(21 June 2017 – United Kingdom) PayPal’s lending business, Working Capital, has more than doubled its UK volumes in the last year and lent more than £400 million credit to British businesses.
The online payment provider’s lending platform, which launched in 2013 in the US and a year later in the UK, allows small businesses that already use PayPal to borrow up to £100,000 and make repayments equal to an agreed percentage of their sales.
With direct access to the cashflow details and patterns of potential customers, PayPal is able to provide applicants with fast credit decisions. It also claims to be cheaper than banks, because there is no interest, just a small fee at initiation.
“Technology companies like PayPal are finding new ways to serve customers where the products and services of the past are coming up short,” said Mark Brant, managing director at PayPal UK, citing statistics from the UK’s National Audit Office that claim there is a £6 – 9 billion gap between the funding SMEs need and what banks provide.
According to the payment service provider, a third of all its Working Capital advances were to businesses in geographies that had seen a steep decline in bank branches in the last year.
PayPal’s global lending business crossed the US$1 billion threshold in October 2015, then the US$2 billion mark the following July and the US$3 billion mark this May, with 115,000 customers globally.
In the UK, traditional banks still remain the dominant lenders, approving about £5 to 6 billion of new loans every quarter, according to data from banks’ representative body the BBA.