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PayPal Breaks Into Small Business Lending

PayPal Breaks Into Small Business Lending
Photograph by Kim Kulish/Corbis

Since bank lending to small business dried up in the aftermath of the financial crisis, a wealth of financing flavors for Main Street merchants has emerged. There are merchant cash advances, peer-to-peer lenders, and online term loans. There are more esoteric products, such as revenue-based lending, dynamic discounting, or industry specific factoring arrangements. What most of these models have in common: They’re more expensive than bank loans and their terms are harder to understand.

Now PayPal is entering the fray with a small business loan that the company says stands out from other types of alternative financing: It’s simple and relatively cheap.