eBay Likes Credit Services: PayPal-Backed BillFloat Raises Funding

A company that offers consumers credit for bill-payment has raised $4.5 million to expand operations. BillFloat, which is backed by PayPal, calls itself "the first micro-credit solution to offer consumers "more time to pay" over 3,000 recurring bills including utility, cable and satellite, wireless, auto lease, phone, housing, and insurance payments."

BillFloat was founded in 2009 with investment and technology backing from First Round Capital, PayPal, Venrock and angel investors. The company announced this week it had closed its Series "A" financing, led by First Round Capital, with original seed investors Venrock and PayPal. New investors include Baseline Ventures, SoftTech VC, SV Angel and Mark Goines.

Consumers use BillFloat to avoid late fees, overdraft charges, service termination, and high cost payday loans. According to the company's website, "BillFloat offers consumers a compelling alternative to the $50 billion, high-cost, low-dollar loan market."

The service gives consumers up to 30 days to pay their bills with fees starting at $4.99. The fees aren't detailed on the website, but using the form to ask Billfloat to pay $100 to Verizon Wireless on July 19 showed a consumer would owe Billfloat $106.25 on August 18 - a fee of $6.25.

eBay, which owns PayPal, is no stranger to credit services. In 2008, it acquired Bill Me Later - a transaction-based credit provider.