PayPal business loans

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Page written by Chris Godfrey. Last reviewed on November 8, 2024. Next review due October 1, 2025.

Fast, simple and easy to apply for, PayPal business loans are suitable for businesses that use PayPal to process some or all their sales. But how does this financing work? Let’s take a look.

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How does a PayPal business loan work?

PayPal Business Loans

This type of financing works like a traditional term business loan. Borrow from $5,000 up to $100,000 if you’re a first-time borrower, or up to $150,000 if you’ve had a PayPal loan before. Repayment periods vary from 17 to 52 weeks depending on your credit history and the sum you borrow.

To repay, you’ll make an automatic and identical payment every week from your business bank account. A flat fee is applied at loan origination and tacked on to the sum you borrow. This means you’ll repay loan capital plus a percentage of the fee with each repayment. A full credit check is required, but if you’re approved, PayPal say you’ll have the funds in your bank account the next business day.

PayPal Working Capital Loans

PayPal Working Capital Loans offer slightly more flexibility than PayPal Business Loans and are best for businesses that process many of their sales through PayPal or who have weak credit.

The funding works by taking a small percentage of your PayPal sales until the loan is repaid. Borrow from $1,000 up to $200,000 if you’re a first-timer, or $300,000 if you’re a repeat borrower. No credit check is required as qualification is based on your PayPal trading history. PayPal say that if you’re approved, you can have the funds in your PayPal Business account ‘within minutes’.

PayPal’s cut of your sales is set by you, but be careful, because the lower the percentage you pay on each sale, the higher your fee will be and the longer it will take to pay off the loan. If you make no sales, you won’t have to make any repayments aside from a minimum amount ranging from 5% to 10% of your loan amount, due every 90 days.

What do PayPal business loans cost?

PayPal do not publish their fees, so the only way to find out is to apply for a loan. This can make it tough to compare PayPal financing costs to business loans from other lenders.

Do I qualify for a PayPal business loan?

You’ll have to meet PayPal’s minimum eligibility requirements to qualify for a PayPal business loan:

PayPal Business Loan:

Annual revenue of at least $33,300
Business is at least nine months old
A PayPal Business account is required

PayPal Working Capital Loan:

Have a PayPal Business or Premier account for at least 90 days
Processed at least $15,000 in PayPal sales in the last 12 months ($20,000 for Premier accounts)
No outstanding PayPal Working Capital loan

How to apply for a PayPal Business Loan

The application processes for both types of PayPal business loan are straightforward:

PayPal Business Loan:

Complete a 5-10 minute online questionnaire to determine your business’s eligibility. (Your application may take longer to complete if your identity cannot be automatically verified).
Once the questionnaire is complete, select your loan amount and duration (17 to 52 weeks) to see customized loan terms and costs.
Accept the loan terms and submit your application.
If your application is approved, you’ll be asked to electronically sign a contract and provide your bank instructions so that payments can be debited weekly from your business checking account.
Funds can be transferred to your business bank account as soon as the next business day.

PayPal Working Capital Loan:

Complete a short application. No credit check or extensive documentation are required. In most cases, you’ll get a decision within minutes.
If approved, select your loan amount. The maximum loan amount you can borrow depends on your PayPal account history.
Choose the percentage of your PayPal sales that will go toward repaying your loan and fee.
Receive the funds in your PayPal Business account within minutes.

Does PayPal business loan require a personal guarantee?

No. PayPal Business Loans and PayPal Working Capital Loans do not require a personal guarantee or collateral.

What length of term can I apply for?

PayPal Business Loans are repaid over a fixed duration of 17 to 52 weeks. PayPal Working Capital Loans are repaid from your PayPal sales, so the higher your sales and the higher the percentage of each sale that you commit to loan repayment, the shorter the loan term.

How do I repay a PayPal business loan?

PayPal Business Loans are repaid with regular weekly payments automatically deducted from your business bank account. You’ll repay a percentage of the loan sum and flat fee that was applied at loan origination with every payment. PayPal Working Capital Loans are repaid with a set percentage of your PayPal sales until the borrowed sum is paid off.

What are the pros and cons of a PayPal business loan?

Like all types of business financing, PayPal business loans have their advantages and disadvantages:

Pros:

No credit check for Working Capital Loans
Automated payments
Fast funding times
Simple application
Loans do not require a personal guarantee
Easy eligibility requirements
Bad credit not an issue with Working Capital Loans

Cons:

Weekly or per-sale payments can hurt cash flow
Doesn’t build business credit
Working Capital Loans mean you must commit to using PayPal during repayment
Must have a PayPal Business account to qualify
You don’t know the loan financing cost until you apply

Are PayPal business loans available to businesses located in all states?

No. PayPal business loans are currently unavailable for businesses based in North and South Dakota.

What are the alternatives to PayPal business loans?

If a PayPal business loan is not for you, don’t worry, there are other ways to get the funding your business needs. Popular small business loans include:

Term loans – with a business term loan, you receive a single, lump-sum cash injection. Repay the loan with regular instalments, plus interest and any fees, over a fixed period of anywhere from a few months up to 25 years.
Business line of credit – a business line of credit, also known as a revolving line of credit, is a loan that functions like a high-value credit card. Businesses can withdraw cash as they need it when they need it up to the limit of their borrowing. Unlike term loans, with a line of credit you only pay interest on the sums you have withdrawn, not the whole loan total. This can significantly reduce your borrowing costs.
Merchant cash advances – a merchant cash advance is designed for businesses that accept customer payments by credit and debit card. Borrow against the value of your card sales. As your card sales increase, your borrowing limit goes up. Pay the loan back with a fixed percentage of your card sales on a daily, weekly or monthly basis.

Get started with Swoop

Working with business finance experts can make all the difference when applying for funding. Contact Swoop to discuss your borrowing needs, get help with your application and to compare high-quality business loans from a choice of lenders. Give your business the boost it deserves. Register with Swoop today.

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.

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