PayPal is expanding its working capital programme for merchants through the acquisition of online lending firm Swift Financial. PayPal has agreed to acquire the 11-year-old fintech company, Reuters reports.
PayPal has been offering short-term loans to its smaller merchants through a division called PayPal Working Capital since 2013.
In March, Swift CTO John Klose was nominated in the Best CTO category at the 2017 NET/WORK Delaware Awards. PayPal did not disclose the deal's terms and said the acquisition would close by the end of the year. Swift's technology will allow the company to assess supplemental information to more fully understand the strength of a business and provide access to complementary financing products to meet the needs of small and mid-sized businesses.
These loans had values up to US$125,000 each and soon, thanks to the acquisition of Swift Financial, this limit will go up to US$500,000. PayPal actually has an existing commercial partnership with Swift Financial, but by taking the company under its wing PayPal says it will be able to "better serve small businesses by enhancing our underwriting capabilities to provide access to affordable business financing solutions to more businesses to help them grow and thrive", according to Darrell Esch, VP and general manager for SMB lending at PayPal.
PayPal is not the only tech company entering the lending space either.
"Increasing access to capital is vital to the success of small businesses and is a strategic offering for PayPal, which drives merchants' sales growth, increases processing volume and reduces merchant churn", the company said.
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