Platforms Step In as Small Businesses Seek Working Capital Lifelines

In uncertain times, access to cash can make the difference between survival and shutdown.

For small- to medium-sized businesses (SMBs), the third-quarter earnings season revealed a growing dependence on working capital extended by the very platforms that power their sales.

The PYMNTS Intelligence report “How Retail Small Businesses Finance Survival in Uncertain Times” found that half of SMBs rely on day-to-day sales or existing bank balances to keep operating. Nearly one-third turn to personal credit cards when traditional financing is unavailable, and SMBs with declining revenues are more than four times as likely to lack access to cash as those with growing revenues.

That fragility has set the stage for platforms that can embed financing directly into the commerce experience, meeting working capital needs at the point of transaction.

PayPal: Loan Volumes Rebound, Credit Quality Holds

PayPal’s Q3 2025 earnings results showed that the company’s capital programs are a central part of its merchant ecosystem. Drilling down, and per the filing, during the nine months ended Sept. 30 and in 2024, the company purchased approximately $1.6 billion and $1.2 billion in merchant receivables, respectively.

PayPal has more than 35 million active merchant accounts, so the reach of PayPal Working Capital underscores the shift toward embedded finance as a mainstream credit channel.

Shopify: Merchant Cash Advances Continue to Climb

Shopify’s lending arm, Shopify Capital, also expanded, according to Q3 2025 earnings results. The company reported $1.73 billion in loans and merchant cash advances outstanding, up from $1.22 billion at the end of 2024. That 42% increase highlights ongoing demand among merchants using the platform’s payments and fulfillment tools.

The embedded nature of Shopify Capital, repaid as a percentage of daily sales, allows merchants to access money and repay it dynamically. The results revealed that 91.9% of the portfolio was current as of the end of the latest quarter, down from 93.7% at the end of last year.

Block: Square Loans Grow as Sellers Borrow to Reinvest

At Block, the Square Loans business showed renewed momentum. The company’s Q3 2025 earnings results listed commercial loans held for sale at $612 million, up from $405 million at year-end 2024, reflecting a surge in loan origination tied to its integrated Square Banking suite.

In its shareholder letter, Block highlighted artificial intelligence-driven underwriting tools that allow small sellers to “put their operations and finances on autopilot” and expand access to credit products.

Regional Banks: Loan Growth Headwinds

While platforms like PayPal, Shopify and Block are amplifying working capital flows to SMBs, the latest earnings from regional banks showed modest growth in business lending and, in some cases, slight contraction in commercial and industrial loans (which do not include commercial real estate lending).

Regions Financial Corporation’s commercial and industrial loans in the latest quarter indicated that the $49.6 billion recorded for the three months ended in September was 0.5% lower than a year ago.

Fifth Third Bancorp’s commercial and industrial loans were 5% higher, at $54.2 billion.

In the most recent Senior Loan Officer Opinion Survey published by the Federal Reserve last month, respondents for the third quarter reported that “on balance, [there were] tighter lending standards for commercial and industrial (C&I) loans to firms of all sizes. Banks also reported, on balance, stronger demand for C&I loans from large and middle-market firms and basically unchanged demand from small firms.”

The acceleration in embedded lending underscores a broader realignment of financial access. Platforms like PayPal, Shopify and Block sit atop vast transaction data sets that allow near real-time underwriting and repayment through daily settlement flows. For SMBs navigating a fragile macroeconomic backdrop, that proximity to cash flow is invaluable.