A Business Owner’s Guide to PayPal Working Capital

You’ve likely heard of PayPal. As a small business owner, you’ve probably used PayPal for either business or personal purposes; however, not many people know about Paypal Working Capital?

PayPal Working Capital supplies short-term loans to small businesses who receive payments through PayPal. PayPal Working Capital takes a percentage of future sales until all of your loans are paid back in full.

So what does PPWC offer?

A Working Capital small business loan from PayPal offers a remarkably fast application process, quick funding, and typically requires no personal credit check or guarantee.

PayPal Working Capital will allow a small business to borrow up to 15% of your last 12 months revenue in PayPal sales, up to $85,000, with a fixed fee- no interest.

It is important to understand that payments on your Paypal Working Capital loan work differently than traditional loans. In place of monthly payments, payments will be made on a daily basis. Essentially, each day you have sales coming into your PayPal account, a percentage of those sales (a percentage you will choose) will be used to repay the loan.

If the percentage of the daily sales you choose to apportion towards repaying the loan is large, your loan fee will be lower. Think of the fixed loan fee as the interest PayPal receives from the loan—the higher that percentage of your daily sales going towards the loan, the lower the interest rate.

Here is an example to help you better understand.

If your loan amount is $8,000, and you choose to repay the loan with 10% of daily sales, you would pay a fee of $949, an interest rate of 11.86%. However, if in that same $8,000 loan, you instead allocated 30% of daily sales toward the loan, your fee would be $294, a 3.68% interest rate.

Here are the pros of PayPal Working Capital:

  • Daily payments
  • No payments on days with no business sales.
  • Fixed fees- no interest.
  • Funds are deposited into your account within minutes of being approved.
  • There are no fees for missed payments or for catch-up payments.
  • Very little information and time are required to apply.

The cons of PayPal Working Capital:

  • The lower your daily repayment percentage, the higher the fee.
  • Advanced payments will not lower the loan fee.
  • You must have significant sales through your PayPal account to qualify.
  • Loan fees will vary greatly.
  • You will not be sure of your loan fees until you apply.

As a small business who uses PayPal for a large portion of your sales, you will benefit greatly from PayPal Working Capital. The loan amount you will qualify for will vary based on the sales accounted for through PayPal. With no personal credit check needed, if you have a booming business, but a poor personal credit score, Paypal Working Capital may get you the funds you need to continue thriving when other loans are not an option.

Since all the information they will need will already be input into your Paypal account, you won’t have to spend more than 5 minutes on the application. Your business also does need a minimum amount of sales to apply, nor do you need to apply for a minimum or maximum amount in loans.

You can apply by hitting the “apply” button under Working Capital, where you will either be told you do not qualify or you can begin the application. If you qualify to apply, you will simply confirm contract details and sales information.

It is a good idea to have your Business Tax ID and your most recent business Tax Return. From there you will choose your repayment percentage, review and agree to the terms of the loan. Be sure you choose the daily repayment percentage you are sure of, as you won’t be able to change this later on.

The business loan will then be transferred to your PayPal account automatically.

Important things to note about PayPal business loans:

  • You won’t have to make a payment on days with no sales.
  • You can have no sales/no payment days a few days in a row.
  • A minimum payment is due every 90 days, regardless of Payal sales.
  • Automatic payments on your loan happen the day after sales, so be sure you keep enough funds in your account to pay the amount you owe.
  • If you withdraw too much from your account, PayPal will catch-up in payments.
  • There are no fees for catch-up payments.
  • If after 30 days, catch-up payments are more than 50% of the total balance due, your loan may default with limits placed on your account.
  • You are required to pay 10% of your total loan amount every 90 days.

PayPal Working Capital may be right for you. Along with the information provided, we’ve also compiled the most helpful reviews from users to help you see how PayPal Working Capital worked for them.

In general, customers feel that PayPal Working Capital is best because of its fast loan processing and little loan requirements. However, many customers also feel that PayPal Working Capital offered up vague conditions, and customer care didn’t clarify all the conditions.

“This is my third loan with Paypal Working Capital and I am nothing short of impressed. I have a small eBay business that allows me to stay home with my kids. This loan has been an annual blessing for me, allowing me to attend sales near the holidays that I otherwise would have missed! Ultimately keeping new merchandise coming in, keeps the customers coming in as well. The fees are much lower than Kabbage, and the payback method is sheer genius! You really don’t even miss [the deducted amount from your sales]. I did notice that they had added a minimum 10% of loan + fee amount due every 90 days. I’m hoping that this does not tarnish the overall experience because up until now it has really been wonderful! Thanks!”- Wendy

“We have applied for and been approved for two WC loans. The first was around $17k and the second around $32k. We paid both loans off within months and recently paid off the $32k loan in order to apply again and avail of larger financing for a move to a new facility. Sales haven’t really changed at all but we were only approved for $6500! No rhyme or reason and no one to evaluate the payment history, loan offer or otherwise. Customer service is nice but totally unhelpful. ‘it’s automated’ they say but with no explanation of why we would be offered such a small amount after clear increases in offers and steady sales.
This has been a total waste of time now (our loan is paid off) and we have moved on to other lending options. We liked the speed of this one but there is absolutely no rhyme or reason to the offer decision and no one to help or answer questions. Don’t waste your time if you plan on this to be steady funding for a solid business.”— Heather Kelly

Will PayPal Working Capital be right for you?

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