PayPal Holdings Inc. (PYPL) has acquired online lending firm Swift Financial in an effort to expand the online payments company's business that offers working capital to merchants, Reuters reports.

Delaware-based Swift Financial provides credit to businesses through loans and advances. The company will allow PayPal to grant loans to firms that process payments via its platform and adequately provide credit to businesses that are not yet users of its services.

PayPal will now be able to offer term loans of up to $500,000 to its larger merchants while taking advantage of Swift's data and capabilities.

"This is an area where customers have been asking for more," Darrell Esch, VP and commercial officer of global credit at PayPal, said.

The terms of the deal, still subject to regulatory approval, were not disclosed.

Shares of PayPal were falling about 1% during Thursday morning trading.

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