PayPal applies to form bank for small business loans, savings

PayPal has applied to form PayPal Bank, which would allow the company to offer loans to small businesses and provide savings accounts.

The payments firm submitted applications to the Federal Deposit Insurance Corporation and Utah’s Department of Financial Institutions.

PayPal, which owns the Venmo app, said the new bank would let it expand banking services in the US.

The company already provides credit lines for consumers and is seeking to broaden its offerings as competition from fintech firms increases.

🔗 Source: CNBC

🧠 Food for thought

Implications, context, and why it matters.

PayPal applied to form a Utah-chartered bank and to obtain Federal Deposit Insurance Corporation (FDIC) insurance. The path matches Square and Nelnet ILC approvals in 2020. An ILC is a state‑chartered depository institution that can be owned by a commercial parent 1.
In June 2024, the FDIC approved Thrivent Bank’s deposit insurance for a Utah ILC, the first nod since 2020 2.
GM Financial withdrew its FDIC bid in 2024 after winning a Utah charter from the Department of Financial Institutions (DFI) 2 3. State clearance did not ensure FDIC approval, and the process can run longer than 3.5 years.
The FDIC opened a Request for Information (RFI) in July 2025 4. Companies in line include Nissan, OneMain Financial, and Edward Jones, with at least six Utah applications pending 3 4.

Utah’s Department of Financial Institutions lists at least six active ILC filings, including bids from commercial parents 4. That creates near-term demand for specialized help.
Regtech firms can build tools for the FDIC’s 2021 rule that requires written agreements from parents to provide financial strength and uphold governance 1 2.
Core banking providers can support ILCs that must operate with enough distance from their parents, including local managers with decision power, based on lessons from early supervision 5.
The July 2025 RFI invites comments on the framework 4.