What is Direct-to-Business Lending?

Direct-to-business lending refers to credit products that financial institutions provide directly to businesses and SMBs through their own channels, such as the bank branch, website or app. These products include working capital loans, equipment financing, business lines of credit, invoice factoring, and term loans. Direct-to-business lending enables banks to deliver financing solutions to businesses, whether for purchasing inventory, managing cash flow gaps, acquiring equipment, or funding growth initiatives.

Direct-to-business digital lending entails lending to businesses via the bank’s digital channels only, such as their bank app or website,  rather than requiring in-person applications or branch visits while meeting business expectations for fast approvals and seamless digital experiences.

Banks that successfully implement direct-to-business lending programs position themselves to capture a share of the small business lending market projected to reach $7.22 trillion globally by 2032. 

What Types of Business Financing Products Do Banks Offer Through Direct Channels?

Banks provide multiple business financing products through direct channels that address different operational and growth needs. Working capital loans deliver lump-sum funding ranging from $5,000 to $400,000 for daily operations and inventory with repayment terms up to 36 months. Business lines of credit offer revolving credit between $6,000 and $250,000 that businesses draw as needed, paying interest only on utilized amounts. Equipment financing enables businesses to acquire machinery or technology through loans or leases secured by the purchased assets themselves. Invoice factoring provides immediate cash advances against unpaid invoices, typically 80% to 90% of invoice value, while the lender manages collection. Term loans support one-time investments with fixed-sum financing repaid over short periods under one year, medium periods of one to five years, or long periods exceeding ten years. These products increasingly reach businesses through API-first platforms embedded directly within accounting software, ecommerce platforms, and enterprise resource planning systems where businesses already manage operations.

How Does Business Lending Differ From Consumer Lending?

Business lending and consumer lending employ fundamentally different approaches to underwriting, risk assessment, and channel deployment. Underwriting for business loans relies on alternative data including cash flow patterns, accounts receivable quality, sales data, and supply chain metrics rather than focusing primarily on personal credit scores, enabling banks to serve businesses with limited credit history. Risk assessment evaluates business revenue, asset quality, and invoice strength with higher tolerance for cyclical business patterns, often securing loans with collateral like equipment or receivables rather than requiring primarily personal guarantees. Deployment channels for business lending emphasize embedded integration within ecommerce platforms, software-as-a-service applications, and business marketplace connections that enable real-time financing offers during procurement or sales processes. Business digital lending platforms also prioritize speed with funding occurring within minutes compared to the weeks-long timelines common in traditional business banking, addressing the time-sensitive capital needs that businesses face when managing inventory cycles or unexpected opportunities.

What Technology Infrastructure Do Banks Need for Direct-to-Business Lending?

Implementing direct-to-business lending requires banks to deploy cloud-native loan origination systems with AI-powered real-time credit decisioning capabilities that can process a huge volume of data points including employment records, financial behaviors, and transaction patterns. Integration capabilities must extend to identity verification, income validation, compliance checks, and connections to credit bureaus and open banking through API architectures. Alternative data integration represents a critical requirement as banks need access to accounts receivable and accounts payable data, cash flow information, and transaction history that traditional credit reports do not capture. Platforms must support digitized documentation with electronic signatures, rules-based automation for business onboarding and fraud detection, and omnichannel engagement through mobile applications, web portals, and SMS communication. Configurable workflows enable banks to tailor approval processes, credit policies, and product terms to different business segments without requiring custom development.

What Direct-to-Business Lending Trends Will Shape Banking in 2026?

Direct-to-business lending in 2026 continues the trajectory of strong growth observed through 2025 where new small business lending increased 7.5% in Q2 2025 compared to both the prior quarter and year-ago period despite banks maintaining tight credit standards for thirteen consecutive quarters. The embedded lending segment specifically shows explosive expansion with U.S. embedded lending projected to grow from $6.35 billion in 2024 to $23.31 billion by 2031, driven by integration of financing options directly into business software, accounting platforms, and procurement systems where businesses make purchasing decisions. AI integration surges with nearly 60% of small and medium businesses now using AI tools, enabling lenders to deliver faster underwriting with real-time data analysis while managing risk through automated compliance checks and fraud detection. The supply-demand gap persists as business loan applications remain high while approval rates at large banks stay between 13% and 44%, creating opportunities for banks with digital-first platforms to capture market share from institutions hampered by legacy processes. 

How Does Jifiti Enable Banks to Launch Direct-to-Business Lending Programs?

Jifiti provides financial institutions with a white-labeled lending platform specifically designed for business financing that supports working capital loans, equipment financing, business lines of credit, and invoice factoring under a single modular infrastructure. The platform enables banks to deploy business lending products through their own digital channels including mobile banking apps and websites, enabling banks to serve existing business customers with pre-approved loan offers, as well as new-to-bank businesses with attractive, digitally-accessible loan options. The platform also enables banks to embed financing options into third-party business environments like ecommerce platforms, enterprise resource planning systems, and industry-specific software that businesses use daily. Banks can select specific platform components that address gaps in their existing technology infrastructure rather than implementing complete system replacements, reducing deployment timelines and integration complexity. Jifiti’s orchestration layer connects to the specialized data sources necessary for business lending including accounts receivable systems, accounts payable platforms, and alternative credit data providers, while maintaining the bank’s control over credit policies and decisioning rules. The platform handles the technical complexity of real-time approvals, automated documentation, and multi-party fund disbursement that business lending requires, enabling banks to compete with fintech lenders while leveraging their existing balance sheets, regulatory relationships, and business customer bases.

Key Takeaways

• Direct-to-business lending market shows strong growth with new small business lending up 7.5% in Q2 2025 and the global market projected to reach $7.22 trillion by 2032, driven by businesses demanding fast digital access to capital.
• Banks need cloud-native loan origination systems with AI-powered decisioning, alternative data integration from accounts receivable and cash flow sources, and API connections to third-party services to compete effectively in business lending.
• Business lending differs fundamentally from consumer lending by using alternative data like cash flow and receivables for underwriting, embedding financing within business software rather than consumer apps, and providing immediate approvals.