Q4 2025 earnings are in. For the first time, all three major platform lenders reported simultaneously, and the combined picture is no longer experimental. These are scaled lending operations built on transaction data your underwriting team will never see.

Shopify Capital purchased $4.2 billion in merchant cash advances and loans in 2025, up 40% from $3 billion in 2024. Its net loan portfolio reached $1.8 billion, with 91.9% of loans current as of December 31, compared with 93.7% a year earlier.¹²

PayPal grew its merchant loan portfolio to $1.8 billion net (up 23% YoY), driven by PayPal Business Loans and PayPal Working Capital. The company has surpassed $30 billion in cumulative global loan originations since 2013. Current loans stood at 89.8%, down from 90.4% a year prior.³⁴

Block (Square Loans) held $708.5 million in commercial loans for sale at year-end 2025, up 75% from $404.8 million in 2024. Square Loans originated $1.54 billion in Q4 alone, bringing the 2024 full-year total to $5.7 billion. Repayment is automatic: a fixed percentage of every card transaction a seller processes.⁵⁶

Why This Matters Now

Q4 2025 marked the first earnings season where Shopify, PayPal, and Block all reported platform lending metrics in the same reporting period. Individually, each looked like a fintech side project. Combined, $6.7 billion in originated merchant funding from three platforms represents a parallel lending system that operates entirely outside the broker channel, requires no loan application, and underwrites using data no traditional lender can access.

Shopify Capital does not accept applications. Its underwriting model uses machine learning to analyze merchant transaction data, including sales volume, payment disputes, chargebacks, customer engagement patterns, and store performance metrics.⁷ The system identifies eligible merchants and presents them with pre-qualified offers. There is no document collection, no financial statement review, no bank statement analysis. The platform already has the data.

PayPal Working Capital operates on the same principle. Merchants with a PayPal Business or Premier account and sufficient processing history receive offers based entirely on their PayPal transaction data.⁴ Square Loans sizes each advance to less than 20% of a seller's expected annual Square gross payment volume, with repayment automatically deducted as a fixed percentage of every card transaction.⁵

The competitive advantage is structural. These platforms do not need to request financial data because they generate it. Every transaction, every refund, every chargeback, every seasonal pattern is visible in real time. Traditional lenders and MCA providers request bank statements that are days or weeks old. Platform lenders see the transaction stream as it happens.

The combined numbers tell the story:

For context, PYMNTS research indicates that nearly three-quarters of small-business owners now bypass traditional banks entirely when seeking financing.⁸ That demand is being captured by platforms that offer capital at the point of commerce, with no separate application process. Enova's small-business lending grew 48% to $1.6 billion in Q4. OppFi reached a 79% auto-approval rate. Industry estimates for the broader embedded B2B finance market vary widely, with figures ranging from $4.1 trillion currently to projections exceeding $15 trillion by 2030, depending on the source and scope of what counts as "embedded."⁹ Regardless of which projection is closest, the directional trend is clear: capital is moving to the point of commerce.

All three platforms show delinquencies ticking upward. Shopify Capital's current loan rate fell from 93.7% to 91.9% year-over-year. PayPal's merchant loan current rate slipped from 90.4% to 89.8%. Shopify's allowance for credit losses on loans rose to $160 million from $110 million; PayPal's increased to $170 million from $113 million.¹³

The question is whether these increases reflect deteriorating credit quality or the math of rapid portfolio growth. The answer is not straightforward, and the distinction matters operationally. Shopify's originations grew 40% while its current rate dropped 1.8 percentage points. If you assume the new originations carry the same risk profile as the existing book, a 40% growth rate should dilute delinquencies, not increase them. The fact that current rates fell despite volume growth suggests the marginal borrower in 2025 was weaker than the marginal borrower in 2024. Shopify's allowance for credit losses on loans jumped 45% ($110M to $160M) against 40% origination growth, meaning loss provisioning outpaced new lending.¹

PayPal's numbers tell a similar story at a smaller scale. Portfolio growth of 23% coincided with a 50% increase in allowance for credit losses ($113M to $170M). That provisioning growth rate, more than double the portfolio growth rate, indicates PayPal's internal models are pricing in meaningful credit deterioration, not just scaling reserves proportionally.³

For MCA providers watching these numbers, the operationally important question is what happens during a downturn. Platform lenders can throttle originations instantly by adjusting their algorithms. They can reduce exposure by lowering advance sizes or tightening eligibility thresholds, all without changing a single contractual relationship. Traditional lenders need weeks to adjust underwriting criteria. Platform lenders need a model update. But the same mechanism that makes throttling easy also means these portfolios have never been tested through a full credit cycle at this scale. A 1.8-point drop in current rates during a period of economic expansion is worth watching closely.

A merchant processing $500,000 annually on Shopify already has a capital offer waiting in their dashboard. No outreach required, no application, no document request. The offer appears based on the merchant's actual transaction performance, sized to a repayable amount, with repayment automatically deducted from future sales.

MCA providers competing for that same merchant must first find them, then convince them to apply, then collect and verify bank statements, then make an offer, then set up payment collection. By the time the MCA provider sends a term sheet, the merchant may have already accepted and funded through Shopify Capital days ago.

The competitive threat is not that platform lenders offer better rates. The threat is that they eliminate the steps where brokers and funders add value: sourcing, document collection, verification, and payment setup. When the platform already has the merchant relationship and the transaction data, those steps become overhead the merchant does not need to pay for.

Platform lenders operate with three data advantages that traditional lenders cannot replicate:

What platforms do not have is entity-level verification. They know a merchant's cash flow, but not necessarily whether the business is in good standing with its formation state, whether there are existing UCC liens from other creditors, or whether the entity is authorized to do business across multiple jurisdictions. Transaction data tells you how a business is performing. Entity data tells you whether the business is legitimate and unencumbered.

The merchants who need capital beyond what their platform offers, those growing faster than platform algorithms will fund, those operating across multiple platforms, those needing equipment financing or real estate-backed loans, will still need alternative lenders. The opportunity shifts from competing on speed of application processing to competing on three things platforms cannot do:

Shopify Capital currently operates in eight countries. PayPal's merchant lending has crossed $30 billion in cumulative originations globally.⁴ At this scale, regulatory attention becomes a question of when, not whether. The embedded B2B finance market is projected to grow from $4.1 trillion to $15.6 trillion by 2030.⁹

State-level rate cap efforts are already accelerating. The American Fintech Council now supports 36% rate cap legislation in multiple states, with Iowa and West Virginia among those actively considering such bills.¹⁰ Platform lenders structure their products as merchant cash advances or revenue-based financing rather than loans, which may exempt them from some state lending laws. But as origination volumes grow into the billions, that structural distinction will attract closer examination.

For alternative lenders, the regulatory uncertainty cuts both ways. Tighter oversight of platform lending could slow the competitive threat. But if platform lenders are brought under the same regulatory frameworks as traditional lenders, the compliance infrastructure they build could make them even harder to compete against at scale.

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The American Fintech Council, representing buy-now-pay-later firms like Affirm and earned wage access providers including DailyPay, is backing 36% APR rate cap legislation in multiple states. Iowa and West Virginia are actively considering bills. The Military Lending Act already caps rates at 36% for active-duty service members, but congressional attempts to extend that cap to all consumers have repeatedly failed. The campaign has now moved to state legislatures. For MCA and high-rate lenders, every state that passes a cap pushes demand toward products structured outside traditional lending frameworks, while tightening the compliance requirements for those that remain.

Warburg Pincus, which acquired Exeter Finance from Blackstone in 2024, is reportedly exploring a sale that could value the non-prime auto lender at more than $2.5 billion, according to Bloomberg. Exeter manages a loan portfolio exceeding $7 billion and specializes in indirect auto lending to near-prime and non-prime borrowers. Warburg Pincus closed a $3 billion Financial Services Fund in January 2026. The potential sale signals continued PE appetite for specialty lending assets, even as delinquency rates in non-prime auto have ticked upward across the sector.

A proposed class action lawsuit was filed against Figure Lending LLC on February 19 in the U.S. District Court for the Western District of North Carolina. The suit alleges the company failed to protect nearly 967,200 customer accounts from a cyberattack attributed to the ShinyHunters group. According to the complaint, the attackers used voice phishing techniques to target employees in January 2026, exfiltrating names, phone numbers, addresses, email addresses, and dates of birth. The stolen data was allegedly leaked on February 13 after Figure reportedly did not pay a ransom demand. Figure, described in the lawsuit as the nation's largest non-bank provider of home equity lines of credit, reportedly did not notify affected individuals until February 24. For any lender handling sensitive borrower data, the incident underscores that social engineering attacks targeting employees remain among the most effective breach vectors.

Federal banking regulators and Treasury Department officials are preparing changes to bank liquidity requirements, arguing current rules restrict lending and failed to protect institutions during recent crises. Treasury's under secretary for domestic finance proposed allowing banks to count collateral placed at the Federal Reserve's discount window toward their liquidity requirements. A separate final rule, effective April 1, 2026, reduces capital requirements for banks engaging in U.S. Treasury market intermediation. Federal Reserve Vice Chair for Supervision Michelle Bowman has also previewed capital reforms that would reduce requirements for large banks by a small amount and produce slightly larger reductions for smaller banks. If these changes increase bank lending appetite, alternative lenders may face more competition from traditional banks on mid-market deals.

Fintech company TomoCredit, which counts Mastercard and Morgan Stanley among its investors, filed a defamation and trade libel lawsuit on March 3 in Illinois Northern District Court against Jason Mikula, publisher of the Substack newsletter Fintech Business Weekly. According to the complaint filed by law firm Blank Rome, TomoCredit alleges that Mikula published false and defamatory statements across more than 20 articles and social media posts. The lawsuit claims that within days of Mikula's most recent publication, two of TomoCredit's major vendors terminated their relationships and a key business affiliate cited the article as its reason for not renewing a partnership. TomoCredit is seeking at least $1 million in actual damages and an order requiring removal of the allegedly defamatory content. Mikula has not publicly conceded any claims. For the fintech press and newsletter ecosystem, the case raises significant questions about the boundary between investigative reporting and actionable defamation.

Cloudsquare announced a direct API integration with Credibly, allowing brokers and lenders using Salesforce MCA to submit applications, manage documentation, and receive status updates without leaving the CRM. The integration eliminates the manual email and portal-based submission process that slows deal flow. If a deal is not prequalified, Credibly provides detailed decline reasons so brokers can refine applications. The partnership continues a broader trend of lender-broker API connectivity, as platforms like VOX Funding have also integrated with Cloudsquare's API infrastructure. For MCA brokers, native CRM integrations are becoming table stakes for lender relationships.