Loan origination, servicing, embedded lending and POS financing: the software layers and the rules behind them.
Lending software covers the systems that take a loan from application to repayment: loan origination systems (LOS) for applications, underwriting and funding; loan management systems for servicing, payments and collections; and embedded lending and point-of-sale (POS) platforms that put credit inside other companies’ products. In the embedded and POS programs profiled here, a bank or other lender makes the loan while the software runs the process around it.
The lending stack
| Layer | What it does | Providers in our directory |
|---|---|---|
| Loan origination | Application, underwriting, decision, closing and funding | nCino, MeridianLink, Blend, LoanPro |
| Loan servicing | The loan ledger after funding: payments, statements, collections | LoanPro, Canopy |
| Embedded lending for platforms | Financing offered to a platform’s users inside its product | Parafin |
| POS financing | Credit offered at checkout, often across several lenders | ChargeAfter |
Each profile lists the vendor’s products, clients, regions and published pricing, with sources and the date we checked them. Start with the loan origination software comparison for four platforms side by side.
Who makes the loan
The software company is often not the lender. Parafin states that its loans are issued by Celtic Bank while Parafin handles underwriting, servicing and support. ChargeAfter names Wells Fargo, Citi and Synchrony among the lenders in its POS network. When a bank is the lender, the software provider and the distributing platform are that bank’s third parties, and the bank’s regulator can limit new programs: Cross River Bank’s 2023 FDIC consent order requires the FDIC’s written non-objection before a new third-party lending partner or credit product. Our sponsor bank enforcement actions tracker lists such limits.
Rules the software has to support
- Regulation B requires a creditor to notify an applicant of approval, counteroffer or adverse action within 30 days after receiving a completed application, with separate rules for business credit.
- Regulation Z (TRID) requires the Loan Estimate for most closed-end mortgages no later than the third business day after an application.
- Regulation V requires a risk-based pricing notice when a consumer report leads to materially less favorable terms.
- Regulation Z advertising rules govern “no interest” deferred-interest offers at the point of sale.
The guides below explain how each applies when choosing software: how to choose a loan origination system and POS financing platforms.
