PayPal Business Loan Review

PayPal is best know for its service that makes it easy for people to send and receive money. In this PayPal Business Loan review, we take a look at the small business loan division of PayPal.

Trusted for years, PayPal is a must have for small businesses as it allows you to accept all types of payments from your customers.

So consider this scenario: Say you’ve been using PayPal for quite some time and used it pay vendors and receive money. You’ve sent PayPal invoices to clients, you’ve installed PayPal as a checkout option in your ecommerce store, you might even have the PayPal debit card, and sales are increasing.

But what if you need some more cash to continue growing your business?

When Did PayPal Get Into Business Loans?

Recently PayPal has been making an aggressive push in small business lending. In 2017 PayPal acquired small business lender Swift Financial and revamped its small business lending programs through LoanBuilder, a PayPal Service.

If you need funds to improve your business cash flow, or to meet daily expenses or for expansion of business, a PayPal business loan is one of the best available solutions built specifically for small businesses. One of our favorite things about a PayPal Business Loan is you don’t need to go through an infinite documentation process nor complex repayment options.

Over 550 different types of industries are eligible for the loan. One condition is that you should have an account with PayPal. In case you don’t have it you can always open one.

Types of Business Loans Through PayPal

There are basically two types of loans from PayPal:

#1 – A PayPal Business Loan Through LoanBuilder

You can get a PayPal Business loan for varying amounts, from $5,000 to $500,000. Your business should have been operational for at least 9 months and have annual revenue should be $42,000 or more.

Features of the loan:

  • It’s easy to apply with PayPal’s online business loan application
  • Loan is funded the next working day after approval
  • You’ll know up front what the loan will cost you. No hidden fees.
  • Loan amount can be repaid over a period of 13 weeks to 52 weeks
  • Repayment Amount as decided during loan process is deducted on weekly basis from your bank account
  • A personal guarantee is needed to get loan approved
  • Loan can be repaid earlier with no prepayment penalties (you will have to cover the full finance charge at payoff)

PayPal Loan application in 4 easy steps:

  • Check loan eligibility by filling online questionnaire
  • Decide how much you need and determine your repayment plane: Decide the amount as per loan approval, choose the repayment amount and day of payment. Know the one time fixed fees that you need to pay.
  • Submit documents as needed
  • Sign loan agreement and get the funds transferred to your PayPal business account

#2 – A PayPal Working Capital Loan

This is for businesses that have a PayPal account for over 90 days. You must have processed a minimum of $15,000 or more through PayPal in the past 12 months. Loan amount ranges from $1,000 to $300,000.

Since the eligibility is based on your sales history, you receive the amount as needed by your business. The maximum amount you will receive is 35% of your PayPal sales. For you first loan, the loan amount should not exceed $200,000.

PayPal working capital loan is lot similar to merchant cash advance. The main difference is that PayPal doesn’t purchase your receivables.

Apart from that there are other loan options available like loan for equipment purchase, loan for equipment lease, commercial mortgage loan etc.

Features of the PayPal Working Capital Loan

The processing is really fast. Within span of minutes you can apply it right from comfort of your home or office. The amount will be transferred as soon as the application is approved.

The usual lengthy procedures and documentation is not necessary. You need to fulfill the prerequisite of having healthy sales transactions on PayPal account. The usual lists of year in the business, annual revenue, credit score, profitability, etc, are not the big drivers for approval.

You just have to pay a one time fixed fee at the time of application. This is great since you don’t need to worry about any hidden charges or interest payments.

No hassle of remembering the day of repayment or manual payment of the interest.

You can choose the percentage of repayment that should happen on daily basis from the sales that happen each day. You will need to pay 5% to 10% every 3 months to keep your account active. One of the benefits of a working capital loan from PayPal is that if you don’t have sales for that day, you won’t have a payment deducted that specific day.

No assets or collateral required. PayPal working capital loans is a type of unsecured loan.

In case of multi-currency sale, you can calculate the value in USD and make the repayment basis the USD value.

How to apply for PayPal Working Capital:

  • Go to PayPal website, login and go to PayPal working capital site.
  • Press Apply now.
  • PayPal says whether or not you’re eligible through automatic system.
  • If PayPal approves, fill in the rest of personal and business information asked by PayPal.
  • Take time now choose a percentage of sales that will be taken by PayPal. Once you lock in you can’t change the option. And that percentage will be deducted from your sales every day.
  • Read for the terms and conditions.
  • Once the procedure is complete, PayPal deposits the amount into your account.

Conclusion – Is PayPal The Best Business Loan for Small Business?

If you have good sales via PayPal and have an urgent requirement for cash, then a PayPal loan make s a lot of sense for you. If you don’t have the patience or time to go through the procedures of traditional format of loan application or if you don’t have the pre requisites like enough number of business years, credit score, etc, PayPal is the best solution. Once you repay your existing business loan you are eligible to apply for further loans. Overall people have liked PayPal as a trusted loan and service provider.

Loan through a credit card or traditional bank would need loads of paper work, 1-3 days for loan approval and it attracts application, annual and late fees.

One of the biggest factors to consider is the loan repayment frequency, which is, how often do you make your payments. Since PayPal business loans are typically set to a weekly payment, this may affect your business cash-flow.

But other than this it is an excellent form of funding for small businesses due to its simple eligibility criteria , ease of application and less documentation, no periodic interest other than one time fixed fees, easy repayment and pre-closure options. You need to evaluate your options of funding, eligibility criteria, cost of such funding and amount of funding needed as per your business requirement and then take a calculated decision.