PayPal Reaches $10 Billion in Small Business Lending
Jun 5th, 2019 @ 4:35 PM by Amber Nelson
PayPal announced that it has now made more than $10 billion in small business loans, an intriguing accomplishment considering its traditional reputation for payments rather than loans.
Those loans were made to 225,000 small business owners around the world. PayPal has a presence in Australia, Germany and the UK. It also operated in Mexico in partnership with Konfio, a separate online lending platform.
PayPal’s small business lending has skyrocketed in the five years since it began making such loans. “It took PayPal twenty-three months to get to the first $1 billion in lending and now we’re hitting more than $1 billion per quarter,” said Darrell Esch, PayPal vice president of global credit. “Demand has never been in shortage.”
In fact, demand has been high since the Great Recession when big lenders pulled back on small business lending to reduce their finance risk. “Small business lending never recovered like commercial lends,” said Esch.
And with stricter loan standards and approval wait-times of up to 90 days, many small business owners have turned to alternative lenders for their funding.
PayPal credits its success to its ability to handle both small and large loans. Small businesses can borrow as little as $1,000 or as much as $500,000, much bigger than many traditional lenders are willing to lend.
Plus, PayPal loans can be approved in a matter of hours and in some cases, just a few minutes. That means business owners can get cash quick and start putting it to use right away for things like new equipment, inventory, cash flow or marketing.
PayPal has some close competition, as the next closest online lender in terms of originations is OnDeck. It reported $636 million in new small business loans in the first quarter of 2019. To-date On Deck has originated a total of $9.5 billion in loans.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.