This UK Bet Is Paying Off for PayPal


Mar. 15 2019, Published 10:19 a.m. ET

PayPal lifts loan limit for UK businesses

In 2014, PayPal (PYPL) launched its small business lending service in the United Kingdom, betting that British businesses would turn to it not just to handle their payment transactions but also for loans to grow their operations. Now, a few years down the line, PayPal has no regrets about that decision. The company recently revealed hitting a $1.3 billion small-business-loan milestone in the United Kingdom last year. PayPal says more than 37,000 British businesses have benefited from its loans. In an apparent effort to maximize its opportunities in the British small business lending market, PayPal has raised the upper limit of loans a business can apply for. British businesses can now secure loans of up to $198,000 in one request. Previously, businesses could only secure loans of up to $132,000. There are about 5.6 million small businesses in the United Kingdom.

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PayPal also extends loans to consumers. The company reports interest and fee income from its lending operations under its revenue segment, Other Value Added Services. In the fourth quarter, the segment reported $375 million in revenue, and overall, PayPal’s overall revenue rose 13% YoY (year-over-year) to $4.2 billion. Amazon (AMZN), Square (SQ), and Shopify (SHOP), which also operate business lending divisions, reported revenue growth of 20%, 51%, and 54% YoY, respectively, in the December quarter. Revenue at On Deck Capital (ONDK), another online small business lender, rose 25% YoY.


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