Future-Proof Your Business with Embedded Lending Through a Payments CRM

What happens when merchant management and lending come together in one place?

During this on-demand quick fireside chat we’re breaking down how Business Capital is opening new doors for partners and merchants. In just 20 minutes, we’ll talk through how embedded lending creates new revenue opportunities, helps merchants access funding faster and strengthens long-term relationships.

We’ll also explore how a modern payments CRM like Merchant Central brings it all together, making it easier to surface opportunities, support merchants and grow your business.

What We’ll Chat About

• How Business Capital helps partners unlock a new revenue stream

• Why access to capital keeps merchants engaged and growing

• How a payments CRM manages financing opportunities on your behalf

• What this means for the future of partner growth

Pull up a chair and join the conversation.

Transcript

Hey, everyone. We're just gonna, I think, give it another thirty, forty seconds just to allow for others to join, and then we'll kick it off.

How's the weather in Dallas today, Jerry?

It is not sunny for the first time in a while, but, there is some much needed rain.

Okay. Yeah. Nice.

Before we go into a summer of sun and no clouds. Yeah. Yep.

Gotta get what you can.

Good. I guess we've got people joining, but waited a few seconds to let everyone join. Let's let's kick it off. So welcome everyone to our fireside webinar series where today Neil and I are going to be talking about business capital.

So my name is Jerry Rankowski. I'm the SVP and GM of NMI's Merchant Central Software Services division. So I've been with NMI for around ten years and most recently moved into the role overseeing the Merchant Central Business Unit. And I'll pass it off to Neil to introduce himself.

Hi, everybody. Neil Lesnack, residual specialist and solutions engineer here at NMI focused specifically on the Merchant Central platform.

Thanks for joining us today.

Great. Thanks, Neil. So first, before we kick it off, a few housekeeping notes. Just so everyone's aware, this session is going to be recorded and it will be sent to you tomorrow.

And then the other thing that I wanted to mention as well as this is this webinar is a part of our new fireside bingo series. So when you attend all of our twenty twenty six sessions live and stay until the end, you are entered for a chance to win a gift card. So before we dive into the good stuff, we wanted to kick it off with a quick poll.

So what would you buy if you came across some extra money?

I guess Neil while everyone's voting, I wanted to ask you first, what would you buy if you came across some extra money?

Yeah, thanks for asking. So I personally have had my eyes on a mirrorless camera for quite a while just for my hobby photography, but also to take with us to the trade shows to take pictures of us and the team and our partners and, you know, just have fun with. But how about you, Dre? What would you have what would you get if you had some extra cash coming your way?

Yeah, probably not as fun. I mean, I'm probably going to go with, you know, reinvesting it into a business, right? So one of my thoughts is maybe reinvested into some additional marketing or paid advertising to, you know, grow the business and grow the brand.

So I guess for the individuals who you know picked something fun, if you care to share in the chat what you'd buy, we'd love to kind of see that.

I don't see many people sharing, but let's maybe dive into what we're here for. So really just an introduction to business capital and let's talk about what business capital is. So Business Capital is an embedded embedded lending solution. It's powered by Paraffin, who's our partner. And really, this gives merchants pre approved working capital offers directly inside their existing merchant portal through Merchant Central or through email offers.

Now, how does this work? So offers are real offers are based on the last six months of sales volume history. The great part is that there are no credit checks required. And with our partner Paraffin loans are funded within one to two business days after they are approved.

Now in terms of repayment, that's also recalculated. The repayment is calculated based on a percentage of daily volumes, it is auto deducted directly from the merchant as well. So what type of problems does business capital solve? I mean in general it's cash flow gap issues for merchants, or for example inventory, you know merchants use it for equipment, for payroll, You know, capital really is there when merchants need it without needing to leave your ecosystem.

In terms of partner value, the value here is, you know, there is zero financial risk to you as the partner and really zero operational lift. And the best part is that, you know, commission is earned on every single loan that gets funded.

In terms of how to get started with Business Capital, you know, if you are a Merchant Central partner, it's pretty easy. It's just going to the manage tab on Merchant Central. You'll see a business capital pop up there. From there, it's really just, you know, viewing and accepting the terms, adding in any banking and adding in your banking information for commissions payouts, uploading a W nine.

From there, you'll see a screen of all of your eligible merchants where you can include or exclude merchants based on, whatever criteria you would like. And then from there, just pushing the button to launch. Once you launch it, what happens is merchants will start receiving offers within their Merchant Central portal or through emails automatically. So I guess, Neil, when partners first hear about business capital, what's the what's the thing that they should be most excited about?

Yeah. First and foremost, they can create a new passive revenue stream for their business with just a few clicks inside of Merchant Central. Right? So in addition to a new revenue stream, our partners can expect increased merchant growth and increased merchant retention.

And so Shopify did a study and found that thirty six percent of merchants I'm sorry. Merchants who have access to lending grow thirty six percent faster than merchants that don't have access to it. So merchant growth means increased sales volume, which translates into increased revenue for your business and trickles down to increased residuals for your agents.

Happier agents, happier partners and happier merchants.

It looks like we've actually reached our next question for the audience.

So let me click my next slide here.

Question is, are you currently offering lending and is it embedded? So if you're confused by what embedded means, just means is it already currently available inside of a platform that your merchants are using today?

Okay, we got some results rolling in here. We can see that.

Yeah, we got some results. It looks like so far, most are not offering Business Capital, but like to.

I guess the great news is for those that are currently not offering it and obviously wanted to offer it. The great news is that you can start generating additional revenue today. And like we mentioned before, it's simply with a couple of clicks of a button.

For the ones that are offering it, it is not embedded. One of the things we actually see is with an embedded experience, we actually see three to four times better acceptance rates for merchants just because merchants are logging into a trusted portal versus receiving emails, which everyone knows we receive a ton of spam emails these days.

Okay, so I know we've said Merchant Central a few times by now, and I'm sure, you know, and I just want to make sure that nobody's sitting around, you know, thinking what are these guys talking about? So just a quick clarifying on the Merchant Central name. If Merchant Central does not sound familiar to you, it's because you might know it as Iris CRM or MRM. So Iris CRM is Merchant Central.

It is the same platform. It has been rebranded. It's now Merchant Central, the payment CRM. So why does business capital matter for partners?

Really, capital turns Merchant Central into a revenue generating tool. So this means that you earn commission on funded loans with no added extra workload.

And some of the real merchant use cases that we're seeing so far, really capital goes to work pretty fast. You know, on average twenty five percent of merchants are using it for inventory purchases. What we're seeing is about nineteen percent are using it for marketing expense to, know, grow their grow their product or their platform. And then we're also seeing usage across business expansion, you know, payroll and hiring, and things like rent and remodeling, especially in brick and mortar locations or places like restaurants.

In terms of retention with Business Capital, when merchants can access funding through you as the partner, they have less reason to really look elsewhere. And what we see is embedding financial tools like this, like Business Capital, really strengthens that relationship with your merchants just beyond payments.

So Neil, I guess how do partners earn commission on every funded loan? And then what does the loan repayment look like for merchants?

Yeah. When a loan is accepted, the merchant will need to repay the amount that they borrow plus a capital fee that Paraffin charges. On average, we're seeing that is about fifteen point three percent of the amount borrowed. So our partners receive a commission of that of that capital fee that Parafin is charging. So what this means is even a small number of revenue or a small number of merchants is gonna turn into real revenue that could be incremental but recurring. Right?

So as far as repayment goes, unlike traditional lending, business capital is sales based, sales based underwriting, and sales based repayment, which means that the repayment flexes with the merchant's cash flow. So on a day where there's more sales volume, they're gonna repay more of their loan versus a day where there's less sales volume. So repayment really ebbs and flows along with your business.

Yeah. So basically, it's it's lending that doesn't necessarily punish a slow Tuesday for merchants, for example, which, know, I definitely like that.

Now, here's the question I think everyone's really thinking about, Neil. What does this look like in the form of recurring revenue over time?

Yeah, of course, recurring revenue. So what we've actually found with these non predatory lending terms through Paraffin, you know, low origination fee, fair favorable repayment terms, and flexible repayment, we're finding that partners or merchants that, have paid off their loans are very, very, frequently reusing it. Right? So we've actually seen that eighty eight percent of our merchants who have repaid their first loan have gone and taken a second. So the best part of that is our partners who are earning a commission on this will get the same commission on the first loan as they do for every additional loan, which is not something that other vendors offer.

Awesome. Cool. Thanks for that, Neil. Alright. Last poll, and I promise this will be the last one.

What is most enticing to you about offering business capital to your merchants?

It looks like we've got a few coming in, all of the above, managing it through existing technology as well.

Definitely appealing an embedded environment.

Great. Looks like I think that has all the votes. So it looks like majority is all of the above. Yeah. I mean, new revenue streams, happier merchants, increased retention, and then obviously managing it through existing technology like Merchant Central, for example.

So I guess Neil, I wanted to have you tell the story of this particular partner that we have just because I think it really shows what skeptical but willing to try can turn into pretty quickly.

Definitely. Yep. So we had a partner that was initially skeptical about this, didn't really see that there was a need for it, for their merchants.

So what they did was they took a small sample size of their merchants and sent out some initial offers just to that small sample size. And what happened was the very day that they enabled and sent those out, a merchant accepted a loan, which translates to instant revenue for our partner. Right? So that very merchant, you can see on this slide here, they accepted their first offer on December third and then repaid it on a couple weeks later.

And now they've actually made it to their third loan and have actually accepted their third loan. Right? So this is now recurring revenue for this partner who was initially skeptical about there being a need for it. Right?

And, yeah, you know, it just really kinda shows, you know, that this is not just something that people will use one time. It's something that they will find very attractive and and continue to use.

Yeah. You know, that's great. And that's the thing. Right, Neil? It's not necessarily a massive rollout. It was really more of a small test. They saw a same day result.

And they continue using business capital. So let's talk about what it looks like at scale. So in terms of scale, what we wanted to show you next is really kind of what potential revenue might look like for partners of different sizes, right? So these figures that we have here on the screen, they're really based across what we see across all of our merchants on Merchant Central, you know, which is that the average loan amount across our merchants is around fifty thousand dollars And the average origination fee is roughly around fifteen point three percent.

Although that can, you know, fluctuate between seven and seventeen percent with our partner Paraffin. Now, with a one percent monthly merchant loan acceptance rate, you know, if you're a partner with around one thousand eligible merchants, you know, we're talking about somewhere in the range of an additional ninety to one hundred thousand dollars of revenue. Now, you know, for partners with around three thousand mids that are eligible, you know, we're talking about potentially two hundred and seventy five thousand of additional revenue and for any partners that have around five thousand eligible merchants, we're talking about four hundred and fifty nine thousand or more in potential revenue.

Now, when we do talk about these projections, these are really just year one projections, right? As Neil mentioned, merchants that do take out their first loan on average about eighty five to eighty eighty eight percent of them take out a second or a third loan.

So Paraffin estimates that these acceptance rates continue to go up for years two and three, where year three can be double or more for the potential revenue growth of what year one would be.

So I know you know we've thrown a lot at you today in terms of in terms of business capital. Now it's your turn as the audience. Let's open it up to Q and A. If you can drop your questions in the chat and we'll get through as many of them as we can.

So I don't know if we've had any submitted questions at the moment.

Oh there's some messages here in the chat from Dan.

Looking for Klarna Afterpay. Yeah, that's like pay as you go, right?

So yeah, I mean, in terms of offering embedded lending in the customer end experience, I mean, that's something that we're definitely hearing from a lot of our partners in terms of, you know, how do we provide, you know, how do we provide an API to be able to offer that through our customers kind of end experience? That is something that our product team is currently looking at. I know, you know, we recently released Business Capital in terms of an embedded solution on both the Merchant Central side, and we're also releasing it on our gateway. But we are looking at how do we offer it through an API so that our partners can embed it directly into their solution. So more to come on that, we just don't have any estimated timelines in terms of that at the moment.

Look Neil looks like we have another question in the Q and A.

I don't know if you want to take that one but is commission paid out once the loan is accepted or repaid?

Oh yeah the commission does get paid out when the loan is accepted.

It's not a matter of like when does it get repaid. As soon as the loan goes out, you're gonna get your commission from it.

Yeah, the moment, you know, like we mentioned earlier, it's about one to two day funding time.

The moment the loan gets funded to the merchant, that's when the commission is paid out to the partner.

Yep, do we have any other questions coming in through the Q and A?

So it looks like we had another question, Neil, and I might, you know, I might shoot this one over to you just because I know you've worked in residuals on the Merchant Central side for some time. But is there a way to share commissions with my agents?

Yeah. If you wanted to share the commission with your agents, there's a report dashboard when you enable Business Capital that will be available. And it's gonna show you all of the offers that have been sent out and then all of the offers that have been accepted, you know, in a table format. So you can just take that table and upload it right into your residuals dashboard.

Right? And if you wanted to say, like, pay out fifty dollars every time somebody accepts a loan to your agent, we could set that up. Know, whatever the terms are that you would wanna be able to set up for your agents, you would just wanna you'd have to figure that out and then just reach out to to us, you know, your normal support channels. And and if you need help with setting up that in your residual mapping, we can definitely help you out there, jump on a call and and and get that set up for you.

Awesome. Thanks for handling that, O'Neil. I think we have another one, which is, am I responsible for any collections from the merchant? So the best part here is that no. Our partners are not responsible financially for collecting or underwriting this. This is completely done by our partner Paraffin through like we mentioned earlier, it's the six months of anonymized data that we sent in terms of sales volume.

And then it's Paraffin who will be underwriting the account, who will also be responsible for collecting the repayment on the account.

So Dan mentioned I'd like to see our CRM data and use an NMI API to generate merchant offers. I don't want our merchants to have to log into another third party CRM. So I think Dan, it's similar to what we mentioned earlier. Our product team is exploring the potential of being able to offer an API to be able to send in data and to be able to send that over to Paraffin to then have loans pre approved and offered to merchants. So we'll definitely follow-up on that and definitely get back to you when we talk to our product team around that.

Oh, another question there. So are there any disallowed or restricted merchant types who are not eligible for this service? So Paraffin does have a list that we can definitely share with you. I know that at the end of this webinar, you are going to be receiving an email with additional resources around that.

And Dan, we could definitely share more information on that. I don't have that list off the top at the moment. But there are definitely, you know, merchant types and certain merchant category codes that are restricted and not eligible for this service. And then Paraffin determines which merchants are eligible.

So once you do launch the Business Capital program, Paraffin will show you which merchants were eligible for this, which merchants were not eligible. And then out of the eligible merchants, you can then either include or exclude those merchants from receiving offers.

Good. Looks like did we have another question?

No, I think that was Good.

Looks like we are at time. So we've got one more thing before we let you go. And this one, you know, obviously it's worth staying for if you're playing the fireside bingo. So register for our next webinar in the series, which will be around merchant management automation. The link is going to be dropped in the chat now.

And as I mentioned, you'll also be receiving an email with additional resources and information around the business capital offering. So thank you everyone for joining the fireside webinar series and have a great rest of your Wednesday.

Looking forward to seeing you on the next one.

Thanks everybody.