PayPal Working Capital and Business Loan Review: What You Need to Know

PayPal Working Capital may be a convenient financing option for business owners already using PayPal to make and accept payments. As long as you meet PayPal’s sales threshold, along with other requirements, you could quickly get an advance on your future transactions. Businesses that don’t process payments through PayPal still have a shot at fast, short-term financing through the PayPal Business Loan. We’ll compare these two business loan options so you can decide which one might be a better fit for your company.

What is PayPal Working Capital?

  • The amount you may borrow depends on your particular sales history.
  • Fees are determined by the repayment percentage you select, typically between 10% and 30%.
  • Terms depend on your sales, but are generally between 3 and 12 months.

If your small business uses PayPal to process payments, the digital-payment giant offers a convenient way to borrow through your PayPal account. Borrowers receive an advance, and in exchange repay that advance and a fee out of their sales. The advantages are quick funding without a credit check or personal guaranty, though PayPal Working Capital may be an expensive way to borrow. Borrowers will know their exact fee before accepting the business loan, and without a hard credit pull, it may be worth applying to see what your costs might be.

How repayment works

PayPal begins collecting automatic payments from your PayPal transactions 72 hours after you receive your loan funds. Each time a sale occurs, PayPal would collect its fee, then deduct the agreed-upon percentage as payment.

The higher your PayPal sales, the faster you would repay the advance, though PayPal does require you to pay a minimum of 5% to 10% of your loan every 90 days to remain in good standing. PayPal also allows you to make manual payments and doesn’t charge an early repayment fee.

What is the PayPal Business Loan?

  • Loan amounts between $5,000 and $500,000
  • Fixed-term loan with a single fee

Like PayPal Working Capital, a PayPal Business Loan is short-term funding in exchange for a single fee that is paid over the life of the loan. The difference is that PayPal Business Loan borrowers have a set term, between 13 and 52 weeks. In addition, borrowers are not required to process payments through PayPal, though you would need to have a PayPal Business account. PayPal does not publicly disclose its fee, but you can get an idea of how much a PayPal Business Loan, also known as a LoanBuilder loan, might cost a business owner seeking a $100,000 loan:

PayPal Business Loan Cost Example
Term Weekly Payment Total Cost
15 Weeks $6,857 $102,850
25 Weeks $4,190 $104,750
40 Weeks $2,690 $107,600

PayPal business loans: Are you eligible?

It may be easier to get approved for PayPal Working Capital than the PayPal Business Loan. We’ll spell out the exact requirements for each.

PayPal Working Capital requirements

As we mentioned earlier, you must already use PayPal to accept payments from customers and meet certain sales thresholds, below. PayPal’s point-of-sale program helps small businesses process online and in-person card payments, and business owners can also use PayPal to electronically pay vendors.

Minimum monthly sales requirements depend on your type of business account:

  • If you have a Business account: You need at least $15,000 in annual PayPal sales.
  • If you have a Premier account: You need at least $20,000 in annual PayPal sales.

You must also have held your PayPal business account for at least three months.

Unlike other types of small business loans, PayPal does not conduct a credit check when reviewing applicants or require borrowers to provide a personal guaranty to secure their loan.

If you’ve already borrowed from PayPal, you’d need to pay off any existing debt before you can apply for another working capital loan.

PayPal Business Loan requirements

  • At least nine months in business
  • Minimum of $42,000 in annual revenue
  • 550 credit score or higher

In addition to meeting the minimum requirements above, you will need to fill out an online questionnaire or call 800-941-5614 to determine your eligibility. As we mentioned earlier, a PayPal Business account is also a requirement, but it’s free to sign up.

Ineligible businesses

PayPal Business Loans are not available to numerous industries and positions, which include:

  • Attorneys
  • Business and professional associations
  • Civic and social organizations
  • Labor and political organizations
  • Non-profit organizations
  • Religious organizations

You can find a full list here.

How to apply

It’s possible to start the process of applying for PayPal Working Capital or the PayPal Business Loan online, but you may have to submit more documents for the PayPal Business Loan.

How to apply for PayPal Working Capital

You can apply online for PayPal Working Capital. As the authorized representative of your PayPal account, you would need to provide information about yourself and the business, including:

  • Your contact information
  • Birth date
  • Social Security numbers for all business owners

When you apply for a loan, you would choose the amount of money you’d like to borrow. PayPal would set a maximum amount based on your PayPal sales history. You would also select the percentage that PayPal would withdraw from your sales to repay your debt.

If approved, you could see the money in your PayPal account the same day. As discussed earlier, automatic repayment would begin 72 hours after you receive your funds. You could also make manual payments at any time to pay down your debt faster.

How to apply for a PayPal Business Loan

The first step is to fill out the questionnaire or answer a series of questions by phone. You will be asked to provide:

  • Personal information, such as your name, phone number, email, personal address, birthday and Social Security number
  • Information about your business, including its address, phone, website, annual revenue, start date, number of full-time employees, type of industry and entity and federal tax ID
  • Loan purpose

You will also be asked what percentage of the business you own, whether you are a citizen or permanent resident and if you’re a controlling manager of the business. An underwriter will review your responses and may request additional documentation.

Filling out the questionnaire will not impact your credit, but if you ultimately decide to complete the loan application process, a credit check and other personal records checks will be performed.

If you are approved, funds will be transferred from WebBank (the lender PayPal works with to supply financing) into your PayPal Business account as quickly as the next business day for applications approved by 5 p.m. when the bank is operating.

What to do if you’re declined for PayPal Working Capital

There is no appeals process if you’re declined for PayPal Working Capital, so your only choice would be to reapply. But PayPal isn’t your only option: you could apply for a similar working capital loan from a different online lender. The PayPal Business Loan is another alternative, though you would have to meet credit score and other requirements that PayPal Working Capital does not require. If you prefer a fixed-term loan like the PayPal Business Loan but do not qualify, you could apply for a similar business loan from a different online lender.

PayPal business loans: Pros and cons

Borrowing money through PayPal may seem like a convenient funding solution, especially if your business already uses the platform. But before you apply, consider these possible advantages and disadvantages of PayPal Working Capital and the PayPal Business Loan.

  • Fast time to funding
  • Borrowers can choose flexible repayment structures
  • One flat fee; no interest payments
  • Only available to PayPal users
  • Borrowers limited to one loan at a time
  • Maximum loan amount would depend on your PayPal sales history or annual revenue, as well as your credit history and overall business health, in the case of the PayPal Business Loan.

PayPal Working Capital vs. PayPal Business Loan

PayPal’s two credit products for small business owners share much in common: quick funding deposited straight to your PayPal account with lenient credit requirements. If you’re trying to decide which one is better for your company, here’s a side-by-side comparison.

PayPal Working Capital vs. PayPal Business Loan
Amount Repayment Requirements Time to Funding (after approval)
PayPal Working Capital Depends on your PayPal sales history Set percentage of each sale, plus a fee Up to $20,000 in annual PayPal sales As soon as the same day
PayPal Business Loan $5,000–$500,000 Weekly, over a set term 550 credit score; 9+ months in business; at least $42,000 in annual revenue As soon as the next business day

FAQs about PayPal Working Capital

What is PayPal Working Capital?

PayPal Working Capital is a financing program for business owners who use PayPal to accept payments. Borrowers can receive an advance on their future PayPal sales. To collect repayment, PayPal takes a cut of each transaction, plus a fee, until the loan is paid back in full. This is different from the PayPal Business Loan, which does not require businesses to use PayPal to process payments.

Does PayPal Working Capital take fees straight away?

Yes, PayPal collects fees as soon as a transaction is complete. The amount that you repay is calculated after PayPal takes the fee, so the fee amount is not included in your repayment percentage.

Is PayPal Working Capital a good idea?

PayPal Working Capital may be a good idea if your business accepts a large portion of payments through the platform. Your loan amount would be based on your previous sales, so you may be able to borrow a significant amount if your past sales were high. You would also need to make sure you can afford to forfeit a portion of future sales to repay your loan.