PayPal Working Capital is a merchant cash advance linked directly to your PayPal account.
PayPal have now loaned $3 billion to small businesses
We’ve heard many stories over the past five years or so of how small business finance has assisted online retailers. You have have borrowed from a company specifically set up to provide finance to online sellers such as iwoca, Ezbob or Cabbage, or more recently from Amazon or PayPal, but regardless which company you’ve used (and they all have different benefits and disadvantages) the aim is to help you grow your business.
PayPal have just revealed that since PayPal Working Capital launched in 2013, they have lent more than $3 billion in loans and cash advances to over 115,000 businesses around the world. A quick calculation gives an average loan value of around $26,000 (~£20,000).
With a PayPal Working Capital loan, the cost (call it interest, charge, or arrangement fee) is added to the loan so there are no discounts for early repayment. That’s the downside, but the upside is that you can choose what percentage of your sales goes towards repaying the loan. If your sales fluctuate down a little then you don’t have to worry too much about not being able to keep up with your commitments, but if sales boom then your repayments will also rise.
We noted back in 2015 that PayPal Working Capital loaned $1 billion in their first two years of operation to 60,000 businesses. For them now to have hit $3 billion means they’ve accelerated (both number of loans and loan amounts). They’ve loaned another $2 billion in just over 18 months.
If you’re considering a small business loan, banks are supposed to be becoming more friendly, but facilities such as PayPal are hard to beat for flexibility combined with speed.