Sci-tech

PayPal Scoops Up Swift Financial in Loan Expansion Deal

PayPal Scoops Up Swift Financial in Loan Expansion Deal”

In a move to strengthen the PayPal Working Capital program, the online payments giant has agreed to acquire small-business capital lender Swift Financial. PayPal has operated its own Working Capital unit since 2013, and has loaned more than $3 billion to small-businesses in total. It's made more than $3B of loans at up to $125K a clip to 115K small businesses. Terms of the deal were not disclosed.

The deal will enable PayPal to start offering term loans of up to $500,000 to its larger merchants and take advantage of Swift Financial's data capabilities to lend to companies that may not be long-time users of its services. These loans had values up to US$125,000 each and soon, thanks to the acquisition of Swift Financial, this limit will go up to US$500,000.

"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.

PayPal is not the only tech company entering the lending space either. Through its Square Capital program, fellow digital payments company Square SQ has already passed $1 billion in loans since the program's launch in 2014. Amazon recently revealed that it had loaned SMEs $3 billion since the launch of Amazon Lending back in 2011, $1 billion of which came in the past year alone.

For PayPal, the acquisition should bolster a portion of the company's business that has seen increased competition over the years.

Shares of PYPL are now down about 1.9% in mid-morning trading.

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