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PayPal Still Leads in Unsecured Small Business Lending

November 12, 2020
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PayPal recently disclosed the dollar amount of receivables it had “purchased” between its working capital and business loan program for the first 3 combined quarters of 2020. The figure was $1.5B, down by more than half from over the same period last year. That would seem to suggest that the actual origination figure is probably $1.3B, which is still larger than some of its closest competitors. Numbers from rivals like Kabbage (recently acquired by Amex) and Amazon were not readily available.

For a larger comparison chart, click here.


Company Q1 2020 Q2 Q3 YTD TOTAL
PayPal $1.3B
OnDeck $592M $66M $144M $806M
Square Capital $548M $0 $155M $703M
Shopify Capital $162.4M $153M $252.1M $567.5M

PayPal Appoints New Chief Accounting Officer

June 17, 2020
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PayPal promoted Jeffrey Karbowski from Global Controller to Chief Accounting Officer. Karbowski is also the company’s vice-president. His new position takes effect on July 31, 2020.

Karbowski has been with the company since 2013.

Amazon Says Browser Extension No Longer Secure, Just After PayPal Acquired It

January 13, 2020
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Last week Politico reporter Ryan Hutchins noted on Twitter that Amazon has been alerting its website users who had installed Honey that the browser extension is no longer safe. The extension, which searches the web for sales coupons for items in your checkout basket and automatically applies them, was recently acquired by PayPal for $4 billion. The deal was agreed upon in November and completed last week. According to Hutchins, such warnings have been viewed by Amazon customers since just before Christmas.

AmazonHaving been compatible for years without any security warnings from Amazon, critics have now raised the question over whether this was intentionally done to level competition between the two tech giants. Honey makes a profit by charging retailers a percentage of the sales made with the coupons that it finds, and with this now under PayPal’s umbrella, Amazon may no longer be comfortable taking that hit. Especially when its own Amazon Assistant offers a similar experience.

Speaking to The Verge, an Amazon spokesperson said that “Our goal is to warn customers about browser extensions that collect personal shopping data without their knowledge or consent.” A charge against Honey that did not seem to stick for Hutchins, who continued on Twitter with, “That’s how all browser extensions work – including Amazon’s own extension.”

During the summer, a security vulnerability was found in the browser extension only to be quickly patched. Following the coverage of this latest security warning, a Honey spokesperson stated to Wired that “We only use data in ways that directly benefit Honey members – helping people save money and time – and in ways they would expect … Our commitment is clearly spelled out in our privacy and security policy.”

PayPal Begins Offering Business Loans in Canada

July 28, 2019
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PayPal LoanBuilderPayPal has extended its popular working capital business loan program to Canada, according to company CEO Dan Schulman.

“This quarter, we began offering our PayPal business loan product to PayPal merchants in Canada, allowing them to access financing to build and sustain their businesses,” he said during the Q2 conference call. “This follows the expansion of our business financing solutions to Germany in Q4 2018 and in Mexico earlier this year in partnership with Mexican lending platform Konfio.”

deBanked ranked PayPal as the leading alternative small business finance company by originations in 2018. They are followed by OnDeck, Kabbage, Square, and Amazon.

Has PayPal Eclipsed OnDeck in Small Business Loans?

April 26, 2019
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Will Fintech Dethrone Banking?
It’s been said that Kabbage is on pace to surpass OnDeck in small business loan originations, but PayPal has already done it.

When PayPal announced a working capital program in the Fall of 2013, few were predicting that the initiative would propel them to the top of the small business lending charts. Just two years later, however, the payment processing giant had already loaned more than $1 billion to small businesses.

Today, that number is over $10 billion, according to a comment made by PayPal CEO Dan Schulman on the company’s Q1 earnings call.

That figure would suggest that they had loaned approximately $9 billion from Fall 2015 to the end of Q1 2019. OnDeck, by comparison, loaned $7.5 billion since Fall 2015 through Q4 2018. Several other data sources, including previous statements from PayPal that they had surpassed more than a billion dollars in quarterly small business funding in 2018 (already more than OnDeck), indicate that PayPal has become #1 on the deBanked small business funding leaderboard.

PayPal’s growth was helped in part by its acquisition of Swift Capital in 2017.

Two of the top four are payment processors:

Company Name 2018 Originations 2017 2016 2015 2014
PayPal $4,000,000,000* $750,000,000*
OnDeck $2,484,000,000 $2,114,663,000 $2,400,000,000 $1,900,000,000 $1,200,000,000
Kabbage $2,000,000,000 $1,500,000,000 $1,220,000,000 $900,000,000 $350,000,000
Square Capital $1,600,000,000 $1,177,000,000 $798,000,000 $400,000,000 $100,000,000
Funding Circle (USA only) $500,000,000
BlueVine $500,000,000* $200,000,000*
National Funding $427,000,000 $350,000,000 $293,000,000
Kapitus $393,000,000 $375,000,000 $375,000,000 $280,000,000
BFS Capital $300,000,000 $300,000,000
RapidFinance $260,000,000 $280,000,000 $195,000,000
Credibly $180,000,000 $150,000,000 $95,000,000 $55,000,000
Shopify $277,100,000 $140,000,000
Forward Financing $125,000,000
IOU Financial $91,300,000

$107,600,000 $146,400,000 $100,000,000
Yalber $65,000,000

*Asterisks signify that the figure is the editor’s estimate

Acquisition Costs Compared for GreenSky, Square, PayPal, OnDeck, Lending Club, and Prosper

March 5, 2019
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GreenSky graphGreensky, a consumer lending company, wants investors to know how low its acquisition costs are relative to the competition. The chart above, which appeared in their year-end earnings report, showed how much lower their sales & marketing expense ratio is versus Square and PayPal.

deBanked examined three additional fintech lending companies and ranked them as follows:

Company Name 2018 Sales & Marketing Ratio 2017
GreenSky 5% 5%
PayPal 8% 9%
OnDeck 11% 15%
Square 12% 11%
Lending Club 39% 40%
Prosper Marketplace 76%* 72%

*indicates an estimate

The closeness between Square and OnDeck is notable in that Square markets its payment services first and then offers loans (and other products) as an add-on, while OnDeck only offers loans. Despite that, sales & marketing as a percentage of revenue are still virtually the same for each of them. Square is outspending OnDeck on marketing by more than 10:1, however, and is on pace to surpass OnDeck’s annual loan volume.

Prosper, meanwhile, is doing just as poorly as its wacky ratio looks. The company is losing tens of millions of dollars a year with no end in sight.

PayPal Has a Lot of Merchants and Venmo Is Adding a Boost

February 1, 2019
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VenmoMore than 21 million merchants accept PayPal to take advantage of the 246 million consumers who use it. That’s a lot of merchants to offer value-added products like PayPal Working Capital and invoicing services. But then there’s Venmo, a fast growing digital wallet that PayPal also owns that processed $19 billion in payment volume last quarter and is projected to handle $100 billion worth across all of 2019.

Although Venmo itself is not a profitable business yet, it has gone from generating almost zero revenue to hitting a $200 million revenue run rate by the end of 2018. And it’s bringing in new users thanks to a network effect. When a network effect is present, the value of a product or service increases according to the number of others using it.

PayPal CEO Dan Schulman said on the company’s earnings call on Thursday that PayPal and Venmo will probably attract another 33 million new active users in 2019, thanks in part to the network effect and “the virality of Venmo.”

Meanwhile, PayPal COO Bill Ready said on the same call that merchants tend to come to them directly for services like working capital loans rather than to online marketplaces like Shopify or Wix because oftentimes merchants sell across multiple marketplaces. “PayPal becomes the aggregation point for them to connect to each of those platforms,” he said.

PayPal Credit Commits $25 Million to Help Unpaid Government Workers

January 21, 2019
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paypalPayPal announced Friday that it was devoting $25 million to a program that offers interest-free cash advances of up to $500 to federal workers who have been impacted by the record long partial government shutdown.

“No matter where you stand on the issues, the fact is that 800,000 of our fellow Americans suddenly find themselves without a paycheck,” PayPal CEO Dan Schulman wrote in a blog post. “We think that the private sector and the public sector need to come together to think about creative solutions, to be able to help,” he said in a video.

Josh Criscoe, a PayPal spokesperson told deBanked that borrowers need only make the minimum monthly payment, generally equal to 3% of the outstanding balance. The APR is 0% until the cash advance is repaid.

Crisco said that any government worker who has gone without pay due to the shutdown qualifies for a $250 cash advance, while most of the others who meet certain credit criteria, are eligible for the full $500.

“We’ve seen strong interest since Friday and through the weekend,” said Criscoe.

PayPal is using public records to confirm that applicants seeking the interest-free cash advances are, indeed, unpaid government workers. And they are asking for certain forms of verification as well.

PayPal is not the only lending institution that is trying to help unpaid government workers. In California, nearly a dozen credit unions are providing financial assistance to their members affected by the shutdown.

“The uncertainty as to when the shutdown will end has created stress and hardship for many credit union members who are now struggling to pay their bills and provide for their families,” said Elizabeth Dooley, President and CEO of the Educational Employees Credit Union, in a statement.

“Credit Unions are offering options to federal employees affected by the partial shutdown – such as skipping a loan payment or zero percent loans – to help their members get through this challenging time.”


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paypal business as his primary bank account... anyone that will fund this kind of deal?...

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paypal. we are very particular about our staff and pay more to get a higher quality person with higher moral and ethic code. we are known for deal security. what gives you the idea?". i responded with how i came to the conclusion which was my salesman was on the phone with a merchant that we had an offer from greenbox on for i believe was 21k and were in the process of closing. suddenly the merchant says hold on i'm getting another call, he comes back on the phone after 30 seconds and says who the hell is elliot from greenbox and why are they saying that "brokers are shopping out their file to them because they couldnt get the deal done". keep in mind, contracts had not gone out yet so he had no idea who greenbox was yet. to my surprise (or his admission of guilt) i never heard back from him or anyone else there. i left it alone and gave them the benefit of the doubt hoping it wouldn't happen again once i brought it to their attention. , , fast forward to today.. i get a call from "true capital" number 949-200-1848 asking for my merchant by name thinking he had the merchants number and then i ask which one of my (the merchants) companies he was calling about and he gave the companies correct name (keep in mind i submitted the file to them tuesday). i checked which lenders i submitted that file to which was a total of 2 companies (other lender was in tx) and greenbox was the culprit. true capital has no online presence what so ever which means they are a entity they have just to backdoor which i'm sure they have a few of and true capital is based in fl according to the rep that called. i called back from from a diff numbe...

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paypal? , , zero security whatsoever....