PayPal Applies for US Bank Charter to Boost Small Business Lending

PayPal, the digital payments giant, has applied for a charter to establish its own bank in the United States, aiming to expand lending options for small businesses that often struggle with traditional banking hurdles.

The company submitted applications this week to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation for PayPal Bank, a proposed Utah-based industrial loan company. If approved, the entity would allow PayPal to originate loans directly, hold customer deposits and offer interest-bearing savings accounts. It would also enable direct membership in U.S. card networks to support payment processing and settlement, reducing dependence on third-party banks that have handled such functions until now.

PayPal's move addresses long-standing challenges for small businesses in securing capital. Entrepreneurs frequently face slow approval processes, high rejection rates and stringent requirements from conventional banks, which view smaller loans as too risky or unprofitable. Since launching its working capital program in 2013, PayPal has facilitated more than $30 billion in loans and financing to over 420,000 business accounts worldwide. The...