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.

Comments

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

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

U.S. Small Business Administration Lending Tops $28 Billion in FY19

For most of us, 2019 won't come to a close until December 31st. However, for several corporations as well as the Federal Government, October 1st marked the beginning of a new fiscal year. Among the agencies looking back at the year that was is the Small Business Administration, who recently...

American Express Partners with PayPal, Venmo for New "Split It" Feature

There's no doubt that the advent of peer to peer (P2P) payment apps has made it easier for friends and family to split dinner bills, reimburse each other for gas money, and much more. Nevertheless, as simple as services such as PayPal, Venmo, Square Cash, and others make the process,...

Zuckerberg Heading Back to Capitol Hill to Talk Libra

Ever since Facebook initially announced plans for the cryptocurrency Libra, it's faced a seemingly endless wave of critiques and inquiries from regulators. Neverthless the company has remained resolute, saying it would continue to pursue its plans while working to assuage concerns. Now, as part of those efforts, it's been revealed...