PayPal has agreed to terms with Swift Financial to acquire the online lending startup. Swift has provided $1.5 billion in funding to more than 20,000 small companies. The move aims to strengthen PayPal’s Working Capital and will be joined with its Business Financing Solutions team.
Swift has raised $56 million since its founding in 2007 and employs 260 people in Conshohocken, Pennsylvania. The company was founded by Ed Harycki, a veteran of the former credit card giant MBNA Corp., under the idea that “small business are not being well-served by the consolidations of the big banks,” according to The Philadelphia Inquirer.
Swift Financial studied a rival’s capital financing package when PayPal started negotiation for its acquiring. “The acquisition of Swift Financial will enable us 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 Darrel Esch, VP and Commercial Officer of Global Credit at PayPal.
The two companies were already working together in a new test service named PayPal Business Loan. At the time, Swift impressed PayPal with the capability of its tools to serve middle-size-market clients, hence enhancing the market share and expanding lending service to new borrowers.
PayPal presented similar numbers to those of Swift under its Working Capital system, providing up to $3 billion to 115,000 small businesses. The San Jose-based company has battled to offer loans of $500,000, however, with Swift’s savviness on the use of analytics to select customers with pre-established conditions, they expect to be able to offer better financial products.
Swift “will allow us to assess supplemental information to more fully understand the strength of a business and provide access to complementary financing products,” wrote Esch on the official announcement of the deal.
PayPal is looking to use borrowers’ receivables to underwrite the loans they offer, promising to do so more quickly than they had before. “This is great for our people, to be part of PayPal, which is ‘The fin tech company,’” wrote Ed Harycki, founder of Swift Financial, in a message to employees explaining the acquisition.