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Fintech Meets Private Credit: A $4 Billion Partnership Revolutionizes Lending

Fintech Meets Private Credit: A $4 Billion Partnership Revolutionizes Lending

Affirm Holdings has entered a groundbreaking partnership with private credit firm Sixth Street, marking its largest capital commitment to date. This multibillion-dollar joint venture will see Sixth Street invest $4 billion in loans over three years, enabling Affirm to underwrite short-term installment loans ranging from four to six months. The innovative structure allows the capital to be recycled as loans are repaid, potentially extending over $20 billion in loans during the partnership's lifespan. This collaboration highlights the growing trend of private credit firms investing in fintech companies, as they seek more efficient and scalable financing solutions compared to traditional banks. Unlike banks that depend on deposits, Affirm utilizes various funding models, including warehouse facilities and asset-backed securitizations. While traditional banks still play a role in financing, this partnership signifies a shift towards alternative funding sources that cater to the evolving demands of consumers purchasing goods online.

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