Business Funding

PayPal Working Capital & Business Loans: Pros, Cons, & Requirements

Read Time: 11 min

A merchant receiving a paypal loan from a hand popping out of a mobile bank window.

PayPal made its name by offering easy-to-use digital wallets to consumers across the globe. While PayPal still provides money transfers, payment processing, and other payment-related services, the fintech giant now offers a range of business funding services, namely PayPal Working Capital and PayPal Business Loans.

For business owners seeking funding, yet without a long history of credit, accessing traditional loans remains challenging. With PayPal, merchants can now access business loans and working capital loans to cover a range of expenses. Both financing options offer quick access to cash, but components like repayment terms and eligibility requirements differentiate them.

Below, we explore PayPal Business Loans and PayPal Working Capital loans—including how to apply for them! Now, let’s find out if PayPal’s funding services are suitable for your business.

What Is a PayPal Business Loan?

PayPal Business Loans act as fixed-term loans, meaning you pay back installments over a pre-arranged term. Loan terms vary from 13 weeks to 52 weeks. Money automatically deducts from your PayPal for Business account each month, making it simple to manage your payments. PayPal Business Loans come at a fixed fee, allowing you to predict how much you pay every month. Likewise, you won’t need to pay any late fees or early repayment fees. However, the fixed fee is non-negotiable after you agree to the loan.

White checkmark in a dark blue circle.

PayPal Business Loan Requirements

You don’t need to be a PayPal merchant to take advantage of PayPal Business Loans. Similarly to other standard business loan requirements, PayPal will require the following during the underwriting process:

  • Your business must be at least nine months old.
  • Your business must have at least $33,300 in annual revenue.
  • Your business’s owner must carry a minimum FICO score of 580.

With PayPal’s eligibility checker on its website, merchants can check if their business qualifies without impacting their credit. If approval occurs before 5 pm EST, funds are usually sent by the next business day.

What Is a PayPal Working Capital Loan?

With PayPal Working Capital, PayPal merchants can borrow money to fund working capital needs. To repay the loan, merchants receive automatic deductions from their PayPal accounts when they make sales. As such, merchants don’t have to pay the loan during time periods containing no sales. However, they must make a minimum contribution every 90 days to satisfy PayPal’s working capital lending obligations.

Unlike other loans, PayPal Working Capital loans are available for a fixed fee. PayPal calculates the fixed fee based on your PayPal sales and account history, the amount you borrow, and the repayment percentage you request. The amount available to your business will depend on PayPal sales, PayPal account history, and potential repayment percentage.

The maximum PayPal Working Capital Loan amount for a first-time loan is $150,000, which may increase to $200,000 on subsequent loans. You must borrow at least $1,000.

White checkmark in an orange circle.

PayPal Working Capital Loan Requirements

If PayPal Working Capital appeals to your business, it’s time to explore the requirements for this type of loan:

  • Your business must have a PayPal Business or PayPal Premier account that’s at least 90 days old.
  • PayPal Premier accounts must process at least $20,000 in annual PayPal sales.
  • PayPal Business accounts must process at least $15,000 in annual PayPal sales.
  • Your business cannot carry any outstanding PayPal Working Capital loans.

Due to PayPal Working Capital loans being related to your PayPal income, you won’t need to undergo extensive underwriting. Not only does this expedite the lending process, but it also ensures funding access, even for individuals with a short credit history.

Additionally, there’s no early repayment fee, allowing merchants to pay the loan in full at any time. However, early repayment does not carry significant benefits as business owners pay one fixed fee for PayPal Working Capital loans.

PayPal Business Loan vs. PayPal Working Capital Loan

When considering financing options, it’s important to understand the distinctions between PayPal Business Loans and PayPal Working Capital. One key difference is that PayPal Business Loans are available to non-PayPal merchants, while PayPal Working Capital loans are available to PayPal users. Additionally, with a PayPal Business Loan, money is withdrawn from your PayPal account each week, regardless of whether your business maintains its revenue. However, with a PayPal Working Capital loan, you pay back a percentage of future PayPal sales, meaning your payments are lower if your revenue dips. Lastly, PayPal Business Loans max out at $150,000, whereas PayPal Working Capital loans max out at $200,000.


How to Apply for a PayPal Business Loan

When seeking financial support to expand your business, PayPal Business Loans can provide a convenient solution. Here are five steps to applying for a PayPal Business Loan.

1. Log into Your PayPal Account or Proceed as a Guest

Borrowers can apply for a PayPal Business Loan through their PayPal account or as a guest. For PayPal merchants, it’s best to log into your account, as your account already has all the necessary details.

2. Enter Business Information to Confirm Eligibility

Next, it’s time to confirm your business details and contact information. PayPal uses this information to check your credit and confirm other details during the underwriting process.

3. Provide Additional Documentation

While many PayPal Business Loans will not require additional documentation, there is a chance PayPal will request more information. Make sure your business has access to bank statements, revenue information, business registration information, and other core details.

4. Review Loan Terms

If PayPal approves your loan application, you will receive a breakdown of your loan terms. Review the terms to ensure the loan fee is affordable for your business.

5. Agree to Loan Terms and Access Funding

Lastly, you must agree with the loan terms to proceed with financing. Funds should arrive the following business day if your approval processes before 5 pm EST.

Pros & Cons of PayPal Business Loan

Pros

  • Flexible Terms: Terms range from 13 to 52 weeks.
  • Fast Access to Cash: Next-day funding is available.
  • Accessibility: You don’t need to be a PayPal merchant to receive funds.
  • Automatic Payments: Each week, payments automatically withdraw from your PayPal account.
  • Fixed Fee: PayPal only charges a single fixed fee.
  • No Hidden Charges: PayPal doesn’t charge late fees or early repayment fees.
  • High Borrowing Limit: Your business can access up to $150,000 in cash.
  • Eligibility Checker: PayPal has an online eligibility checker that doesn’t impact your credit score.

Cons

  • Terms Are Short: PayPal Business Loan terms are between 13-52 weeks, which is short compared to many other lenders on the market.
  • No Upfront Pricing: You won’t find much information on pricing until you apply for a loan.
  • Smaller Loan Amounts for First-Time Borrowers: Businesses can access up to $150,000, but only if they have a history of borrowing and repaying PayPal Business Loans.
  • No Advantages to Early Repayment: There is no penalty for early repayment, but the fixed borrowing fee must still be paid in full. There are no reductions available for clearing your balance early.

How to Apply for a PayPal Working Capital Loan 

A PayPal Working Capital loan can be a perfect way to propel your business forward. Below are steps you can take to apply for a PayPal Working Capital loan.

1. Log into Your PayPal Business Account

PayPal Working Capital loans are only available to PayPal merchants. To being the application, you must log into your PayPal Business account.

2. Fill Out the Application

Filling out the application only takes a few minutes since PayPal already has your business’s details and no formal credit check is required.

3. Review and Customize Your Loan

Next, choose a loan amount and determine what percentage of future sales you want to be withdrawn from your account. Then, assess the fixed fee to determine if it’s affordable for your business.

4. Agree to Loan Terms and Access Funding

If PayPal grants your PayPal Working Capital loan, you must agree to the terms to receive funding. And then, the funds should deposit into your account within a few minutes!

Both loans offer fixed fees and don’t come with any additional late charges or early repayment fees. Likewise, business owners cannot lower their fixed fees by repaying early. Overall, PayPal Working Capital loans are more flexible, but PayPal Business Loans are accessible for those without a PayPal sales history.

Pros & Cons of PayPal Working Capital

Pros

  • Based On PayPal Activity: Because PayPal Working Capital lending decisions rely on your PayPal sales record, you don’t need to undergo the same strict underwriting process found at other lenders.
  • Quick Funding Timeframe: Once you agree to loan terms, funding can be in your PayPal account in minutes.
  • Won’t Hurt Your Credit Score: PayPal Working Capital doesn’t need to run hard credit inquiries.
  • Fixed Fee: PayPal Working Capital charges a fixed fee, ensuring transparent financing with no hidden charges or interest payments.
  • Automatic Deductions from Future Sales: Automatic deductions mean your business does not need to manage payments manually.
  • No Payments During Revenue Gaps: Payments are not required on days without sales, but a minimum contribution to the loan balance must be made every 90-day period for your business.

Cons

  • Must Be a PayPal Merchant: PayPal only offers this form of financing to PayPal merchants with a sales history. You’re not eligible if you don’t currently use PayPal to sell products or services.
  • No Upfront Pricing: While you will know the fixed fee for financing before you agree to a loan, PayPal does not advertise rates before you apply.
  • Smaller Loan Amounts for First-Time Borrowers: First-time borrowers may only access up to $150,000. However, this increases to $200,000 for subsequent loans.
  • Only One Working Capital Loan at a Time: You cannot obtain more than one Working Capital Loan at any given time. You must pay the loan back in full before applying for more financing. It can take up to 72 hours after you make your final payment until your business has permission to apply again.

Alternatives to PayPal Loans

At PaymentCould, we offer a range of small business working capital loans, including business lines of credit, merchant cash advances, and accounts receivable loans. If your business needs immediate access to working capital, our trusted partners provide funding in as little as 24 hours. Let’s explore our three business funding services in more detail below:

Merchant receiving a merchant cash advance from another person.

Merchant Cash Advance

A merchant cash advance operates similarly to PayPal Working Capital loans. Our trusted partners provide upfront capital to merchants in return for payment as a percentage of future sales. If your business needs access to quick cash and you have a strong sales history, this funding solution is perfect. Our clients use merchant cash advances to expand their businesses, improve marketing, cover payroll, and pay for business emergencies.

A dollar sign inside arrows circling it to show a working capital transfer is happening.

Invoice Financing

Invoice financing allows businesses to borrow money using their outstanding invoices or accounts receivable as collateral. With PaymentCloud’s tailored lending options, businesses can access funds based on their accounts receivable, helping them manage cash flow, cover expenses, and seize growth opportunities.

A gray credit card with an orange magstripe.

Business Lines of Credit

Unlike business credit cards, business lines of credit make it easy to withdraw cash and transfer money to customers, vendors, and staff. Also, unlike a term loan, you only pay interest on the money you use, making this a flexible borrowing option for businesses with cyclical needs. At PaymentCloud, our business lines of credit are built to help small businesses meet short-term costs and avoid cash flow problems.


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Secure business funding & secure peace of mind.


PayPal Business & Working Capital Loan FAQs

Are PayPal Business Loans instant?

You should receive a decision on a PayPal Business Loan application within minutes if you meet the eligibility requirements. In many cases, PayPal can transfer the cash to your account the following day, although timelines may vary depending on individual circumstances.

Does PayPal offer cash advances?

PayPal Working Capital loans operate similarly to a traditional cash advance. You receive upfront money based on your current PayPal earnings and repay the loan automatically via deductions from future sales.

Does PayPal check your credit before offering you loans?

Yes. PayPal performs credit checks before offering finance to customers. Merchants can use PayPal’s loan eligibility checker online to assess eligibility without affecting their credit score.

Does PayPal report your account activity to credit bureaus?

Yes. PayPal reports loan activity to credit reporting bureaus, so it’s important to honor your debt obligations with PayPal Business Loans to protect your business credit score.

How much can you borrow with PayPal Working Capital?

PayPal Working Capital doesn’t provide clear information on the maximum your business may borrow—it states the maximum loan will vary depending on your business. However, businesses may be able to access up to $150,000 for their first loan, rising to a maximum of $200,000 for any following loans.

How many PayPal Working Capital loans can you get?

PayPal account holders can only obtain a single PayPal Working Capital loan at any given time. You must pay off any existing PayPal Working Capital loans before you can apply for a subsequent loan. Once you clear the balance of an existing loan, you can apply for a new loan within 72 hours.

Can you get a PayPal loan with bad credit?

If you want a PayPal Working Capital loan, your credit will not play a significant role, as PayPal assesses your PayPal account’s revenue when determining how much money to offer to your business. However, if you choose a PayPal Business Loan, it will be more challenging to access funding if you carry a poor credit score.

Can you get a PayPal Business loan after being declined?

A PayPal Working Capital loan rejection may be tough news for your business, but not all hope is lost. While you shouldn’t reapply immediately, as your circumstances will likely remain unchanged, your business might be eligible in the future. Review the PayPal Working Capital requirements to see if your business falls short.

Why would a PayPal loan be denied?

In most cases, a PayPal Working Capital loan will be denied because your business does not generate enough revenue or your PayPal Business account has not been active for long enough. In other cases, your loan might be denied due to inconsistent revenue or other problems with your application.

How long should you wait before applying for another PayPal loan?

Businesses only have access to a single PayPal Working Capital loan at any given time. You must pay back your current loan before applying for a new loan. After you clear your loan balance, it may take up to 72 hours for PayPal to reinstate your eligibility to apply for a new loan.

What are PayPal’s interest rates?

PayPal Working Capital does not advertise its rates, which makes it challenging to compare against other commercial loans. However, PayPal offers a single fixed fee, so you will know how much you’re obligated to pay when you first accept the loan.

Does a PayPal Working Capital loan incur any extra fees, like an origination fee, late fee, or prepayment fee?

In short, no. While many lenders charge origination fees (sometimes up to 5%), PayPal does not. You only pay a single fee for PayPal Working Capital loans, so there are no additional charges or fees.

Regarding late fees, PayPal Working Capital repayments automatically deduct from your PayPal sales. So, there should be no reason to make late payments. However, PayPal Working Capital advertises it doesn’t charge late fees to its merchants.

Finally, if you decide to complete repayments for a PayPal Working Capital loan early, you won’t incur any prepayment fees.

Is there a maximum business loan term with PayPal?

PayPal does not advertise the maximum loan term for PayPal Working Capital loans. However, the loan term will impact the minimum percentage of sales you must pay.

How long after approval does it take to see the funds in my account for a PayPal business loan?

You will often receive a decision in just a few minutes and can see funds almost instantly after approval.

Can You Change the Percentage of Daily Sales that PayPal Takes for Repayment?

No. Once you agree to a percentage at the start of your PayPal Working Capital loan, you will not be able to change it.

What if there are days where my business makes zero sales?

If you access a PayPal Working Capital loan, PayPal deducts a percentage of your sales to repay your loan. If you don’t make any sales, you don’t receive any deductions. However, you must make a minimum contribution toward your loan balance every 90 days.



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