PayPal Reaches $10 Billion in Small Business Loans

Home » Small Business » Small Business News » PayPal Reaches $10 Billion in Small Business Loans

PayPal Reaches $10 Billion in Small Business Loans

FinTech giant PayPal announced this week that its small business lending had reached a major milestone. In less than five years, the service has now funded more than $10 billion in small business loans. That figure also amounts to upwards of 225,000 businesses around the world receiving funds from the company.

Speaking to Forbes, Paypal’s vice president of global credit Darrell Esch explained the company’s role in the market, saying, “Since the great recession, the traditional lenders have really slowed down and pulled back from small business lending. Small business lending never recovered like commercial lends.” This is where FinTechs like PayPal, Lending Club, OnDeck, Kabbage, and others have come in, offering entrepreneurs another option for obtaining capital. Detailing how the firm’s lending has grown over the past five years, Esch notes, “It took PayPal 23 months to get to the first $1 billion in lending and now we’re hitting more than $1 billion per quarter. Demand has never been in shortage.”

PayPal currently offers two small business lending programs in the U.S.: PayPal Business Loan and PayPal Working Capital. Business Loans can range from $5,000 to $500,000 and are intended for businesses that have been open longer than nine months and have more than $42,000 in annual revenue. Meanwhile Working Capital loans offer $1,000 to $125,000 to current PayPal Business customers (who have had accounts for at least 90 days) and have processed at least $15,000 with PayPal within the past 12 months.

Like other FinTechs, one of the advantages PayPal says it offers business owners is speed of funding. For example Esch notes that U.S. Small Business Administration loans can take up to 90 days to gain approval. Compare that to PayPal where Esch says a decsion can be made within hours if not minutes. He adds that this “allows the business to start using the funds almost immediately.”
With some signs pointing to a potential slow down in economic growth, Forbes asked Esch if PayPal was anticipating a decrease in demand. Acknowledging that possibility, he said, “We recognize we are long in the cycle and do think the market will head into recessionary periods that could cause a slowdown in the sector.” However he went on the say, “Having said that, I feel very good about the quality of these programs and the way we are managing risk. We see a long runway of growth here.”
Reaching $10 billion in lending in just five years is certainly no small feat. While PayPal might not be the first option that pops into small business owners’ heads when they’re looking for capital, its clear that the company is playing a big role in the space. With concerns about what may be ahead for the economy and what that would mean for small business expansion, it is reassuring that FinTechs like PayPal and others will be around to help businesses access funds even if banks tighten their purse strings once again.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

SoFi Re-Applies for a National Bank Charter

SoFi — short for "Social Finance" — is ready to become a bank. This week, the FinTech filed for a national bank charter with the Office of the Comptroller of the Currency (OCC). In their application, SoFi says having its own bank charter would help lower their funding costs by...

Small Business Optimism Ticks Up But Threats Still Loom

The past few months have certainly been challenging for a number of the country's small businesses. Between mandated closures, necessary adjustments and investments required for reopening, and on-going health concerns, business owners have been hit on multiple fronts. Nevertheless it seems as though some are starting to see some hope....

FinTech nCino Plans Initial Public Offering

It looks as though another FinTech initial public offering could soon be upon us. This week, nCino announced plans to go public. As TechCrunch reports, the firm is currently eying a share price between $22 to $24. With nCino planning to issue 7.625 million shares, the IPO could raise as...