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PayPal Working Capital
PayPal, already one of the biggest eCommerce services in the world, has increased the range of its services through its PayPal Working Capital lending service. PayPal Working Capital services are aimed at the small business market and are intended to help smaller companies meet their funding requirements. PayPal launched its Working Capital services in 2014 and since then, the service has become an easy way for many small businesses to ensure they have the funding required to meet their growth needs in 2021.
PayPal Working Capital Loan
PayPal Working Capital loans offer fast and easy access to much-needed working capital through short-term business loans, similar to merchant cash advances. The service offers loans to small businesses who have a PayPal business or premier account and have a strong sales history of 3 months or more.
PayPal uses WebBank as a banking and lending partner for its Working Capital Services; WebBank will ultimately determine whether you are eligible for a PayPal Working Loan or not.
Loan repayments are simple: the service deducts a percentage of each sale you record from your PayPal business or premier account until the loan’s balance is paid in full. PayPal also allows you to make manual payments towards your loan using either your PayPal balance or a verified linked bank account.
PayPal Working Capital Review
The PayPal Working Capital service offers loans to small businesses who have a PayPal business or premier account and have a strong sales history of 3 months or more.
PayPal’s banking and lending partner is WebBank who will ultimately determine whether you are eligible for a PayPal Working Loan or not.
The repayment of the loan is simple with a percentage of each sale automatically taken from your account until your balance is paid in full. PayPal also allows you to make manual payments towards your loan using either your PayPal balance or a verified linked bank account.
Let’s continue with a more detailed look at this service.
There are no minimum credit score requirements for a PayPal Working Capital loan; in fact, PayPal doesn’t access your credit history at all during the application process. However, all eligible borrowers must be existing PayPal users with either a premier or a business account.
Also, the business applying for the loan must be at least three months old. Additionally, applicants must live in either the United States, Australia, Germany, or the United Kingdom, and they must have paid off any previously existing PayPal Working Capital loan 3-5 days prior to the current application.
Business age: 3 months
Credit Score: Not Applicable
PayPal Revenue: Premier accounts: $20,000 annually, Business accounts: $15,000 annually
Terms & Fees
PayPal Working Capital Loan Amount
PayPal Working Capital lends money to a maximum of 25% of a borrower’s annual PayPal revenue. For example, if your PayPal revenue is $100,000, then you will be eligible for a loan of up to $25,000. The first loan from the service is capped at a maximum of $97,000 and any subsequent loans can be up to $125,000.
As stated earlier, repaying a PayPal loan is straightforward. The service deducts a percentage from your daily sales until your loan is repaid in full. If, for example, your loan takes more than 12 months to pay off then you will be required to pay a minimum of 5% every 90 days. However, if your loan can be paid off within 12 months then you will be required to pay at least 10% of your loan every 90 days.
PayPal Working Capital also charges a one-time fixed fee which is calculated by applying the factor rate to the amount you have borrowed. Factor rates are not to be confused with interest rates, as they are different. For example, if you borrowed $100,000 at a factor rate of 1.15 then you will have to repay $115,000 regardless of how long it takes you to pay it back.
- Borrowing Amount: Up to $97,000 for the first loan, Up to $125,000 for subsequent loans
- Term Length: Up to 18 months
- Factor Rate: Between 1.01 and 1.58
PayPal Working Capital Loan Calculator
The fee calculator below is based on a $25,000 working capital loan from $100,000 in annual PayPal sales. When offering you the working capital loan, PayPal will ask you what percentage of your sales you want to be deducted from your sales each day.
As you can see from the graph, the higher the repayment percentage, the lower the fixed fee; conversely, if you opt for a lower repayment percentage, you will be charged a higher fixed fee.
|Repayment percentage||Fixed fee||Total repayment|
Application Process – Apply For PayPal Working Capital
The application process for the PayPal Working Capital service is simple and straightforward. PayPal account holders can apply through their PayPal account. The online application form will already contain the credentials you provided when you first registered with PayPal, so you just need to check these credentials to make sure they are current and click the submit button. The application process is automated, so you will know if your application has been accepted or rejected instantly.
If your application is approved, you will get to choose your fee and the rate at which the daily deductions are made. Ensure that you take into account that the loan factor rate fee and daily deductions are inversely related. So, if you choose low daily deductions then you will have to pay a higher factor rate, and if you choose a low factor rate then you’ll have higher daily deductions. If everything works smoothly, PayPal will deposit funds from the loan immediately upon approval of your application.
PayPal Application Errors
The PayPal Working Capital service relies heavily on web-based automation, and there have been times when people have complained of technical errors; from time to time these technical glitches have prevented people from successfully completing the application process.
The PayPal online community has cited systemic problems with the site creating errors during the application process which render the applicant’s information unidentifiable. In order to avoid these technical errors while applying, past users recommend double-checking your address and other details to make sure they are in a format the system can recognize.
Additionally, some borrowers have reportedly experienced credit errors while applying, even though they have a perfectly good credit record. The only thing that seems to rectify this is to re-submit your application as necessary. The system is automated and there is no penalty for multiple submissions. Many successful loan applicants have reported that simply by applying again they have been able to bypass this credit error.
It should be noted that PayPal does NOT do a credit check when you apply and your application does not affect your credit record in any way unless you default on the loan and fail to repay the agreed amounts on time.
To apply, go to the PayPal Working Capital login and application page and follow the prompts.
PayPal Working Capital Second Loan Wait 3 Days
Once you have paid off your first loan, PayPal advises waiting 3 – 5 days before applying again for a second loan through their service. This gives the system time to process any lagging payments you’ve made and to finalize your existing agreement. You will receive an email from PayPal letting you know your existing loan is closed, and then you can apply again. Finalizing your final payment can take anywhere between 72 hours and 5 days, depending on whether or not you have made a manual bank payment.
PayPal Working Capital Declined Second Loan
Some users report receiving denial error codes like DLGJ0656, DLGJ0711, and 650 after applying for their second loan. There are a few reasons your application could be declined:
● Incorrect information in the application
● Your company information has changed
● Applying too soon after paying off an existing loan
● Information cannot be verified
● Inconsistent sales
● Trading in a high-risk industry
● Pending transactions or limitations on your account
The best way to make sure you are approved for any PayPal Working Capital loan is to make sure all of your information is up to date and correct before you apply.
Customer Service – PayPal Working Capital Phone Number
PayPal customer service can be reached through:
● Phone 1-877-981-2163
● Social media platforms
However, because the PayPal system relies so heavily on automation, many users report that the customer service team is often unable to provide timely support when there is an issue with an application or an existing loan account.
Can You Have More Than One Loan At A Time?
PayPal Working Capital allows only one loan at a time. However, the service encourages you to apply for another loan once the existing loan is fully paid off.
PayPal Working Capital Reviews
PayPal itself has a reasonable reputation in the market, and users are generally satisfied with the PayPal Working Capital service as well. However, there are a few issues that come up when you search through user reviews.
Most of the complaints registered are based on the aforementioned technical issues with the loan application and approval process. Additionally, some users have cited the low borrowing limit, and the lack of an early payment redemption scheme as subpar as well.
Another issue that past users have reported is PayPal’s aggressive stance on overdue payments. Some merchants have reported that PayPal sold their loans to debt collectors over amounts as little as $20, without even contacting them to address the default payment. If you are concerned with a consistent ability to generate sales to service a loan, you should definitely take this into account before using PayPal loan services.
From the PayPal website:
“If you don’t meet the minimum repayment amount, your entire loan balance could become due immediately.”
To address some of these shortfalls, the PayPal Working Capital dashboard now displays the amount you have paid and the minimum you need to pay each month to avoid defaulting. This enables users to clearly see if they need to top up their loan repayments in the event sales have declined, and they aren’t meeting the minimum payment requirements.
Pros and Cons
- Fast service
- Reliable and hassle-free
- Quick application time
- Quick transfer of funds
- The repayment process is easy
- Automated system with no paperwork
- No credit check
- No collateral required
- Those with strong sales and bad credit are most often approved
- No late fees or penalties for early repayment or one-off repayments
- Fees can sometimes be quite high
- No incentive to repay the loan early
- Only small amounts available
- Poor customer service
- Errors, bugs, and platform issues
- No boost to your credit score
- Only available to PayPal business or premier users
Parting Thoughts: A Good Service for Small Businesses
Is PayPal Working Capital a good idea? PayPal Working Capital loans can be very useful for providing small businesses with modest amounts of immediate funding for their working capital needs. The rates on these loans are low and repayment is relatively easy as well. Additionally, the application and approval process for a PayPal Working Capital Loan is much faster than a traditional lender.
Apply For A Working Capital Loan
Check your eligibility.
Enjoy our PayPal Working Capital review?
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