When you're running a business, capital is always necessary. There are several ways of obtaining financing, for different needs, but if none of them are what you were looking for, you may be better off opting for something different, like PayPal Working Capital. You will notice that this financing solution is a lot like a cash advance, although it's not an advance, but a loan. It is, however, similar in the way you repay it. Here's a review of what you can expect from PayPal Working Capital.
As I already mentioned, PayPal Working Capital is not a way to sell future receivables, like you do with a merchant advance, but a short-term business loan. The way it works is you repay the money you borrow through a fixed percentage of your PayPal sales, just like you would with credit card transactions, in the case of an advance. A fixed fee is also set, that you pay one time, that PayPal charges you for the service. This is paid instead of the traditional interest a lender would charge you.
Existent reviews generally show a positive customer experience, although there are some complaints related to loan approval. It can be inconsistent, which is something to take into consideration if you ever need money urgently; this may not be a 100% reliable source.
Are You Eligible?
Just like other financing options, PayPal Working Capital has some eligibility criteria that you need to meet. First of all, in order to qualify, your business must have been in operation for at least 3 months. Then, of course, you need to have significant PayPal revenue in order to be able to repay the loan. Your business needs to make roughly £9,000 in revenue annually for Business accounts, and around £15,000 for Premier accounts in order to qualify. The good news is that you don't need a good credit score, because there is no credit check involved.
How Do You Apply?
Applying for PayPal Working Capital is easy - just like with any other loan, you fill in an application. That is openly accessible in your PayPal account. All you have to do is fill in the necessary information, such as your place of business, identity, as well as the financial info. Approval or denial comes once you complete the application. Once you are approved, you need to pick a withholding rate and fee, and you instantly get the money deposited. If you do not get approved, it can unfortunately take some time for the situation to sort itself out.
Here are the advantages that users of PayPal Working Capital were able to identify and highlight:
- Flexible fees - The borrower has a degree of control over the fees, thanks to the flexible structure.
- Single fee - Instead of interest, the borrower pays a one-time fee.
- Quick & easy application - You can easily apply from your account and it only takes a couple of minutes of your time.
- Easy repayment - The repayment is made automatically as long as the money is present in your account.
- Quick loan transfer - You don't have to wait forever for your loan to kick in. PayPal will transfer the money into your account immediately.
- Low fee - You will pay more in interest charges for traditional loans than in fees for PayPal.
Let's also take a look at the disadvantages users have encountered when using PayPal Working Capital:
- There is no advantage to early repayment - When you pay interest on a loan, early repayment means you get to reduce the amount of interest you pay on the loan, but a one-time fee must be paid in full, regardless of how long it takes to repay the loan.
- Problems with approval - Unfortunately, there have been some issues with approval that some users have experienced. While approval can be mistakenly denied even when the borrower meets the criteria, the error can take a long time to be fixed.
- Low borrowing amounts - The maximum amount you can get from PayPal is just 25% of your annual sales through PayPal. That doesn't necessarily mean very much, because most businesses do not use PayPal as their primary source of payment.
In conclusion, PayPal Working Capital can be an excellent financing solution, and represents a good alternative to traditional loans or similar cash advances offered by other companies. You have the advantage of a quick and easy application process, a one-time fee, and a flexible fee structure. If you get rejected, a service like OnDeck can be a viable alternative.