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Why the Splitit share price is pushing higher on Tuesday

In morning trade the Splitit Ltd (ASX: SPT) share price is pushing higher following the release of a funding and regulatory update.

At the time of writing the buy now pay later provider’s share price is up 3.5% to 67.5 cents.

Funding update.

According to the release, due to Splitit’s rapid growth, it has exercised half (US$4 million) of its interim financing facility with Shaked Partners Fund.

This will be used to expand its funded merchant business model, particularly in the United States market.

As a result of this exercise, it will grant a first ranking charge over the shares in its United States finance subsidiary, for the benefit of Shaked Partners Fund.

An extra US$4 million is available under the facility prior to August 10 2020.

Furthermore, with the Shaked Partners Fund facility now in place, Splitit has terminated its agreement with secondary credit provider Simpel.

Simpel previously provided funding for approved merchants. It notes that over the four-year period of the facility no credit losses were incurred.

Splitit’s CEO, Brad Paterson, was pleased with the development.

He said: “This reflects the rapid growth we are seeing in the U.S. market as demand rises for the Splitit platform. The facility with Shaked, on more attractive terms, also frees up capital to invest in our platform and support our growth plans, including expanded sales and marketing.”

Regulatory update.

Today’s release also reveals that Splitit has registered with AUSTRAC to provide factoring services in Australia.

This will allow the company to provide its funded model directly to merchants in Australia following pre-requisite vetting and underwriting.

Australia is one of the few markets Splitit operates in that requires registration for the provision of factoring services to merchants. It also allows faster onboarding of merchants opting for its funded solution.

Mr Paterson added: “This is another important step in building our funded merchant model and improving efficiencies as we grow the business. Our business model is fundamentally different to other BNPL providers, as such, we are not subject to the same regulatory or licensing requirements in our principal markets associated with the provision of new consumer credit. This allows us to be nimble and highly scalable.”

Also on the rise on Tuesday are the shares of rivals Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P). The latter’s impressive quarterly update appears to have given these shares a lift this week.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.