PayPal is an online payment platform that facilitates individual and business payments.
A PayPal account can be used for many things — making purchases, paying for services, or invoicing for and receiving payment for services or goods. It can also be the key to getting a Paypal working capital loan.
Few people think of loans when they hear the name Paypal. But if you are an account holder and your business needs some working capital PayPal can help. Are you a small business owner in need of financial assistance? Discover how PayPal working capital loans can help you grow your small business.
What Is a PayPal Working Capital Loan?
A PayPal working capital loan is a business loan of a fixed amount, with a single fixed loan fee. A working capital PayPal loan is quick and easy to apply for and is available to all active PayPal account holders. The loan and fee are both repaid automatically with a percentage of your future PayPal sales.
This means that it’s ideal if you do all or most of your business transactions through PayPal. However, if you don’t use your PayPal account for most business transactions, you might not meet the regular cash-flow requirements for taking a working capital loan.
You won’t be subjected to a credit check. And you won’t have to submit tons of documentation either. For most businesses, the authorized Business account holder will only need to provide very basic personal and business info. However, more information (like SSNs) may be required for some businesses, particularly when business partners/ employees have access to the account in question.
Key Features of PayPal Working Capital Loans
- A PayPal working capital loan has a fixed loan amount and a fixed loan fee. The repayments for both of these will be taken from your PayPal sales until the balance has been settled in full. There are no periodic interest charges.
- Rather than a fixed repayment amount, the payments are a percentage of your PayPal sales. You decide how much of a percentage you want to use for your repayments. This makes a Paypal working capital loan user-friendly and flexible.
- Your eligibility for the loan is primarily based on your PayPal account history. No credit check is required during the application and review process, and applying for the loan doesn’t affect your credit score.
- Unlike conventional bank loans, no penalty fees apply in the case of late loan payments, or for early lump sum settlement of the balance. You do have to make a minimum payment every 90 days, though. (We explain this in more detail a bit later)
How Does PayPal Working Capital Work?
First, you’ll have to apply for a PayPal working capital loan. You can do this on the PayPal website after login. It takes only a few minutes to apply and find out if you’ve been approved or not.
If approved, you must select your loan amount. Then you must choose the percentage of your future PayPal sales that you want to use for your loan repayments. Once you have agreed to the terms and conditions, the funds are deposited into your account.
The loan amount carries a fixed loan fee. Both are repaid automatically with a percentage of each sale you make through your PayPal account. This continues until the balance is paid in full.
You can make extra payments manually to pay the loan off sooner. Just use your PayPal balance or a linked bank account. There are no periodic interest charges or late payment fees, but a minimum payment is required every 90 days.
Because of its simplicity, many PayPal users find the working capital loan appealing. However, some confusion often arises between this and another type of PayPal loan — the business loan.
Is It the Same as a Paypal Business Loan?
No, a PayPal working capital loan is not the same as a PayPal business loan. Both options offer quick access to funds, but their eligibility requirements and repayment terms differ.
- A PayPal business loan is available to non-PayPal users, whereas a PayPal working capital loan is only available to PayPal users.
- PayPal business loans are fixed-term loans, with installments payable over a pre-arranged term. But a PayPal working capital loan has a single fixed fee, and this plus the loan amount is repaid as a percentage of your PayPal sales.
How Much Will You Pay?
Your automatic loan repayments get deducted as a percentage of each PayPal sale.
The amount you repay will fluctuate, according to daily changes in your sales volume. Of course, the more you sell, the more you’ll pay, but that is because you have more revenue coming into your PayPal account. The repayment percentage that you agreed on at the start, never changes.
You’ll make no payments on the days without any PayPal sales. However, a minimum payment is required every 90 days. Depending on the loan terms you choose, the minimum is 5% or 10% of your total loan amount (loan + the fixed fee).
Take note: If you don’t meet the minimum and your loan goes into default, you risk the entire balance becoming due immediately. Limits could be placed on your PayPal account until the loan balance is settled.
Benefits of Using PayPal Working Capital Loans for Your Small Business
Every business needs working capital.
Working capital is the difference between a business’s current assets and current liabilities. It is what businesses use to run their operations and pay short-term expenses, throughout the year. Working capital can be used to purchase inventory, pay short-term debt, and invest in marketing or new projects.
If your business is still new, you might lack the working capital necessary to tide you over until your business becomes more profitable. That’s where a working capital loan can help. But why apply for PayPal working capital?
Here are the top benefits:
1. Easy to Apply For
When you’re running a small business, you don’t have time to waste. Fortunately, a PayPal working capital loan is easy to apply for, online and in just a few minutes. The application is quick and simple. No credit check is required. You won’t have to submit much supporting documentation either.
Why is this good for your business? You don’t have to set aside much time to apply for the working capital loan you need. You can do it during a coffee break!
2. Quick Approval Time
Part of the problem with applying for loans at traditional banking institutions is the long wait to hear if you’ve been approved. But you won’t have to wait long to find out if you’ve been approved for a PayPal working capital loan. You’ll know within a few minutes if you’re approved or not.
How does this help your business? You’ll soon know whether your financial problems are solved, or if you need to keep searching for a solution.
3. Receive Funds Quickly
With traditional bank loans, the wait to receive the funds can be even more excruciating than the wait to hear if you were approved. But that’s not a problem with a PayPal loan. The funds will be deposited into your account much quicker than with conventional loans.
What does this mean for your business? The sooner you receive the funds, the better. It means you’ll be able to address all those urgent expenses and get your business back on track.
4. You Decide How to Pay It Back
Your working capital loan and loan fee repayments are taken from your PayPal sales until your balance is paid in full. You may also make additional payments, or pay the loan in full early if you wish (there is no early repayment fee). This gives you more control over repayments than with a traditional bank loan.
Is this good for your business? It sure is! You don’t have to stress about potential penalties when you have had a bad sales month. And you can settle the balance earlier if you’ve had a good month!
Eligibility Criteria for PayPal Working Capital
So, how do you qualify for a PayPal working capital loan? Like with any loan, there are certain eligibility criteria.
1. Must Have a Paypal Business Account or Premier Account
Being an entrepreneur with a promising small business is not enough to qualify. PayPal working capital is only available to people who hold either a PayPal Business account or a Premier account.
A PayPal Premier account is for people who do a lot of buying and selling online. You can use it to shop online and send and receive money from friends and family. You can also use it to accept card or bank account payments when you sell on eBay or your website. The account operates under your name (not your business name).
A Business PayPal account is for businesses revolving around e-commerce or who transact online. It offers all of the functionality of a Premier account, but also offers multi-user access, so you can assign permissions to employees to access the account. The account is held under your business name.
2. Minimum Sales Figures Required
Minimum sales figures are required to qualify for PayPal working capital.
If you have a Premier account, you must process at minimum $20,000 in annual PayPal sales. You must have held the account for at least 90 days, and there should be no outstanding loan on the account. The loan will be approved based on your PayPal Premier account history.
If you have a PayPal Business account, the minimum required is $15,000 in annual PayPal sales. As with the Premier account, you must have held the account for at least 90 days, and there should be no outstanding loan. Your account history is a major factor in whether or not the loan will be approved.
Key Takeaways
A PayPal working capital loan is quick and easy to apply for. It’s repaid with a percentage of your PayPal sales you determine upfront, and you can pay it off early with no penalty. If you meet the eligibility criteria and are satisfied with the terms and conditions, it might be the solution to your problems.
But if you don’t meet the criteria or your application is denied, don’t worry. There are other options. E-Boost Partners offers easy access to customized small business financing solutions. We’ll help you get the working capital you need. Contact us today for more information.
