After a spate of recent partnership announcements to expand its acceptance network and P2P reach, PayPal is buying Swift Financial to boost its small business lending division. PayPal has agreed to acquire the 11-year-old fintech company, Reuters reports.
Since 2013, under its PayPal Working Capital unit, PayPal has made more than $3 billion of loans at up to $125,000 each to 115,000 small businesses.
The terms of the deal, still subject to regulatory approval, were not disclosed. "By joining forces, we'll accelerate our efforts to provide expedient access to working capital that keeps America's small businesses moving forward".
PayPal said the acquisition is to increase small business owners access to capital - with loans of up to $500,000 - and better provide credit to merchants who aren't yet using its services. Now the service only offers loans of up to $125,000 and is only open to firms that use its payments services because that data is used to assess credit-worthiness.
"This is an area where customers have been asking for more", Darrell Esch, vice president and commercial officer of global credit at PayPal, said in an interview.
Online lending, which took off after banks retreated from offering loans to small businesses and consumers in the wake of the 2007-2009 financial crisis, takes advantage of digital technologies to offer loans at lower costs.
PayPal is not the only tech company entering the lending space either.
Basically, Swift Financial's technology will serve PayPal with additional data to give it a better understanding of businesses' strengths, allowing PayPal to sell them add-on financial services. "For PayPal it was a day".