Paypal Holdings Inc (NASDAQ:PYPL)'s Working Capital Distributes $500 Million ...

Category: Small Business Borrowing Published: Wednesday, 11 November 2015 Written by Admin

Although the company doesn't disclose how much in revenues or profits it generates from Working Capital, it has been willing to share some key metrics about its loan business. Since inception in 2013, Working Capital has distributed loans amounting to $1 billion to sellers on PayPal network. Most of the loan distribution happened over the last nearly six months with about $500 million being distributed in the period.

60,000 borrowers and counting

At least 60,000 merchants have borrowed money through PayPal's Working Capital program. Initially, borrowing on Working Capital was slow, but the numbers have recently spiked. From making $1 million in loans daily, PayPal now makes $100 million in loans every month.

Driver of alternative borrowing

According to PayPal's Darrell Esch, the financial crisis of 2008 is part of the reason demand for alternative small business borrowing is on the rise. It is easier for merchants to obtain quick funding through channels such as Working Capital than through conventional banking systems.

Members only

PayPal Holdings Inc (NASDAQ:PYPL) only offer its loans to its members, a strategy that has cut off those outside the network but helped subscribers because getting loans is faster and more flexible. Once PayPal has established that a merchant is eligible for a loan, the money can be deposited in their PayPal accounts instantly.

In repayment, PayPal takes a cut from the incoming funds of the borrower based on a repayment rate selected by the borrower.

PayPal Holdings Inc (NASDAQ:PYPL) doesn't reveal how much it makes from selling small business loans through Working Capital.

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