Affirm (AFRM) struck a capital partnership with investment firm Sixth Street, which will invest up to $4 billion in the buy-now, pay-later service provider's loans over the next three years, the companies said in a Friday statement.

The agreement includes additional off-balance sheet funding, enabling Affirm to extend up to more than $20 billion in loans over the period as it scales its payment network.

The deal reflects the largest-ever capital commitment secured by Affirm, according to the statement.

"Sixth Street's expertise in asset-based finance, long-term capital and collaborative approach make them an ideal partner for Affirm," Affirm Chief Capital Officer Brooke Major-Reid said in the statement. "Over the last several years, we have been extremely thoughtful in working with a diverse mix of world-class investors as we empower more consumers and merchants with our honest financial products."

Affirm has a total funding capacity of $16.8 billion as of the end of September, and more than 19 million active consumers, the statement said.

"Affirm's ability to provide flexible, scalable financing solutions is unparalleled, and we see tremendous opportunity in this partnership," Michael Dryden, partner at Sixth Street, said. "We look forward to being a key funding partner for Affirm and continuing to build on this relationship to support the company's growth in the years to come."

Last month, Affirm posted a fiscal first-quarter net loss of $0.31 a share, compared with a $0.57 loss a year earlier. Its revenue grew 41% year over year to $698.5 million.

"This partnership represents a major step forward in how we support Affirm's future growth plans as we continue to generate quality assets at scale by underwriting every transaction," Affirm Chief Operating Officer Michael Linford said Friday.