PayPal Working Capital Loan: 2023 Review
Estimated APR range: Not disclosed.
Best for: Business owners looking for quick funding and who already accept most of their payments through PayPal.
Pros and cons of PayPal Working Capital
No credit check required
Funding available within minutes
Repayments are made automatically
Doesn’t require a personal guarantee
Not available in several states and territories
Must be a regular PayPal business user
Doesn’t provide many details to general public
May limit you from switching payment processors until loan is repaid
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PayPal Working Capital small business loans review
PayPal is one of the most recognizable names on the internet and, as of January 2023, nearly 83% of Digital Commerce 360’s Top 1000 retailers accept it as a form of payment. That kind of clout allows it to offer regular business customers a relatively niche financing product: working capital loans, based on the volume of a business’s sales.
If you’re an infrequent PayPal user at best, this loan won’t be a great small business financing solution for you. On the other hand, if you’re an existing PayPal business user looking for short-term funding, it could be a good option. Just make sure you shop around for other options to make sure it’s the best fit for you, rather than relying on the fast funding and easy repayment it provides.
PayPal Working Capital small business financing at a glance
|Product||Loan amounts||Repayment term||Estimated APR range||Fees|
|PayPal Working Capital||$1,000 to $250,000||Varies||Not disclosed||Not disclosed|
Working capital loan
PayPal’s working capital loans are almost entirely based on your PayPal sales. If you’re eligible, PayPal will allow you to choose from a range of borrowing options and repayment percentages that go toward paying off the loan. Your sales volume will impact how much you can borrow and how much you’ll be charged.
You’ll pay a single fixed fee rather than an interest rate — since a percentage of each sale will automatically go to repay the loan — as well as the fixed fee. The higher the repayment percentage you choose, the less you’ll get to keep until the loan is paid off. However, you can save money by choosing a higher repayment percentage, as PayPal will charge you a smaller fixed fee.
This also means your payment amount scales according to your sales volume. But even if your sales volume is low, you’ll still need to make a minimum payment of 5% to 10% of the loan every 90 days. However, you do also have the option of paying off the loan early with no penalty fee.
PayPal Working Capital borrower requirements
|Minimum annual revenue||PayPal Business account: $15,000 in annual PayPal sales |
PayPal Premier account: $20,000 in annual PayPal sales
|Minimum time in business||90 days with a PayPal Business or Premier account|
|Minimum credit score||N/A|
PayPal is unique since it doesn’t actually consider many other traditional business loan requirements when deciding whether to approve you for a working capital loan or not. Instead, it relies mostly on your PayPal sales history to determine eligibility. It generally won’t check your credit, nor will it require a personal guarantee on the funds from you or any of the other business owners.
During the loan application process, loan applicants will need to provide personal details of all business owners and business management, even if they don’t have access to the PayPal account. The following is needed:
- Contact information
- Social Security numbers
- Birth dates
Other than that, you won’t really need to submit any documentation except in rare circumstances.
Alternatives to PayPal Working Capital
|PayPal Working Capital||American Express||Credibly|
|Minimum credit score||N/A||N/A||500|
|Loan products offered||Working capital loans||Term loans|| |
|Time to funding||Minutes||3 to 5 business days||Same day|
|Starting APR||Not disclosed||6.98%||1.11 factor rate|
|Maximum loan size||$250,000||$75,000||$400,000|
|Minimum annual revenue||Business PayPal account: $15,000 in annual PayPal sales|
Premier account: $20,000 in annual PayPal sales
PayPal Working Capital vs. American Express Business Loans
American Express small business loans are also popular, including more traditional-style business loans with terms ranging from six months to three years. Like PayPal, American Express reserves services for members with an existing account — you’ll need to have been an Amex business cardholder for at least a year in order to qualify.
It’s quite a bit more transparent than PayPal, as it discloses its interest rate range before you apply — always a good sign. However, it does take longer to get your funding from Amex after your loan is approved and accepted: It can take up to five business days.
PayPal Working Capital vs. Credibly
Compared with PayPal, Credibly‘s business loan policies are much more open — it’ll work with any business owner who meets its broad requirements, not just clients it has a history with. Credibly also offers several different financing options to choose from, rather than just a single loan choice.
The downside is that only fairly profitable, more established businesses will qualify for these loans: Your business will need to earn a minimum of $15,000 per month, with at least a six-month track record.