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Acquired by PayPal in 2017, LoanBuilder was originally launched by Swift Capital. There is some confusion between PayPal LoanBuilder vs PayPal Business Loans; the two services are more or less the same. PayPal markets LoanBuilder under the brand name of PayPal loans, so, for PayPal, it is a separate entity.
LoanBuilder only offers short term loans with flat fees.
On the surface, it may not look as if the service offers too much, but LoanBuilder has eligibility requirements that are quite low, which makes it an attractive choice for companies that cannot get funding through other means.
There is, however, a downside, and that is in the form of its cost. So let us now have a look at what LoanBuilder has to offer.
PayPal LoanBuilder vs Working Capital
The difference between a PayPal LoanBuilder loan and a PayPal Working Capital Loan is the type of loan service and the repayment style. A PayPal Working Capital Loan will take a percentage of your turnover as payment each day until it is paid off, similar to a merchant cash advance, and a LoanBuilder loan requires weekly payments over a maximum of 52 weeks.
- Short term business loans
PayPal LoanBuilder Requirements and Eligibility
As mentioned above, the eligibility requirements for LoanBuilder are quite low.
- Time In Business: At least 9 months
- Business Revenue: $42,000 per year
- Personal Credit Score: 550
- Business Location: United States
There is a long list of prohibited industries that exclude your business from applying for a LoanBuilder loan including financial services, law firms, charity, religious organizations, and other prohibited industries.
- Agents and managers for artists, athletes, entertainers, and other public figures
- Any businesses in public administration
- Business and professional associations
- Civic and social organizations
- Collection agencies
- Credit bureaus
- Elementary and secondary schools, and junior colleges
- Environmental, conservation, and wildlife organizations
- Financial services
- Gambling and related businesses
- Grantmaking foundations
- Gun stores
- Holding companies and management companies (without subsidiaries included)
- Human rights organizations
- Independent artists, writers, and performers
- Labor and political organizations
- Manufactured (Mobile) Home Dealers
- New and used automobile, ATV, RV, personal watercraft, boat, and motorcycle dealers
- Non-profit organizations
- Religious organizations
- Voluntary health organizations
PayPal LoanBuilder Rates & Terms
- Borrowing Limits: $5,000 – $500,000
- Term Length: 13 – 52 weeks
- Borrowing Fee: 2.9% – 18.72% of the total amount
- Origination Fee: None
- Collateral: UCC blanket lien
LoanBuilder offers loans starting from $5000 and going up to $500,000. The term length lasts up to 52 weeks which means these loans are not going to be viable for businesses looking for long term borrowing. LoanBuilder doesn’t charge any origination fee, and instead of an interest rate, it charges a flat fee on the borrowed amount.
The repayment structure is based on weekly repayments that are automatically deducted by LoanBuilder through ACH transfer direct debit (debited directly from your bank account). So, this means that if a borrower receives a $100,000 loan for 52 weeks then they will need to have approximately $2000 to repay every week. This may be difficult for businesses with cash flow problems.
The flat-rate fee offered by LoanBuilder doesn’t work like an interest rate, so there is no early payment incentive for borrowers. The flat rate is a lump sum payment that is allocated over the life of the loan term. So, for instance, if the borrower has a $100,000 loan with a 5% rate then the flat fee will be $5000 and the total cost of the loan will be $105,000.
Apart from the flat-rate fee, there is no origination or late fee, or any hidden charges for that matter. However, there may be a possible late payment penalty for missing the payment deadlines.
The application process is fast and convenient. It is divided into phases to make it easy for applicants. To start with, applicants need to fill in an online pre-qualification form. Applicants can sign in through either their PayPal account, as a newcomer, or a guest. The prequalification form will ask for information related to five of the following areas.
- Contact details
- Personal details
- Business location
- Business details
- Identity verification
According to the advertisement on the site, this process should take less than 15 minutes. There is no hard credit check at this stage, so the credit score of the applicant won’t be affected.
Once LoanBuilder has assessed the applicant’s profile and deemed the business eligible for the service, it will send the offered rates and terms. The applicant can then customize the terms and borrowing amount according to their needs and requirements.
Once the applicant has decided on the service they want, they will be required to submit additional documentation including bank statements. It is at this stage that LoanBuilder will carry out a hard credit check. Upon approval, the funds will be transferred within 24 hours into the applicant’s bank account.
PayPal LoanBuilder customer service can be contacted through:
- Social media platforms
PayPal LoanBuilder phone number: 1-800-347-5626
PayPal LoanBuilder Reviews
The user reviews of the PayPal business LoanBuilder are mostly positive. Some of the most common complaints against LoanBuilder include the application process being more complex than advertised, and some customers have complaints about the weekly payment terms.
These complaints are not about any issue with the process, but more so complaints about the type of service provided. The weekly repayments are a stated policy and not much can be done about that unless the company decides to change it.
PayPal LoanBuilder Pros and Cons
- Low eligibility requirements
- Fast and convenient service
- Completing the questionnaire to assess your eligibility will not impact your credit score
- No long term funding option
- List of prohibited industries is quite long
- A personal guarantee is required
- Credit checks and other public record checks will be performed if you decide to go ahead with the loan
Frequently Asked Questions
How to apply for a PPP loan through PayPal?
Wondering how to get a PPP loan through PayPal? PayPal is no longer accepting new PPP loan applications.
PayPal LoanBuilder Review: Parting Thoughts
LoanBuilder has a fast and convenient lending process. Compared to other lenders the rates are not very high, but for customers with weak fundamentals, they may appear slightly on the expensive side.
The only issue with LoanBuilder is the weekly payments, so businesses with poor working capital management may find it difficult to manage the loan repayments.
Conversely, businesses with good working capital management may find LoanBuilder to be a very good option.
If your business is ineligible for loans from other lenders due to their high eligibility requirements, then LoanBuilder may be an option for you.
Looking For A Business Loan?
Explore funding options with America’s leading business loan marketplace, Lendio
You may also be interested in Lendio Loan Marketplace.