Affirm, the online lending startup founded by PayPal co-founder Max Levchin, has raised $100 million in debt from financial services giant Morgan Stanley. The credit line comes with the news that Affirm has tripled the volume of its loans in the past year, which amounts to hundreds of millions worth of loans.
Levchin is taking a slightly different approach to borrowing online, rethinking the way shoppers—particularly millennials—borrow money by letting them obtain a micro-loan at a point of sale instead of using a credit card. The company’s backers include Founders Fund, Lightspeed Venture Partners, Spark Capital, Khosla Ventures, Andreessen Horowitz, and Jefferies.
According to the Wall Street Journal, the new credit facility will allow the lending startup to offer more loans. The company has raised over $500 million in debt and equity from investors.
Affirm’s service, Buy With Affirm, lets online shoppers pay for purchases in multiple monthly installments. To apply, consumers submit their name, mobile phone number, birthday, and last four digits of their Social Security number. In measuring risk, Affirm takes into account data from sources such as bank accounts to determine how much cash a borrower has and how frequent they are collecting pay checks.
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As Levchin has explained to Coins2Day previously, there is a huge opportunity to provide credit to younger customers, including millennials, who don’t trust or use credit cards provided by large financial institutions. The company markets itself as being more transparent with its users about fees than established financial institutions, which would almost certainly dispute that assessment.
Affirm says that 750 merchants now offer Affirm at checkout, up from 100 last year. They include TheRealReal, fashion retailer BCBG, Expedia (EXPE), EventBrite, and mattress startup Casper.
