Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

PayPal Scoops Up Swift Financial in Loan Expansion Deal

On Thursday, online payments company PayPal Holdings Inc. PYPL said it has agreed to acquire lending firm Swift Financial in a deal that will hopefully expand its business that provides working capital to merchants. Terms of the deal were not disclosed, and is subject to regulatory approval.

Founded in 2006, Swift Financial offers credit to businesses through methods like loans and advances. With Swift, PayPal will be able to grant loans to firms that process payments through its platform, in addition to providing credit to firms that are not yet users of PayPal’s services. Additionally, PayPal can also offer term loans of up to $500,000 to its larger merchants, as well as utilize Swift’s data and capabilities.

With this deal, PayPal believes 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,” said Darrell Esch, vice president and commercial officer of global credit at PayPal, in an interview.

Dabbling in credit offerings is not new to PayPal. The company has offered a working capital program, called PayPal Working Capital, through which it lends money to small businesses since 2013. PayPal has lent over $3 billion to 115,000 small businesses in loans of up to $125,000.

PayPal is not the only tech company entering the lending space either. Through its Square Capital program, fellow digital payments company Square SQ has already passed $1 billion in loans since the program’s launch in 2014. Even Amazon AMZN is encouraging spending, and with its Amazon Lending division, founded back in 2011, the e-commerce giant said that it has loaned SMEs $3 billion.

“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,” added Esch.

Shares of PYPL are currently down about 1.9% in mid-morning trading.

One Simple Trading Idea

Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.

This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today. Learn more >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Square, Inc. (SQ): Free Stock Analysis Report
 
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research