To be able to continue with a business, most of the time, if not always, entrepreneurs apply for a loan from a bank or any financial institution. But that is something easier said than done. Traditional funding options that most entrepreneurs or large businesses usually resort to, have been increasingly difficult for small businesses to be eligible for and actually acquire.
Especially when you take in today’s situation and the pandemic that has hit the whole world, getting loans has made it even more difficult because of a lot of people, small business owners, merchants, and surprisingly even those who own large businesses. It isn’t viable anymore to wait in line in a bank, or even if they do have measures to lessen human interaction, wait online to be answered by an online banker.
This has made smaller businesses opt to look for alternative funding methods to be able to continue to run their businesses. One of the alternatives that are available to them is Paypal’s Working Capital Loan which was first introduced back in 2014.
What is PayPal’s Working Capital Loan?
PayPal’s Working Capital Loan is an alternative funding method dedicated to small businesses that do transaction payments through PayPal. Paypal’s working capital loan is for the business owners who need working capital to fund their day to day expenses in their business. These may include rent, acquiring machinery, maintenance of machinery, payment of wages, and even funding for new marketing systems, whatever their daily expenses are. This working capital will and can help small businesses keep their doors open.
Who is eligible for it?
While Paypal doesn’t actually check an entrepreneur’s credit history, nor does it check your credit score, to be eligible for the working capital loan, one must have a three-month-old PayPal Business or Premier account and should at least be getting $15,000 worth/ year with your Business account or $20,000 worth/year with a Premiere Account. Another last requirement is that if you have an existing Paypal working Capital Loan, you must first be able to pay off the first loan you made.
How do you apply for it?
You apply for it on Paypal’s site. You would have to verify a lot of information first like: verifying identity, your business location, and a bit of your financial information. From there you would need to wait whether or not Paypal approves or denies your application for a working capital loan.
If and when you are approved, you will then be asked how much you want to borrow from their given statistics, which are also all based on your Paypal account’s performance. Paypal will then show you the allowable amount of time for the repayment of your chosen loan. You’ll be then asked to review your loan and upon acceptance of the final review,
What are the rates and fees?
Paypal actually charges a fixed fee to all those who opt for the Working Capital Loan. This fee will be determined by three factors: your PayPal sales history, the amount that you asked for, and ultimately, the size of the loan.
The percentage of your repayment is about 10% that can go to even 30% of your daily sales made through PayPal transactions. You however have the option to direct a larger portion of your daily sales to PayPal which will then decrease the fees you will pay for. Paypal also considers the volume of your sales history, the higher the volume, the faster the repayment is.
The Top 10 Benefits of Getting a Paypal Working Capital Loan
By now, most people would be doubting as to whether or not, getting a working capital loan is better than getting any other alternative loans out there. Or better yet, just try your luck with a bank or a big financial institution.
But let’s hold that off for a moment. While getting a Paypal Working capital Loan may be a bit limited in terms of who is eligible, to those who actually can and are eligible, getting a PayPal working capital loan has a lot of benefits to it.
Here are the TOP TEN benefits of getting a PayPal Working Capital Loan:
> Easy Application & Fast / Easy access to Cash
Most banks and financial institutions would require you a lot of papers and documents. And whilst it’ll be no problem at all if all your files are complete, not a lot of banks and financial institutions review your files and documents all in one sitting. You would have to come back for another day and there’d be no reassurance that the loan you applied for will be approved.
In Paypal’s Working Capital Loan, the waiting time for waiting for approval is lesser than that of any bank or financial institution. What’s more, is that once you are actually approved in some institutions, you won’t be able to get access to cash until another set date. In Paypal’s Working Capital Loan, once you are approved, PayPal’s partner bank, WebBank will immediately send the amount you asked for to your PayPal account which is withdrawable immediately.
With this, Paypal’s Working Capital Loan is faster than any regular way of applying for loans from a bank or an institution.
> No Collateral Requirement
Usually, when one hears the word loans, we often think about the question: “what’s in it for them?” and we usually equate getting a loan with having collateral on the side looking to be lent capital money. Collateral will work as leverage for the lending bank or institution in case a debtor fails to pay and eventually avoids the creditor bank or institution. It serves as something that will and can be of use to the creditor bank or institution should the debtor fail to pay.
This is not the case with Paypal’s Working Capital Loan. You don’t need any kind of collateral to secure approval of the loan you’re applying for. You simply need to have the eligibility for getting the loan and you’re already underway.
Not having the requirement of any kind of collateral will benefit the entrepreneur more greatly due to the reason that he’s not putting any property he owns at stake. This is often where banks and other financial institutions make money, for when a debtor fails to pay and the bank comes to collect what is now due to them: the debtor’s property, they can easily sell it, transferring ownership from the debtor to the bank, to a new buyer. In this case, if you ever default payment, you only need to pay a late fee, but otherwise, no property of yours will be taken from you.
> Easy to Qualify for
While having a three-month-old Business or Premier PayPal account may be daunting to those who haven’t, think about it, statistics show that a lot of retail businesses that have an eCommerce platform or are selling online tend to have PayPal, because most of Americans prefer it, because of the safety PayPal brings to the consumers.
This means that there are actually a lot who are eligible for this loan. And remember that this loan is particularly targeting small businesses that already have PayPal transactions, thus once one meets the quota for eligibility, it’ll be easier to qualify for considering these facts.
> Easy Repayment
Repayment with Paypal’s Working Capital Loan is easy because, from the very start, Paypal will tell you that repayment to them will be a percentage of your sales every day. This means that PayPal will be the one to deduct the payments directly from your PayPal account depending on your sales for the day.
This actually makes it easier for any loan applicant as they no longer need to think about whether or not you were able to make your loan payment. This also means that you have more time to focus on actually selling than going around and chasing bank closings or office closings.
> Doesn’t bother with your Credit Score
A credit score is an internal scoring system of your “creditworthiness.” It not only calculates based on your levels of debt but also of how many accounts you have, the rough estimate of the money inside your accounts, your repayment history, and a lot more factors related to your credit history.
Usually, a Credit Score is a number in between 350-850, and this means that the lesser your credit score is, the lesser probability of you actually being approved in loans that you try to apply for. Banks and other financial institutions have access to your credit score and it pays a large percentage in determining the possibility of approving or disapproving your application for a loan.
Paypal’s Working Capital Loan does not need to check on your Credit Score and consider it to approve your application for a loan. You simply need to check all the requirements needed of having a business or premier account and accumulate 10,000 or 15,000 dollars worth of sale transactions respectively per year. When you actually check all those boxes? Your application is as good as approved.
> Small loan amounts perfect for a small business
The maximum amount loanable to a businessman or entrepreneur may not be big, this is because the Paypal Working Capital Loan is an equivalent of another loan project of PayPal, but this Working Capital Loan is perfect for the everyday transactions and working expenses for small businesses that may need them.
This Working Capital Loan, as said by some SMEs has said that this does not actually feel like a loan to them. And in truth, the fees additional and the repayment value is not much and will not hurt an SME that badly.
> No extras or hidden Fees
Extra Fees are a nightmare when talking about loans. In getting a loan from banks and other financial institutions, you can expect a lot of Extra Fees that you did not account for. What’s worse is that sometimes they are hidden fees that weren’t properly introduced, to begin with. The concept or thought of hidden fees are actually what is daunting about getting a loan from a bank or any financial institution, though some really have no hidden fees, others have small hidden fees you wouldn’t think of at all but if added together, you’ll realize that they actually were a big portion of fees.
In Paypal’s Working Capital Loan, the fees first discussed or presented by Paypal is what you’ll get. You won’t ever be surprised that you suddenly have to pay a larger amount for something that you weren’t aware of in the first place.
> Flexible Fee Structure
Most of the time banks and other financial institutions have set schedules of payments. Although a lot may also have various choices, these choices per se are already set and you will have to simply choose. This may be a problem because then, the next course of action for a debtor is to make sure that they can make every payment before their next payment due.
With Paypal’s Working Capital Loan, the flexibility of the fees depends on your history of PayPal transactions. This means that PayPal takes into consideration just how much sales you make per day. This in turn will make an entrepreneur worry less about upcoming deadlines but become more focused on gaining more volumes to sell per day.
> Inexpensive Fee compared to other competitors
Comparing the fees of other short-term business loans, the fees that the Paypal Working Capital Loan has is ultimately inexpensive than other direct competitors that are alternative loan institutions or plans.
While Paypal’s Working capital Loan is usually considered a merchant cash advance program by many because of how it is repaid, it is actually really a short term-term business loan. And compared to MCA’s, Paypal’s fees are less controversial than MCA’s for the reason that a merchant cash advance fees range from 40% to 350% depending on the repayment length, the lender, and the size of the cash advance. The Working Capital Loan Paypal carries lower APRs than that of a merchant cash advance loan.
> Possibilities of better loan options the second time around
As Paypal’s Working Capital Loan works on mainly your scores and history of sales with Paypal itself, everything depends on your sales made with your Paypal Business or Premier account payments linked to your business. This means that actually getting your first loan approved means that you have to focus on generating sales on eBay or any platform that you have Paypal as your chosen mode of payment in order to be able to make payments every day of your sales to your loan with Paypal. But this in turn allows you to also accumulate to your yearly sales done with Paypal, which means that the next time you actually apply for a Paypal Working Capital loan, not only will you have accumulated sales certain already, you actually also get additional points to consider due to the recent completion of your Paypal Working Capital Loan.
Paypal’s Current Take
Recent events like the pandemic have made Paypal adjust a lot of things on their side. With their Paypal Working Capital Loan for example, during the height of the pandemic that made businesses close down and economies cripple, Paypal actually halted their automatic sales based payment system to those who were in the middle of repaying their loans when the pandemic hit and the economy had to close, this was in order to help their own partners in maintaining their businesses. Furthermore, they actually sent out an open letter stating that while they are proud to have helped a lot of businesses that are partnered with their Paypal Working Capital Loan try to stay open, they stated that whoever needs more time for repayment may be able to ask for an extension by contacting them.
In 2013, back when Paypal launched their Working Capital Loan service, a lot of small businesses and merchants welcomed it with open arms as it was one of the first of many revolutionary financing solutions. And today, 7 years later, a lot of businesses and merchants are still able to flourish and manage to stay open because of this. Paypal has ensured the small businesses and merchants who depend on the loans that as a lot of things change, like eBay having their own payment platform, Paypal will continue to improve and manage new payment solutions for them.
Currently, Paypal has also released that they are working on the new generation of the Paypal Working Capital Loan, promising a new set of innovative features that will help solve business needs while your business continues to grow and evolve. Paypal has gone as far as promising to produce the new generation Paypal Working Capital Loan to be able to answer the rapidly evolving, and currently being forced to speed up commerce and eCommerce ecosystems and to provide assistance and funding to merchants who actually choose to sell in various marketplaces and platforms.
Many business reviews on Paypal’s Working Capital Loan have said that it has the opportunity to become something greater than it is today, and Paypal’s current statement has a lot of small businesses, both who are looking forward to applying and those who have had the experience, looking forward on what is set to come in the near future.
Meanwhile, owners who rely heavily on Paypal for their day to day business transactions and sales benefit the most from the Paypal Working Capital Loan. It has proven to be a quick, flexible, and convenient way to gain an opportunity to grow and develop a small business into something greater.
You get the flexibility of payment that you don’t get much of anywhere else, have reasonable fees that won’t make one business grow bankrupt, furthermore, getting loans today, especially during a pandemic is hard, and while Paypal benefits more on those who actually use Paypal, to them it can still be of great help because as everyone is affected by the effects the pandemic has brought not only to the whole of the US but to the whole world and living life as a human being today, options like the Paypal Working Capital Loan is something that can take off burdens that are currently present to small businesses and merchants today.
With everything that you may need to know about the Paypal Working Capital Loan available on their actual website, and their Paypal Calculator being of great help for any small business owner or merchant, Paypal is pretty much efficient in giving their consumers and partners what they need to do in order to qualify, what they get when qualified, and what they can actually expect once the repayment starts. This being straightforward of Paypal in terms of their Paypal Working Capital Loan is only more beneficial to the consumer or partner client today.
And while presenting to you the advantages of using or applying for the Paypal Working Capital Loan, remember that don’t take our word for it, be sure to do your own research, read what is available on the Paypal Website, reach out to their customer service for any questions you might have, use their Paypal calculator in order to determine and gain an understanding of how much you can actually borrow from their Working Capital Loan. In order to gain additional information, read reviews that help you weigh the pros and cons of applying for one.
Additionally, and finally, with today’s pandemic still at large, and with the rest of the world still waiting for a vaccine for it, the lesser interaction one has with other people or the lesser need to head outside to do any sort of transaction, be it just withdrawing, depositing or even making payments, assures that at the very least, you’re still taking precaution and ensuring that not only you, but your family, employees and, consumers are safe. Paypal’s application and repayment scheme check all of those boxes off, while it may not be that big of a deal to some, to others, it is, and to the general public who are taking extra precautionary methods to be safe, Paypal Working Capital Loan offers the best way to take a short-term business loan.