PayPal announced this week that it submitted regulatory applications to create PayPal Bank, a new industrial loan company to support small businesses.
The company said Monday that it filed documents with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) to launch PayPal Bank.
PayPal said that the bank would allow the firm to provide lending solutions for small businesses, as well as interest-bearing savings accounts. It also plans to pursue direct membership with card networks to complement processing and settlement activities through existing banking relationships.
If PayPal’s application is approved, customer deposits would have FDIC insurance coverage, which protects up to $250,000 per depositor, per insured bank.
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“Securing capital remains a significant hurdle for small businesses striving to grow and scale,” 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 opportunities across the U.S.”
PayPal selected Mara McNeill to serve as the president of PayPal Bank. McNeill has over 25 years experience in banking, commercial lending and private equity. Before she joined PayPal, she was the president and CEO of Toyota Financial Savings Bank.
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The company’s announcement noted that since 2013, PayPal has provided access to over $30 billion in loans and working capital to more than 420,000 business accounts worldwide. That access helps small businesses tap into the capital they need to expand, buy inventory or make investments in their workforce and business equipment.
Industrial banks are regulated by states as well as the FDIC if they’re members. Unlike banks covered by the Bank Holding Company Act (BHCA), industrial banks are exempt and don’t necessarily have to be bank holding companies, which allows non-financial companies to own and operate an industrial bank.
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They are otherwise subject to the same regulatory and supervisory processes as other banks. Industrial banks are also permitted to make all kinds of consumer and commercial loans and to accept federally insured deposits, according to the state of Utah’s Department of Financial Institutions.
Bank charter applications have been spurred this year by the Trump administration, which has favored a deregulatory approach to allow financial institutions to help spur growth.
The administration’s Office of the Comptroller of the Currency last week granted preliminary approvals to cryptocurrency giants Ripple and Circle to explore the establishment of national trust banks, which could further integrate digital assets into the U.S. banking system.
Reuters contributed to this report.
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