On-demand pay company DailyPay has secured $175 million in funding, resulting in a 75% increase in the company’s valuation to $1.75 billion.
This funding includes a $75 million equity round and a $100 million expansion of an existing secured credit facility, with additional financing provided by Citi, the company said in a Thursday (Jan. 18) press release.
The expansion of the credit facility provided by Citi reflects the rapid growth of DailyPay, according to the release. With this funding, the company’s revolving secured debt facility now stands at $660 million, including commitments from Barclays and TPG Angelo Gordon.
The funds will be used to accelerate growth and expansion into new markets and categories, the release said.
“This latest equity capital raise, from both long-time institutional investors and new financial partners, underscores DailyPay’s strength and market-leading position,” DailyPay CEO Kevin Coop said in the release. “We are eager to capitalize on this momentum as we continue to revolutionize the future of pay.”
DailyPay’s employer-integrated on-demand pay platform enables employees to track, transfer, spend or save their earnings as they earn them, giving them more control over their finances, according to the release.
The company has formed partnerships with leading employers across various industries, including Fortune 500 companies such as Hilton, Target, Kroger and Dollar Tree, the release said. Employers have seen positive impacts on hiring and retention by offering DailyPay as a voluntary employee benefit.
DailyPay empowers its users to take control of their earned pay, allowing them to pay bills on time and avoid unnecessary fees associated with overdrafts, high-interest credit products or payday loans, per the release.
PYMNTS Intelligence has found that earned wage access — having access to pay as they earn it rather than waiting for the next payday — can make a big difference to consumers who live paycheck to paycheck.
Fifty-eight percent of Americans live paycheck to paycheck, and 70% report feeling financial stress, according to “Living Paycheck to Paycheck: Real-Time Payments for Financial Health,” a PYMNTS Intelligence and The Clearing House collaboration.
Earned wage access (EWA) offers these consumers an alternative to going into debt, Rob Nardelli, director of commercial banking and business development at DailyPay, told PYMNTS in an interview posted in June.
“They’ve earned the hours and wages. EWA just gives them access,” Nardelli said.