PayPal has added a fixed-term business loan from YouLend to its German financial services page. Merchants can borrow between €1,000 and €1m for up to one year, with a single fixed fee, fixed weekly repayments and payout from the next working day. YouLend arranges the loan and runs the application, while its sister company Banking Circle provides the money. PayPal has not announced the product, and its UK, French and Dutch pages do not list it.
Strictly speaking, this is not embedded finance, for two reasons. Firstly, PayPal is not a non-financial brand, and secondly, the loan is not even a PayPal product. PayPal's small print says it does not offer, grant or service the loan and may be paid when a merchant takes one, so it sounds like a referral partnership between PayPal and YouLend. It still matters for the embedded finance community, because PayPal also lends itself and chose to partner on this loan, a build-or-partner decision every platform faces.
Building something in embedded finance? Whether you are a brand comparing providers, an enabler working through your go-to-market strategy, or a team trying to fill a crucial (fintech) role, my office hours are a free call to talk it through. I share my honest read and, where it helps, intros to my network.
Owning the loan or referring it
By March 2025 PayPal had lent more than $30bn to over 420,000 business accounts worldwide. In Germany it now runs merchant lending in two ways. Its own product is Businesskredit (business loan with PayPal's brand), which PayPal lends from its own Luxembourg banking licence. With the YouLend term loan, PayPal points the merchant to someone else's product and earns a fee.
For the merchant, the two loans work quite differently. Businesskredit offers first loans of up to €250,000, decided on the merchant's PayPal sales and account history, the kind of data no outside lender has. Merchants repay with a fixed share of those sales, so a slow month means a smaller repayment, as long as they meet a minimum every 90 days. The YouLend loan comes with a credit check, goes up to €1m and is repaid in the same amount every week, whatever the merchant sells.
So why add a second loan when PayPal already lends? I expect the YouLend loan suits merchants who want a bigger sum on a fixed schedule, or whose sales mostly run outside PayPal. It is also the product furthest from PayPal's data advantage, so I assume renting a lender was cheaper and faster than building a German term loan in-house, and YouLend was an easy pick since it already provides Stripe Capital in Germany. At least that is my guess. What's yours?
