Buy-now-pay-later specialist Affirm Holdings has secured its largest funding commitment yet, partnering with private credit firm Sixth Street to secure a $4bn, three-year deal, according to a report by NBC News.
The partnership will fund short-term instalment loans, recycling repaid capital to enable over $20bn in lending by 2025.
According to the report, the deal reflects a growing trend of private credit firms investing in fintech companies like Affirm, which use diverse funding methods instead of relying on bank deposits.
Sixth Street will purchase loans originated by Affirm for platforms like Amazon and Apple, similar to a recent PayPal-KKR agreement in Europe.
However, traditional banks will continue to play a supporting role, indirectly funding some loans alongside private credit. This expanding ecosystem is fuelling demand for buy-now-pay-later (BNPL) products.
Affirm’s funding capacity hit $16.8bn in September, up 130% in three years, with 34% growth in gross merchandise volume this year.
Offering APRs from 0% to 36% with no late fees, Affirm reported a 2.8% delinquency rate for loans overdue by 30 days.
