Affirm and Sixth Street: In a major move within the fintech and private credit sectors, Affirm Holdings has entered a groundbreaking partnership with private credit firm Sixth Street, securing a $4 billion capital commitment over three years. This joint venture marks Affirm’s largest-ever funding arrangement and signals an exciting new chapter in the world of alternative lending.
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New Model of Lending
Through this deal, Sixth Street will provide upfront capital to Affirm to facilitate short-term installment loans with durations ranging from four to six months. As these loans are repaid, the capital is recycled back into the system, enabling Affirm to extend more loans — ultimately allowing for the deployment of over $20 billion over the three-year period. This model offers greater flexibility and scalability compared to traditional bank financing methods.
| Key Points | Details |
|---|---|
| Partnership Value | $4 billion |
| Loan Duration | 4-6 months |
| Total Loan Potential | $20 billion over three years |
| APR Range | 0%-36% |
The Rise of Private Credit in Fintech
Private credit has surged in popularity in recent years, with fintech companies like Affirm opting for more efficient funding models. Unlike traditional banks, which rely heavily on deposits, Affirm leverages warehouse facilities, asset-backed securitizations, and forward flow agreements. This allows the company to scale its financing based on demand, without the reliance on conventional bank-based funding.
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Growing Financing Ecosystem
This partnership isn’t just about Affirm and Sixth Street — traditional banks still play an indirect role in financing, using their balance sheets to back the loans alongside private credit funds. As the fintech space expands, both private credit firms and banks are aligning to support increased demand for short-term installment loans and Buy Now, Pay Later products.
Affirm’s Growth and Market Impact
As of September 30, Affirm’s funding capacity reached $16.8 billion, marking a 130% growth over the last three years. Despite slower growth in gross merchandise volume compared to 2022, the company continues to innovate and cater to the growing demand for flexible, short-term consumer credit, setting the stage for further expansion through this new partnership.
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This collaboration represents a significant evolution in fintech lending, offering a glimpse into the future of digital finance.