PayPal is Back to Growing its Merchant Lending Program

After taking drastic action over the last year to rein in surging SMB lending charge-offs, PayPal believes it has corrected the issue.

“We have now fully lapped the actions taken last year to tighten credit underwriting and reduce on balance sheet risk,” said PayPal CFO Jamie Miller on the Q3 earnings call. “We’re seeing better performance across the portfolio, and have now started to modestly grow merchant originations. We’ll continue to prudently manage the portfolio’s exposure with the goal of sustaining our balance sheet-business model, while providing our customers with more ways to manage their cash flow, spending and borrowing needs.”

The reduction in originations since the pullback had been severe, down by as much as 50% by deBanked’s prior estimates.