Private credit firms including Blue Owl, KKR, and Elliott are pre-purchasing billions of dollars of BNPL loans before they are made, through “forward-flow agreements” that fund origination machines at Klarna, Affirm, and PayPal, according to Bloomberg. The arrangements let fintechs offload risk, collect fees, and free up capital for new lending, while giving private credit buyers short-dated consumer assets that mature in weeks to diversify longer-term holdings. Skeptics warn the model incentivizes churning out more loans and draws comparisons to the originate-to-sell practices behind the subprime mortgage crisis, with former CFPB director Rohit Chopra noting those repayment expectations broke down once before. Klarna doubled its Elliott deal to $2B in March to fund up to $17B in loans, while Affirm now draws about 46% of its funding capacity from forward-flow agreements across roughly 20 institutional buyers.
