Uber Partners with Pipe for Instant Restaurant Financing
Uber has partnered with Pipe to offer a unique financing solution for restaurant partners. This move, using a Merchant Cash Advance structure, is tied to the restaurants' ongoing sales and indicates a shift in small business lending.
The growth of embedded finance, where financial services are integrated into non-financial platforms, is pushing traditional banks to innovate or risk being left behind. Tech platforms like Uber and Shopify are leading this change, creating powerful ecosystems that increase value to merchants and reduce churn.
Uber's partnership with Pipe is a prime example. Capital is offered directly through the Uber Eats Manager app, with approval decisions nearly instant and funds arriving within 24 hours. This speed and accessibility are made possible by using real-time sales data, a departure from traditional bank loans.
Shopify has also expanded its capital services, providing over $5.1 billion to its merchants since 2016. It has expanded to Canada, the UK, and Australia, with more markets likely to follow. Square has extended over $24.5 billion globally, demonstrating the potential of embedded finance in transforming the multi-trillion-dollar small business lending market.
However, the opportunity is not limited to developed markets. There's a $5.2 trillion annual financing gap for small businesses in developing countries. Data-driven platform lending, as seen in Uber and Shopify's models, can help fill this gap.
Uber's partnership with Pipe signals a significant shift in small business lending. By leveraging embedded finance, these tech platforms are offering faster, more accessible funding than traditional bank loans. As seen with Shopify and Square, this model can be scaled and expanded to new markets, including developing countries with large financing gaps. Traditional banks must innovate and partner to remain competitive in this evolving landscape.
