Buy now, pay later (BNPL) platform Zip Co (ASX:Z1P) is moving into business to business (B2B) services, and investors couldn’t be happier.

The company announced the launch of its Zip Business platform this morning, giving small and medium-sized enterprise (SME) clients a new pathway to access working capital via a similar BNPL model.

It combined the launch with a new distribution partnership with eBay, where the new service will be rolled out to merchants across the eBay marketplace.

Shares in Z1P promptly rose more than 20 per cent to new record highs above $9, as BNPL stocks continue their torrid post-COVID rally.


From B2C to B2B

As part of the deal, Zip Co said it would provide eBay merchants with “access to flexible lines of credit” to help cover short-term expenses such as inventory costs and marketing.

To launch the B2B model, Zip Co said it would look to leverage the credit writing experience of its Spotcap subsidiary, which it acquired last September for $8.825m.

Co-founder Peter Gray said the company was excited by the opportunity to provide additional lending services to Australian small business, particularly in the wake of the disruption from COVID-19.

Interestingly, the move marks a push into a market — B2B lending — that has struggled to gain the traction enjoyed by the ASX’s cohort of BNPL competitors.

For example, SME lender Prospa (ASX:PGL) listed on the ASX at $4 last year and is currently trading below 90c.

Zip Co also announced a new $100m debt funding facility from US company Victory Park Capital Advisors, which the company said would give it the “flexibility and capacity required” to expand the Zip Business platform.

The latest BNPL surge is reflective of broader bullish sentiment in the sector, which helped drive Afterpay (ASX:APT) shares above $90 for the first time this week.