PayPal makes $1b in small-business loans in first two years of launch

The PayPal logo is seen during an event at Terra Gallery in San Francisco, California May 21, 2015. REUTERS/Robert Galbraith

PayPal Holdings Inc, the online payment processor, said on Tuesday its small-business lending program has processed $1 billion in loans in the first two years of its launch and more than doubled loan growth in that span.

PayPal Working Capital is extending short-term loans totaling more than $100 million per month, or $3 million per day, to a mix of sellers on eBay Inc and standalone small- to medium-sized merchants, the company said at a payments conference in Las Vegas.

PayPal separated from eBay earlier this year, and Chief Executive Officer Dan Schulman has stated he is looking to use PayPal’s size to offer affordable financial services widely.

The biggest challenge for a small business is getting access to credit and about 90 percent of businesses to which PayPal extends credit come back for a repeat loan, Steve Allocca, PayPal vice president and general manager, global credit, told Reuters.

Allocca said the businesses pay back loans as a percentage of daily sales.

Online lending accounts for about 3 percent of the roughly $1 trillion of outstanding personal and small business loans in the United States.

The default rate for small businesses with credit under a $1 million stood at 1 percent in 2014 but is seen rising to 1.6 percent in 2015 as new lenders, with varying ability to assess risk, increase lending, according to small business credit ratings provider PayNet.

In June, Amazon.com Inc said it was extending its small-business lending program to seven new countries where credit is a key factor in competing for new vendors and grabbing market share.

PayPal currently offers credit to businesses in the United States, UK and Australia.

(Editing by Jeffrey Benkoe)

Reuters

Also Read: PayPal expands seller protection policy in Southeast Asia

 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.