The company submitted an application to the Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions requesting registration in Utah of PayPal Bank, an industrial lending company.

Raising capital remains a significant barrier for small businesses seeking growth and scale. "The creation of PayPal Bank will strengthen our business and increase efficiency, allowing us to better support small business growth and economic opportunity in the United States," said PayPal CEO Alexa Criss.

The company already has a banking license in Luxembourg, but approval from US regulators will allow it to expand its lending capabilities and join the fintech boom, Criss said. Furthermore, PayPal's strengthened financial position will help address ongoing capital challenges facing small businesses across the country.

If approved, PayPal Bank will allow the company to directly lend to small businesses in the United States, reducing its reliance on third-party banking partners. This will be a structural shift from PayPal's current model, which relies on partner banks for funding and loan servicing. PayPal also plans to introduce interest-bearing savings accounts for consumers for the first time, expanding its product offering beyond wallets and payment systems.