PayPal Working Capital is a business loan service offered by PayPal, one of the biggest names in payment processing, particularly in eCommerce. Launched initially as a pilot program in 2013, PayPal Working Capital opened up to all PayPal users in 2014. This lending service is intended to help merchants get capital to grow their businesses.
In practice, PayPals financing product resembles a merchant cash advance, though technically, its a loan (not a sale of future receivables). When you get a loan from PayPal, you are charged a one-time fixed fee. Repayments of the loan and fee are made through a daily deduction of a percentage of your PayPal sales.
There is a lot to like about PayPal Working Capital. In terms of borrowing fees, PayPal doesnt specifically state a range, but you can expect to repay anywhere between $0.01 and $0.58 in fees for every dollar borrowed (according to PayPals sample calculator).
Overall, customers appear happy with PayPal Working Capital. However, some customers express frustration because loan approval tends to be inconsistent, meaning that PayPal Working Capital might not always be a dependable capital source when you need it. If you are having trouble getting approval for a PayPal Working Capital loan, we have included some tips below, which may help you get approved, or you could check out some of our favorite alternatives to PayPal Working Capital.
Final Verdict: If you have a Business or Premier PayPal account, PayPal Working Capital is a fast and easy way to secure funding for your small business. However, readers should know that PayPal Working Capital fees can be expensive, and borrowers cant save money by repaying the loan early.
Services Offered By PayPal Working Capital
PayPal offers short-term business loans. However, PayPals business loans are a little different than the standard short-term loan. PayPal will loan qualifying business customers an amount of money for a flat fee. https://yourloansllc.com/personal-loans-tx/ It will then collect a percentage of your daily PayPal transactions until the loan is paid back.
PayPal Working Capital Borrower Qualifications
PayPal does not require a minimum credit score as part of its PayPal Working Capital requirements, nor does it check your credit history. However, you need to have a PayPal Premier or Business account thats at least three months old and be processing at least $15K/year if you have a Business PayPal account or $20K/year if you have a Premier PayPal account. Additionally, you must pay off any existing PayPal Working Capital loans to apply for a new one.
PayPal Working Capital Interest Rates Fees
PayPal will loan you a maximum of 35% of your annual PayPal sales, capped at $125K for your first two loans and $200K for loans after that. For example, if you make $100K annually, PayPal will loan you a maximum of $35K.
PayPal Working Capital loans are repaid through a daily deduction of a percentage of your PayPal sales, so they dont have a specific maturity date. However, to keep you on track, PayPal requires that you pay at least 5% or 10% of your loan every 90 days. The 5% minimum is required for loans that will take 12 months or longer to pay off, while the 10% minimum applies to loans that will be repaid within 12 months. If you are falling behind, you may need to make catch-up payments.
The only fee PayPal charges is a one-time fixed fee, calculated once by multiplying a factor rate (sometimes called a “buy rate”) by the principal. This fee must be repaid along with the principal. Because PayPal does not charge interest (which compounds), your fee will not change regardless of how long you take to repay the loan.