Financial technology start-up Affirm announced on Thursday that it had secured a $100 million credit line from Morgan Stanley.
Affirm offers loans for particular purposes as an alternative to credit cards. It aims to help millennials afford nicer things, Max Levchin, Affirm's CEO and PayPal co-founder, told CNBC's "Squawk Alley" on Thursday.
"We are helping them take an expensive item — that would hit the cash flow too hard —split it into several payments, pay it off, be done," Levchin said. "A lot of people prefer that to the complexity and unpredictability of carrying a credit card balance."
Here's how it works: Online retailers like 3-D printing company Makerbot and mattress start-up Casper accept Affirm directly. On top of that, users can create a "virtual card" and pay at other stores they same way they would pay with a Mastercard.
But unlike a credit card, each purchase has its own one-time credit line, rather than an open, revolving line of credit that's always available. Plus, the interest rate and time period are simple and set, not compounded over an unlimited period.