Published By Janet Gershen-Siegel at September 12th, 2018
PayPal Working Capital is a lending company in the online space. They provide small business loans. We look at the specifics and drill down into the details. This review was updated in March of 2022.
PayPal Working Capital is located online here: https://www.paypal.com/webapps/workingcapital/. Their physical address is:
2211 North First Street
San Jose, California 95131.
San Jose is the home of PayPal Working Capital’s corporate headquarters.
You can call them at: (888) 221-1161. Their contact page is here: https://www.paypal.com/us/smarthelp/contact-us. They have been in business since 1998 but that is actually how long PayPal itself has been in business.
The maximum loan amount can be up to 30% of annual PayPal sales. Your business can get funding in minutes and there is no early payment penalty.
You need to have a PayPal Business or Premier account for 3 months or more. This means having a PayPal business account. You also have to process a least $20,000 in annual PayPal sales if you have a Premier PayPal account. Or you need at least $15,000 in annual PayPal sales if you have a Business PayPal account.
And you have to pay off any existing PayPal Working Capital loan.
These are loans with no credit check. Eligibility is solely based on your PayPal sales.
Automatic repayments are deducted as a percentage of each PayPal sale. The fee is based on your business’s PayPal sales history, your loan amount, and the repayment percentage chosen. A higher payment percentage will lower the fee.
You must pay at least 5% back every 90 days. Or, you can pay 10% of the total loan amount back. The 5%+ minimum applies to loans estimated to take 12 months+ to be repaid. It is based on business’ past PayPal sales and other factors. And the 10%+ minimum applies to loans estimated to be repaid within 12 months.
Note: PayPal will monitor accounts for unexpected drops in PayPal sales volume. Hence your loan will be in default if you move your sales away from PayPal in order to avoid repayment.
Advantages include that the payments are deducted from sales so are easier to make and not miss. Plus few American-based online lenders seem to offer funding which is available outside the United States. PayPal does a lot of volume and is accepted by numerous merchants.
Also, the annual sales requirements are pretty low.
Disadvantages are that the whole system is predicated upon your customers using PayPal. If you have customers who do not, then that will make it harder to get funding this way. This is so even with good credit, time in business, and annual revenues. In addition, if yours is a business which receives many of its revenues through Amazon (such as a bookseller), this is problematic.
This is because Amazon does not take PayPal. Hence that will artificially decrease your revenues as perceived by PayPal Working Capital. It will also make it far less convenient to pay back your loan.
The companies which will do the best with PayPal Working Capital are the ones which make a large volume of their sales via PayPal. If your business does not, then PayPal Working Capital will not be for you.
And finally, as with every other lending program, whether online or offline, remember to read the fine print and do the math. Go over the details with a fine-toothed comb, and decide whether this option will be good for you and your company.
In addition, consider alternative financing options that go beyond lending, including building business credit, in order to best decide how to get the money you need to help your business grow.
Always use financing responsibly! Never borrow beyond what you can pay back. Keep track of balances and deadlines for payments. Paying off punctually and in full will do more to increase business credit scores than pretty much anything else.
And while a PayPal business loan review may be helpful, business credit is a lot more so.