B2B Payments

PayPal SME Lending Nears $1B Milestone

PayPal is now an independent company, and analysts say the firm is enjoying the single life. Amid its split from eBay only weeks ago, PayPal has been ramping up its support for small businesses.

Part of that initiative includes the PayPal Working Capital unit, launched in 2013 and in the middle of significant growth. According to PayPal, in May, the unit was lending about $2 million every day.

Reports in Forbes published yesterday (Tuesday, Sept. 1) revealed that PayPal is now about to approach the $1 billion mark in its small business lending operations. According to reports, PayPal VP and General Manager of Small Business Lending Darrell Esch told reporters that today the company has “moved beyond” issuing $2 million a day in financing to small businesses, and that the company will likely hit the $1 billion milestone this winter.

The influx in small business loans follows PayPal’s recent decision to up borrowing limits from $65,000 to $85,000, reports said, meaning larger companies are seeking out financing from PayPal.

According to Esch, even though many of these larger customers have access to traditional bank loans, PayPal’s funding services offer working capital for less friction. “They choose our products over traditional ones, even when a traditional loan is available, because of the speed they can take possession of the funds and because of the way repayment is tied to their sales,” he told Forbes.

The executive also noted that PayPal’s spin-off from eBay has not affected its Working Capital operations. “We’re not noticing any customer changes directly related to the spin-off,” Esch said, even when working with eBay businesses.

He added that, moving forward, PayPal Working Capital is anticipating federal regulation of the alternative lending industry, especially following the Treasury’s recent inquiry launch into the market. “I suspect more regulation will come to the space, and I think that will suit us well,” Esch said. “When more regulation in this sector happens, the goods and the bads will be sorted out in the process."

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