Pre-Approved vs. Pre-Qualified: What’s the difference and which is best for your embedded finance product?

Embedded finance can unlock tremendous potential for software companies, enabling them to provide value-added services that deepen customer engagement and create new revenue streams. By leveraging live data, financing offers can be generated automatically, making funds available for your small business customers without the need for extensive applications and waiting periods. However, not all embedded lending solutions are created equal—especially when it comes to funding offers labeled as “pre-approved” versus “pre-qualified.” For software companies, understanding the difference is essential to ensuring your platform delivers the best customer experience while maximizing the potential benefits for your business.

Pre-qualified vs. Pre-approved: The key differences for embedded finance

One of the defining differences between pre-qualified and pre-approved is the percentage of offers that go on to be fully approved. To be considered pre-approved, offers need to be much more finalized

the only issues that should lead to a disqualification should be failed fraud or compliance checks. 

As you can see, providers with pre-approved offers may require a bit more data up front (though this should be behind the scenes and seamless from a customer perspective) but leads to less customer disappointment and more final offers. By utilizing more up-front data, offers can be stronger and more customized, based on a better understanding of business health.

Pre-approved funding allows SMBs to access capital quickly, which is crucial for responding to opportunities or addressing urgent needs. By significantly reducing friction in the application process, pre-approval ensures businesses spend less time waiting and more time growing.

A pre-approved offer signals that a platform has already vetted the business and determined its eligibility. This gives SMBs the confidence to move forward without worrying about unexpected denials or changes to terms.

Consider a small e-commerce business that needs to restock inventory after an unexpected surge in demand. With pre-approved funding, they can act immediately, ensuring they don’t lose out on sales opportunities. Pre-approved offers enable SMBs to navigate challenges and seize opportunities without financial uncertainty. It also gives them confidence that their offer will hold up, reducing the need to apply for funding from a competitor while waiting for final approval.

Why pre-approval is a competitive advantage for software companies

, with a unique underwriting approach that allows us to create pre-approved offers for our partners’ customers without relying on credit checks. Our reliable, unbiased offers result in outstanding customer satisfaction scores with an average NPS of 77. 

Pre-approved funding is more than a convenience—it’s a strategic advantage for software companies embracing embedded finance. For SMBs, it means faster, more reliable access to the capital they need to thrive. For software platforms, it translates to higher engagement, stronger revenue opportunities, and a significant edge in a competitive market.

If you’re considering adding embedded capital to your platform, make pre-approved funding a priority. It’s a win-win for your customers and your business.

Compare pre-qualified and pre-approved financing offers and decide which one is better for your embedded capital product

Whether you're looking for working capital for your business, or selecting an embedded financing partner for your software platform, make sure you know the difference between pre-qualified and pre-approved offers.

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