PayPal currently lends money to shoppers on their service, but it is beginning to finance merchants on its online platform due to a strong demand for new types of financing. Reuters reported the new programs focus on the millions of merchants selling on eBay.com. The pilot program tested in the U.K. was available to a select number of PayPal users.
Over eight million businesses currently use PayPal to process credit card transactions, and the financing option will provide merchants using online marketplaces like eBay and Amazon with a highly sought after alternative to traditional business financing. The opportunity to receive financing from PayPal will benefit small businesses or individual merchants that may have a hard time getting loans from companies like Wells Fargo or CIT Group. Financing through PayPal can assist merchants in growing their business on the online marketplace.
Since the 2008 financial crisis, many traditional loan providers have scaled back lending. Small businesses or individual sellers have difficulty obtaining access to other forms of financing like factoring, a common financing source for larger merchants.
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