PayPal Resumes Growth of Its Merchant Lending Program

After taking significant steps over the past year to address rising SMB lending charge-offs, PayPal believes it has successfully corrected the issue.

"We have now fully lapped the actions taken last year to tighten credit underwriting and reduce on-balance sheet risk," said PayPal CFO Jamie Miller during the Q3 earnings call. "We’re seeing improved performance across the portfolio and have begun to modestly grow merchant originations. Our focus remains on prudently managing the portfolio’s exposure to maintain our balance sheet and business model, while offering our customers more options to manage their cash flow, spending, and borrowing needs."

The reduction in originations following the pullback had been substantial, with deBanked previously estimating declines of up to 50%.