Buy now, pay later company Affirm strikes $4 billion loan deal with private credit firm Sixth Street

Core Insights - A new multi-billion dollar joint venture is formed between Affirm Holdings and private-credit firm Sixth Street, with Sixth Street committing $4 billion for loans over three years [1] - The partnership allows Affirm to underwrite short-term installment loans, with the potential to extend over$20 billion in loans during the partnership [2] - The deal is part of a growing trend where alternative-asset managers are increasingly investing in non-bank fintech companies for more efficient financing solutions [3] Group 1 - Sixth Street's upfront capital commitment enables Affirm to offer short-term loans with a repayment period of 4 to 6 months, allowing for a revolving loan structure [2] - The loan sales are set to begin in 2025, indicating a ramp-up period for the partnership [2] - Affirm utilizes various funding models, including warehouse facilities and asset-backed securitizations, distinguishing itself from traditional banks [4] Group 2 - Traditional banks still play a role in the financing supply chain by indirectly financing loans through their balance sheets alongside private-credit funds [5] - The partnership reflects a shift in the financing landscape, where fintech firms are seeking alternative funding sources that can adapt to user demand [3] - Similar deals, such as PayPal's agreement with KKR for loans in Europe, highlight the trend of fintech companies collaborating with private credit firms [4]