Embedded Financing Strategies for 2025 with LoanStar

How Embedded Financing Can Help Credit Unions Expand Lending and Reach More Members

As credit unions continue to seek innovative ways to grow their loan portfolios and deepen their impact, embedded financing is emerging as a strategic tool to drive lending, attract new members, and strengthen business relationships.

This webinar hosted by CUCollaborate and LoanStar Technologies explores how embedded financing solutions can help credit unions offer branded, instant financing at the point of sale—whether through local merchants, home improvement contractors, or healthcare providers. This approach allows credit unions to compete with traditional lenders while keeping loan origination and decision-making in-house.

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1️⃣ Expanding Lending with Embedded Financing

LoanStar Technologies enables credit unions to offer financing solutions directly through local businesses, ensuring members receive credit union-backed loan options when making major purchases. This applies to industries such as:

• Home Improvement (HVAC, roofing, solar, foundation repairs)
• Elective Medical (dental, vision, cosmetic procedures)
• Power Sports & Vehicles (motorcycles, e-bikes, recreational equipment)
• Green Lending (energy-efficient home upgrades)

By integrating lending at the moment of need, credit unions can capture more loans that would otherwise go to large financial institutions like Synchrony, Wells Fargo, or CareCredit.

2️⃣ A Strategic Tool for CDFI & Low-Income Designation Initiatives

A significant part of the conversation centered around how embedded financing can align with a credit union’s LID and CDFI goals. By partnering with businesses in underserved areas, credit unions can generate more loans from LID-qualified borrowers, helping them maintain or obtain their regulatory designations while fulfilling their mission-driven purpose.

🔹 Key Insight: LoanStar’s financing solutions help identify and track LID & CDFI-qualified borrowers, making compliance and reporting easier for credit unions focused on these initiatives.

3️⃣ Strengthening SEG and Business Relationships

Many credit unions rely on Select Employee Groups (SEGs) and business memberships as key drivers of growth. Embedded financing offers a powerful way to deepen these relationships by providing a custom financing solution for business partners.

Example: A dental practice that’s part of a credit union’s SEG network can offer financing through the credit union instead of high-cost alternatives like CareCredit. This strengthens the relationship between the credit union, the business, and its customers, creating a pipeline for new member acquisition.

💡 Pro Tip: Credit unions can approach businesses that already use their banking services and offer embedded financing as an additional value proposition. This can help lock in business loyalty while increasing consumer lending opportunities.

4️⃣ Seamless Integration & Familiar Lending Process

One of the biggest advantages of LoanStar’s solution is its seamless integration with major Loan Origination Systems (LOS), including MeridianLink, Sync1, and Temenos. This means:
✔ Loan applications are processed just like any other consumer loan
✔ Credit unions retain full control over underwriting, pricing, and decisioning
✔ There’s no need to operate in a separate software system

This ensures a smooth process without requiring major operational changes.

Q&A Highlights from the Webinar

💬 Q: How does embedded financing compare to indirect lending?
📌 A: It’s similar in that credit unions partner with external businesses to generate loans, but the key difference is that the credit union controls the underwriting and rates, unlike traditional indirect lending where dealers often dictate terms. Credit unions can also cross-sell additional products like credit cards and HELOCs once a member is onboarded.

💬 Q: How quickly can a credit union implement this solution?
📌 A: LoanStar’s LOS integrations are already built, meaning implementation can take as little as 30-90 days depending on how quickly a credit union sets up loan terms and business relationships.

💬 Q: What types of businesses are the best fit for embedded financing?
📌 A: It depends on the credit union’s lending strategy. Some credit unions focus on high-ticket items like home improvement and elective medical, while others explore energy efficiency loans, e-bikes, or niche business partnerships.

💬 Q: What’s the impact on loan performance?
📌 A: Loans originated through embedded financing tend to have higher borrower credit scores (often 720+ FICO), and because they’re tied to home improvement or essential services, they typically experience lower delinquency rates than unsecured loans.

Unlock New Growth Opportunities with Embedded Financing

Embedded financing offers credit unions a scalable, strategic way to expand their lending footprint, deepen business relationships, and reach new members at the moment they need financing.

📅 For more details or to discuss how embedded financing could fit your credit union’s goals, schedule a meeting today!