PayPal to Deepen Small Business Lending Push With PayPal Bank
PayPal said it is ready to venture deeper into small business lending.
The company applied to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corp. to create PayPal Bank, a proposed Utah-chartered industrial loan company, according to a Monday (Dec. 15) press release provided to PYMNTS.
“Securing capital remains a significant hurdle for small businesses striving to grow and scale,” PayPal President and CEO Alex Chriss said in the release. “Establishing PayPal Bank will strengthen our business and improve our efficiency, enabling us to better support small business growth and economic opportunities across the U.S.”
Since 2013, PayPal has offered access to more than $30 billion in loans and working capital to more than 420,000 business accounts around the world, per the release. PayPal Bank would offer a more efficient way to lend to small businesses while lowering dependence on third parties and boosting PayPal’s business.
Beyond its small business lending program, PayPal Bank expects to offer interest-bearing savings accounts and seek direct membership in the United States with card networks to complement processing and settlement activities, the release said. If approved, customer deposits with PayPal Bank would become eligible for FDIC insurance.
Mara McNeill was tapped to serve as PayPal Bank’s president, according to the release. A veteran of financial services, McNeill previously served as president and CEO of Toyota Financial Savings Bank.
PayPal and other platforms that can embed finance into the commerce experience have begun to serve as a lifeline for small- to medium-sized businesses (SMBs) seeking working capital, PYMNTS reported in November.
The PYMNTS Intelligence report “How Retail Small Businesses Finance Survival in Uncertain Times” found that half of SMBs depend on day-to-day sales or existing bank balances to remain in operation.
“Nearly one-third turn to personal credit cards when traditional financing is unavailable, and SMBs with declining revenues are more than four times as likely to lack access to cash as those with growing revenues,” the report said.
PayPal’s third-quarter earnings results showed that the company’s capital programs are a core part of its merchant ecosystem. During the nine months ended Sept. 30 and in 2024, the company purchased a respective and approximate $1.6 billion and $1.2 billion in merchant receivables.
“PayPal has more than 35 million active merchant accounts, so the reach of PayPal Working Capital underscores the shift toward embedded finance as a mainstream credit channel,” the report said.
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