Morgan Stanley lends $100m to fintech company Affirm

Affirm, Inc., a San Francisco-based fintech company, has announced that it has obtained a $100 million lending facility from Morgan Stanley.

Started by PayPal co-founder Max Levchin, Affirm offers consumers an alternative to traditional credit with a straightforward, transparent loan product that enables consumers to pay for purchases over time. It uses proprietary technology to verify identity and assess credit risk in seconds by utilizing more sources of information than conventional FICO models, enabling it to provide financing to a broader set of consumers.

According to the official release, the company plans to use the money to continue its expansion of consumer-friendly point-of-sale financing at leading online and offline retailers.

“Today’s credit line is an indication from Morgan Stanley that they believe in our credit and underwriting practices,” said Jeremy Solomon, head of capital markets for Affirm, as quoted by TechCrunch.

Solomon added that the primary benefactor of the recent credit will be the company’s current short-term loans and that any new products would require additional debt from diversified institutional investors to propagate. A syndicate was not needed in this round as Morgan Stanley was willing to fulfill the entire transaction.

In May 2015, Affirm raised $275 million in debt and equity financing in a round led by Spark Capital Growth and also drawing support from new investors Jefferies and Andreessen Horowitz and existing investors Khosla Ventures and Lightspeed Venture Partners. Founded in 2012, the company has raised $525 million so far.

TechCrunch reported that all loans remain on the company’s balance sheet till date. Solomon said that this was intentional in order to prove to outside investors that the team is fully invested in their idea and willing to bear the risk.