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PayPal announced this week that it has submitted regulatory applications for creation PayPal Banka new industrial loan company to support small businesses.
The company said Monday it filed documents with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) to launch PayPal Bank.
PayPal said the bank will allow the company to offer lending solutions small businessesand interest-bearing savings accounts. It also plans to pursue direct membership with card networks to complement processing and payments through existing banking relationships.
If PayPal’s application is approved, customer deposits can be insured by the FDIC, which protects up to $250,000 per depositor, per insured bank.
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PayPal has announced plans to launch an industrial bank called PayPal Bank that will address the financial needs of small businesses. (Justin Sullivan/Getty Images)
“Finding remains a significant hurdle for small businesses struggling to scale and grow,” said PayPal CEO Alex Chriss. “Establishing PayPal Bank will strengthen our business and improve our efficiency, enabling us to better support small business growth and economic opportunity across the US”
PayPal has appointed Mara McNeill to serve as president of PayPal Bank. McNeill has over 25 years of experience banks, commercial lending and private equity. Before joining PayPal, he was president and CEO of Toyota Financial Savings Bank.
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Small businesses will be able to get loans and deposit services from PayPal Bank. (James Carbone/Newsday RM via Getty Images)
The company’s announcement noted that since 2013, PayPal has provided access to more than $30 billion. loan and working capital to more than 420,000 business accounts worldwide. That access helps small businesses access the cash they need to expand, buy inventory or invest in their employees and business resources.
Industrial banks are regulated by states and the FDIC if they are members. Unlike banks covered by the Bank Holding Company Act (BHCA), industrial banks are exempt and are not required to be bank holding companies, allowing non-financial corporations to own and operate businesses. industrial bank.
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PayPal CEO Alex Chriss said PayPal Bank will help support small businesses. (Alex Wong/Getty Images)
Apart from that they are subject to the same regulatory and supervisory processes as other banks. Commercial banks are also allowed to make all types of consumer and commercial loans and accept federally insured deposits, according to Utah’s Department of Financial Institutions.
Bank charter applications were promoted this year by The Trump administrationin favor of a deregulation approach to allow financial institutions to help stimulate growth.
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The administration’s Office of Financial Regulation last week gave initial approval crypto currency Ripple and Circle are exploring the creation of national trust banks, which could further integrate digital assets into the US banking system.
Reuters contributed to this report.
