will best meet the needs of your business and your customers.

Regulatory compliance is one critical element of an embedded partnership. Many financial services require you to jump through regulatory hoops to protect consumers and businesses. This can be a huge lift for you if your partner doesn't take care of regulatory issues on your behalf. It's important to partner with an institution that is fully compliant with all relevant regulations and has a robust compliance program in place. At Pipe, our team handles all the regulatory hurdles for our partners, so they don’t need to allocate any resources to stay fully compliant. 

Tech and engineering support are the next thing to consider. An embedded offering allows you to build financial products right into your platform, but a build that goes smoothly and feels natural to your customers takes the right tech team. This is a major advantage for fintech teams, who can typically provide a much more seamless turnkey offer along with more support for customization. For example, while Pipe’s UI is based on hundreds of tests and proven optimizations, our team also supports and enables partners to customize their UI to match their own platform.

Finally, consider your revenue opportunity with a partner, which goes beyond just sharing in revenue. Compare how embedded partners help you with acquiring, onboarding, and supporting your customers. While some offer only a single channel (like email) to help you increase activation for your financing offer, others offer a suite of marketing and promotional services. The more customers you can activate on your embedded offering, the bigger the impact on your customers 

 your revenue. You’ll also want to take the long view, considering the future roadmap and how an embedded partner can build out new offers with you, as well as scale with you and your customers as you grow.  

Once you've chosen a partner, it's essential to strengthen that partnership. This involves clear communication, regular check-ins to assess performance, and a willingness to work collaboratively to address challenges and opportunities as they arise.

Regular communication is critical to maintaining a strong partnership. Schedule regular check-ins with your partner to discuss performance, identify areas for improvement, and share feedback.

Another key to a strong partnership is a willingness to work collaboratively. Be open to feedback from your partner and be willing to make changes. By working together, you can build a strong and successful partnership that serves your customers and grows your GPV.

Step 3: Overcome common challenges with implementation 

While embedded finance offers many benefits, such as increased convenience and accessibility, it also presents several challenges companies need to address.

Embedded finance has great potential for scalability and flexibility. As long as you choose a partner who can scale with you and look to the future with you, you’ll be able to grow your offering exponentially.  

Scalability depends on how much financing your partner is able to provide, and what size of businesses they can serve. As a capital partner, Pipe works with small businesses, all the way up to mid-market, allowing us to scale with your customers as they grow, as well as scale with you as you add more customers.

Embedded finance involves providing financial services which are subject to various regulations and compliance requirements. Companies need to ensure that they are able to comply with an state financing disclosure laws which may apply to capital products, along with any other state and federal laws and regulations, such as 

(KYC) regulations. Failure to comply with these regulations can result in significant penalties and reputational damage. 

Staying current with regulatory changes requires ongoing monitoring and communication with regulatory authorities and industry associations. Your financing partner can help you with this, as they’ve got their finger on the pulse of changes in the industry. Regulatory disclosures and AML/OFAC checks are built into Pipe’s embedded capital, handling KYC and other processes automatically, so there’s no added burden on your team and no unnecessary friction for your customers.

Another challenge in implementing embedded finance is ensuring the security and privacy of customer data. Financial information is highly sensitive and valuable, making it a prime target for cyberattacks and other forms of fraud. Companies need to ensure that their security measures are robust and comply with applicable data security and privacy laws, such as the 

Companies also need to communicate clearly with their customers about how their data is being used and protected. This requires transparency and trust-building measures, such as clear privacy policies and secure data storage practices.

One of the biggest challenges in implementing embedded finance is integrating it with existing systems. Financial systems are often complex and highly regulated, making it difficult to integrate them with non-financial systems seamlessly. Companies need to ensure that their IT infrastructure can handle the increased complexity and any potential security risks associated with embedded finance. Let’s take a closer look at overcoming implementation challenges.

Key strategies for a frictionless implementation 

Embedded finance is a rapidly growing sector, and companies are increasingly looking to offer financial products and services to their customers. However, implementing embedded finance can be challenging, with complex technical requirements, regulatory hurdles, and security concerns. Here are some strategies you can adopt to overcome these challenges:

One strategy for overcoming implementation challenges is to adopt a modular approach to embedded finance. This involves breaking down the implementation into smaller, more manageable components that can be developed and tested independently. By doing this, companies can reduce the complexity of the implementation and allow for greater flexibility and scalability. 

For example, a company could start by offering a single financial product, such as a revenue advance, then gradually add more products and services as the implementation progresses. A modular approach also allows companies to iterate on each component independently, making it easier to address issues and make improvements. This approach helps companies identify needs and areas of potential growth so they can expand their offerings wisely.

Pipe uses an iFrame-style solution called 

. It plugs in easily, offering a turnkey revenue advance product with no need to build anything. This allows companies to offer capital to their merchants right away, taking advantage of a fully tested user experience, and gathering data on what those merchants may want next.

 is another strategy for overcoming implementation challenges. They enable companies to build and deploy embedded finance offerings quickly and efficiently while ensuring scalability and flexibility. By using APIs, companies can avoid the need to build complex, monolithic systems from scratch.

For example, a company could use an API to access a third-party payment processor, rather than building its own payment processing system. This would allow the company to focus on its core competencies, while still offering a high-quality capital product or service to its customers. 

Fintech companies are creating solutions that bypass these layers of complexity. At 

, we use a simple API to embed an offering without complex integrations and without deploying software on your end. This not only eliminates many potential integration issues but also allows you to go to market with a capital offering in just a couple of days.

Let's consider PayFac Pro, a [fictitious] payment facilitator looking to 

 into its platform to enhance its services for small business customers. They already have a great reputation and a well-established customer base made up mostly of small and medium-sized businesses in online retail. Recognizing the need for these businesses to have easy access to 

, PayFac Pro decided to embed a financial service into its platform.

PayFac Pro begins by assessing the specific needs of its customer base. The company understands that these businesses often face cash flow challenges due to the time lag between purchasing inventory and selling it. Seasonality is also an issue for some. To address this, they consider embedding a capital offering product like Pipe, which would provide immediate funds to businesses based on their projected future sales.

Next, they evaluate potential financial partners to provide this embedded capital offering. The company seeks a partner that has scaling capabilities and robust regulatory compliance. PayFac Pro also prioritizes partners offering product, design, and engineering support to ensure seamless integration of the financial service into its existing platform.

After selecting the right partner, PayFac Pro focuses on integrating the capital offering into its platform. This integration is designed to be user-friendly, enabling businesses to apply for and manage their financing directly within PayFac Pro’s existing interface. The process is made efficient and secure, with minimal disruption to the daily operations of the businesses using the platform.

By embedding a capital offering like Pipe, PayFac Pro enhances its value proposition to its customers and opens up a new revenue stream. This move also positions PayFac Pro as a more comprehensive service provider, deepening customer engagement and loyalty. The embedded capital feature empowers small businesses with quicker access to funds, aiding their growth and stability, and in turn, contributes to PayFac Pro’s growth as a preferred payment facilitator in the market.

Embedded finance is a powerful tool to help you serve your customers and grow your own business. It can increase usage on your platform, improve brand loyalty, and help your b2b customers grow their own businesses. By following these three steps and leveraging a few key strategies, you can make the embedded financing process quick and painless, so you can start reaping the benefits right away.

If you're looking to scale your business, increase revenue streams, and deepen customer engagement, embedded finance could be the solution.

If you're considering added embedded financing to your product or service, find out how to assess the opportunity and align with the right partner to help you.

Product

Pipe Capital: A merchant-friendly cash advance model built to improve capital access for SMBs

Why Pipe? See what sets Pipe apart from other embedded finance partners

Why SOC 2 Compliance is a Must-Have for Your Capital Partner

3 steps to embed financing into your product or service

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Product

Why Pipe? See what sets Pipe apart from other embedded finance partners

Why SOC 2 Compliance is a Must-Have for Your Capital Partner

3 steps to embed financing into your product or service

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