Affirm's $4 Billion Loan Deal: A Game Changer for Buy Now, Pay Later?

In a significant move for the buy now, pay later (BNPL) industry, Affirm has struck a $4 billion loan deal with private credit firm Sixth Street. This strategic partnership not only diversifies Affirm's funding sources but also positions the company for substantial growth. Let's delve into the implications of this deal and what it means for Affirm and the broader BNPL landscape.



Firstly, this deal represents the largest capital commitment secured by Affirm to date, more than doubling the size of its previous funding rounds. With a total funding capacity of $16.8 billion as of September 2024, this partnership increases Affirm's capacity to over $20 billion, enabling it to extend up to $20 billion in loans over the next three years. This strategic move allows Affirm to maintain a diverse and durable funding model, supporting its ambitious growth plans.

Secondly, the partnership with Sixth Street provides Affirm with additional off-balance sheet funding, aligning both partners' interests. By purchasing Affirm loans in a unique AssetCo structure, Sixth Street gains exposure to a growing consumer credit market, attractive risk-adjusted assets, and the opportunity to support Affirm's growth. This deal is a win-win for both parties, as it enables Affirm to diversify its funding sources while Sixth Street gains access to a promising investment opportunity.



As an industry-leading underwriter, Affirm offers easy-to-use solutions for merchant partners and transparent, flexible financing for consumers. This partnership with Sixth Street further strengthens Affirm's position in the BNPL market, allowing it to continue generating quality assets at scale by underwriting every transaction. With over 19 million active consumers and a gross merchandise volume (GMV) of over $28 billion for the last twelve months, Affirm is well-positioned to capitalize on the growing demand for BNPL services.

In conclusion, Affirm's $4 billion loan deal with Sixth Street is a game changer for the BNPL industry. This strategic partnership not only diversifies Affirm's funding sources but also positions the company for substantial growth. By providing additional off-balance sheet funding and aligning both partners' interests, this deal enables Affirm to maintain a diverse and durable funding model, supporting its ambitious growth plans. As the BNPL market continues to evolve, Affirm's strategic moves, such as this partnership, will be crucial in shaping its future and that of the industry as a whole.