Parafin provides platforms with credit offerings for their small business customers. The company has helped more than 60,000 businesses gain access to capital and complementary credit products since 2020, according to the release.
The planned acquisition will enable Stripe to bring these offerings to the more than 18,000 platforms that build on Stripe and serve as the financial home for small businesses, the release said.
Stripe expects the proposed transaction to close in the coming months, subject to customary closing conditions, per the release.
Neetika Bansal, business lead at Stripe, said in the release that platforms power millions of small businesses around the world and that the Parafin team will bring to Stripe their expertise in credit, risk and embedded financial products.
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“Together, we’ll be able to offer a wider range of credit products to a larger ecosystem and increase credit access for high-growth businesses,” Bansal said.
In their own blog post announcing the planned acquisition, Parafin founders Sahill Poddar and Vineet Goel and the Parafin team said that the company started in 2020 with the insight that the software platforms that small and medium-sized businesses run on can see data that banks don’t and can help assess a business’s health in a better way.
Since then, Parafin has powered financing programs for some of the world’s largest platforms and has expanded from cash advance to a full suite of products that includes flexible and term loans, B2B pay over time and credit cards, according to the post.
“We started Parafin because we believed SMBs deserve financial products as good as the ones big companies enjoy,” Poddar, Goel and the team said in the post. “Inside Stripe, we will get to help more businesses as we pursue this endeavor at an even greater scale.”
The PYMNTS Intelligence report “Embedded Finance as a Strategic Initiative” found that the integration of financial services and products directly into nonfinancial platforms is now foundational to how companies create broad, lasting value.
Nearly every company surveyed for the report said they had at least one embedded finance capability.
“Embedded finance has become table stakes across key industries as companies leverage the strategy to fuel deeper customer relationships and growth,” the report said.
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