PayPal has announced it will be buying Swift Financial in a bid to develop the SME lending side of their business. Working Capital has already been a huge success already, lending to existing PayPal users a total of $3 billion to more than 115,000 small businesses since inception.

Darrell Esch, VP & Commercial Officer, Global Credit, PayPal says in the announcement: “We know and value Swift’s technology platform and people, and we believe their talent and capabilities will further strengthen our overall merchant value proposition. Building upon an existing commercial relationship, 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. While PayPal Working Capital provides access to capital based exclusively on proprietary insights, Swift’s technology will allow us to assess supplemental information to more fully understand the strength of a business and provide access to complementary financing products to meet the needs of small and mid-sized businesses. With these capabilities, Swift Financial will help accelerate our efforts to democratize financial services by enabling PayPal to further fill the small business funding gap.”

It’s good to see that PayPal is exploring further opportunities in SME lending. There’s no doubt that finance remains a problem for SMEs, especially those operating online. Trad banks and lending houses have difficulty understanding the nuances of internet merchants. Paypal gets it but clearly wants to enhance what they have on offer. If you have capital on hand then lending it at a decent rate makes perfect sense.

Other providers also occupy the space. Amazon lends to its sellers too and the likes of iwoca also lend, basing their credit decisions on trading evidence they have to hand. But more competition and innovation is most welcome.