Your customers keep asking whether you can help them get funded. Your product team wants to say yes. Then the real argument starts: build the lending stack yourself, license white-label software and run it under your brand, or plug into a partner that already has lenders, licenses and servicing in place.
This guide gives software companies, agencies and brokers a way to settle that argument with numbers and contracts rather than demos. If you need background first, read our explainers on what embedded finance is and how embedded lending works.
What do build, buy and partner mean in lending?
Building means you own the application flow, the credit decision, the lender or bank relationships, the compliance program and the records. Buying means you license finished lending software and run it under your brand. Partnering means a provider supplies the lenders and the regulated work while you present the offer. Most real programs mix the three.
- Build. You hire engineers, negotiate with a bank or capital provider, write a credit policy and staff compliance. Block went furthest: it obtained FDIC deposit insurance in 2020 for Square Financial Services, an industrial bank that, in the FDIC's words, would "originate commercial loans to merchants that process card transactions through Square, Inc.'s payments system."
- Buy (license white-label software). You get a branded origination and servicing system. You usually still bring your own capital or lenders, and much of the compliance stays with you.
- Partner (embed a provider's program). The provider and its banks underwrite, fund and service. Stripe's Capital for platforms documentation says "Stripe and its financial partners manage eligibility, underwriting, pricing, funding, servicing, and collections."
Key takeaway: Build vs buy is really a question of which layers you own: the screen, the data, the credit decision, the capital, the compliance program and the ledger. You can own the first two without owning the rest.
What does it really cost to build lending in-house?
The people alone run to seven figures a year before you fund a single loan, and people are the cheaper part. Capital, bank relationships and compliance are what make building expensive.
Start with the engineers. The Bureau of Labor Statistics reports that the median annual wage for software developers was $135,980 in May 2025. Wages are not the full cost of an employee. The BLS Employer Costs for Employee Compensation release for June 2026 found that wages and salaries were 70.0% of private industry employer compensation costs, with benefits making up the other 30.0%.
Here is the arithmetic for a hypothetical team of six engineers paid the median:
- Wages: 6 × $135,980 = $815,880 a year
- Fully loaded at the BLS private industry average: $815,880 ÷ 0.70 = about $1,165,500 a year
That excludes a product manager, a compliance lead, a credit analyst, recruiting, software, audits and legal review. It also excludes the loans themselves. A platform that builds still needs a bank or capital provider to fund the receivables, or its own balance sheet.
How much volume does a build need to pay for itself?
Turn the team cost into a funded volume target. Divide the annual cost by the net margin you keep on each funded dollar after losses and funding costs:
| Net margin you keep per funded dollar | Annual funded volume needed to cover $1,165,500 |
|---|---|
| 1 point (1%) | $116.6 million |
| 2 points (2%) | $58.3 million |
| 4 points (4%) | $29.1 million |
Plug in your own margin and your realistic volume. A platform whose users might take $20 million a year of financing would need to keep about 5.8 cents of every funded dollar ($1,165,500 ÷ $20,000,000) just to pay six engineers. If that margin is not plausible after credit losses, building does not pay back on economics alone.
Key takeaway: The code is the cheap part of lending. The expensive parts are the capital, the bank relationship, the compliance staff and the losses, and they last as long as the program does.
What do you get, and give up, when you buy or partner?
Buying or partnering gets you speed, an existing capital source and someone else's compliance work. In exchange you accept limits on control, a smaller share of the economics and dependence on a vendor. Public documents show what those limits look like in practice.
- Control of the flow. Stripe requires that "connected accounts must accept their offer on a Stripe-hosted Capital page or an embedded component," whichever integration a platform chooses. You can style the experience, but the acceptance step is the provider's.
- Concentration on one partner. Toast's Form 10-K for fiscal 2025 says of its lending program, "We do not currently have partnerships with other financial institutions for such loans." A single bank partner is a single point of failure.
- Risk you may not expect. A partner model is not automatically risk-free. Toast markets and services its bank partner's loans and must buy back certain bad loans up to 15% of each quarter's original principal, so it says it is "subject to credit risk" on them. Stripe, by contrast, says platforms are not liable for credit losses on Stripe-branded offers.
- Economics. Revenue shares and fees reduce what you keep. Providers rarely publish their splits, so treat every number in a sales deck as a term to put in the contract.
A seven-question framework for the decision
Answer seven questions with your product, engineering, finance and legal leads in the room. If the honest answer to the first four is not a clear yes, partner or buy now and revisit later.
- Is lending your core product or a feature? If customers choose you for something else, owning the lending stack rarely pays back.
- Can you reach the funded volume your margin requires? Use the table above with your own numbers, not a vendor's.
- Can you fund the loans? Software without capital is an empty storefront. You need a bank, a credit facility or your own balance sheet.
- Can you carry compliance permanently? That means state disclosure and registration rules, sanctions and identity checks, fair lending and complaint handling, with staff to keep them current.
- How fast do you need to launch? A build takes far longer than integrating an existing program, and your users will find financing elsewhere in the meantime.
- Which control is a must-have? Branding and placement are usually available through partners. Custom pricing, custom underwriting and holding loans usually are not.
- What happens if the vendor fails or you outgrow it? If no partner offers data portability and clear exit terms, that weighs toward building more yourself.
Run the exercise twice: once for today and once for three years out. If the future answer points toward building, pick a partner now whose contract lets you take your data and customers with you.
Who owns compliance in each model?
When you build, nearly all lending compliance is yours. When you license software, much of it usually still is. When you partner, the provider and its banks carry most lending duties, while you remain responsible for how you market the product and handle data. Get each duty in writing.
| Obligation | Build | Buy software | Partner |
|---|---|---|---|
| Borrower cost disclosures under state law | You, as provider | Usually you | Usually the provider |
| State broker registration where required | Possibly you | Possibly you | Possibly you, depending on your role |
| Identity and anti-money-laundering checks | You or your bank | Shared | Provider or its bank |
| Section 1071 data reporting, once in force | You, if covered | You, if covered | The covered lender |
| Marketing claims | You | You | You |
| Data privacy and security | You | Shared | Shared |
The broker row is the one platforms miss. Texas's Chapter 398, added by HB 700 and effective September 1, 2025, "requires providers and brokers to register with the OCCC by December 31, 2026," according to the OCCC's adopted rules. New York's commercial financing regulation sets duties for "financers and brokers." California's disclosure rules have applied since December 9, 2022. The CFPB's revised Section 1071 rule has a compliance date of January 1, 2028. Our embedded lending guide summarizes each rule.
Banks that sponsor partner programs also pass requirements down to you. The Interagency Guidance on Third-Party Relationships of June 7, 2023 says a bank's use of third parties "does not diminish its responsibility" to comply with the law, including consumer protection law, so expect audits of your marketing and complaints.
This is a general overview, not legal advice. Confirm your obligations with counsel before launch.
How to evaluate a white-label or partner provider
A strong provider can tell you, in writing, which institution makes each loan, who keeps the records, which duties it carries and what you get if you leave. Vague answers on any of those are a warning, not a negotiating detail.
The 2024 Synapse failure is why the records question comes first. Synapse sat between fintech apps and their partner banks. After its April 2024 bankruptcy filing, the banks found they held less money than Synapse's records showed, "a shortfall of between $60 and $90 million," according to the CFPB. In June 2024 the Federal Reserve took enforcement action against Synapse partner Evolve Bank & Trust for lacking an effective risk management framework for its fintech partnerships. Synapse was about deposits, but the lesson applies to lending.
Ask every provider:
- Which bank or lender issues each product, and who signs the agreement with the borrower?
- Who keeps the system of record for applications, offers, balances and repayments, and how often is it reconciled with the bank?
- Which disclosures, registrations and checks does the provider handle, listed in the contract?
- Who carries credit losses, and is there any buyback or first-loss obligation like the one in Toast's 10-K?
- How is the borrower's cost shown? A flat fee should come with an annualized comparison. Our factor rate calculator shows why.
- What data can you see and keep, during the contract and after it ends?
- How are you paid, and are setup fees, minimums or exclusivity clauses disclosed up front?
- What are the exit terms: notice period, transition help and data export?
Key takeaway: The best provider is the one whose answers you could repeat to a regulator, a customer and your board without hedging.
The bottom line
For most software platforms and agencies, partnering or licensing first is the rational choice, with a contract that keeps the option to build later. Building end to end makes sense for the small group of companies where lending is the core product, capital is available and the volume math in this guide clears comfortably.
A practical next step: put the seven questions and the volume table in front of your leadership team, then take your top provider candidates through the checklist above.
Loanistry is owned by Trulli, which runs a lending platform for brokers, agencies and software companies: trulli.ai.
Sources
- U.S. Bureau of Labor Statistics: Software Developers, Occupational Outlook Handbook, checked November 2026
- U.S. Bureau of Labor Statistics: Employer Costs for Employee Compensation, June 2026, checked November 2026
- FDIC: Deposit insurance approval for Square Financial Services, March 2020, checked November 2026
- Stripe: How Capital for platforms works, checked November 2026
- Toast, Inc.: Form 10-K for fiscal year 2025 (SEC), checked November 2026
- Texas OCCC: Commercial sales-based financing rules adoption, 2026, checked November 2026
- New York DFS: Superintendent adopts updated regulation for commercial financing disclosures, February 2023, checked November 2026
- California DFPI: Commercial financing disclosure regulations effective December 9, 2022, checked November 2026
- CFPB: Small business lending rulemaking, checked November 2026
- Federal Reserve: SR 23-4, Interagency Guidance on Third-Party Relationships: Risk Management, checked November 2026
- CFPB: Synapse Financial Technologies, Inc. enforcement action, checked November 2026
- Federal Reserve: Enforcement action against Evolve Bancorp and Evolve Bank & Trust, June 2024, checked November 2026