According to Reuters, Klarna has struck a massive $6.5 billion loan deal with Elliott Investment Management to fuel its buy-now-pay-later expansion in the United States. The agreement allows the Swedish fintech to sell portions of its existing Fair Financing portfolio to Elliott funds starting immediately, with newly originated receivables transferring on a rolling basis from October. The facility is initially sized at $1 billion but operates as a forward flow agreement where repaid loans are continuously replaced, enabling up to $6.5 billion in loan originations over two years. Klarna CFO Niclas Neglén called this “another major step in our U.S. growth journey” targeting Americans moving away from traditional credit. The company will retain all consumer-facing functions including underwriting and servicing while Elliott funds provide the capital backing.
What this means for Klarna’s US push
This is basically Klarna’s answer to the capital problem that plagues every lending business. They’ve found a way to keep growing without having to fund everything themselves. The forward flow structure is clever – it’s not a one-time dump of $6.5 billion, but rather a revolving door where Elliott continuously buys new loans as old ones get paid off.
And here’s why this matters: Klarna’s Fair Financing product – which lets customers spread large purchases over longer periods – is exploding in the US. Their gross merchandise value grew 244% stateside compared to 139% globally. That’s insane growth, and they needed a partner who could keep up with the demand. Elliott, with its deep pockets and appetite for structured credit, fits the bill perfectly.
The bigger fintech picture
Look, this isn’t just about Klarna getting more money to lend. It’s about validation. When a heavyweight like Elliott backs your loan portfolio to the tune of billions, it signals confidence in your underwriting and business model. That’s huge for a company that went public earlier this year and needs to prove it can scale profitably.
But here’s the thing – what happens if the US economy slows down and consumers start defaulting? Klarna keeps the consumer-facing risk while Elliott presumably gets some protection through the deal structure. It’s a fascinating dance between growth and risk management.
The timing is also interesting. Klarna just beat revenue expectations in its first post-IPO quarterly report. So they’re riding momentum, and this Elliott deal gives them the fuel to really step on the gas in their most promising market. Whether traditional credit card companies should be worried is the real question.
