A PayPal Business Loan is a loan available to qualified PayPal Business customers. They are priced based on the % of daily sales applied to the term loan, ranging from $5,000 - $100,000 for first-time borrowers and up to $150,000 for repeat borrowers. Instead of interest, small business owners are charged an easy-to-understand fixed fee (with no hidden fees), and payments are automatically deducted from their daily sales transactions. PayPal Business Loans have successfully helped thousands of businesses across several different industries. Read on to learn more about PayPal business loans and requirements.
Applying for a PayPal Business Loan is a simple process. To obtain a PayPal Business Loan, the first step you will need to take is to complete a 5–10-minute online questionnaire to determine your business’s eligibility. Next, you can customize the loan amount and duration to compare the costs of financing. After choosing your ideal loan terms, you complete an application and if approved, you should be prompted to electronically sign a contract emailed to you, which includes bank instructions so that payments can be debited weekly from your business checking account.
The short answer is, yes, PayPal business loans can be a good option. The lender for PayPal Business Loans is WebBank, which is a member of the FDIC (Federal Deposit Insurance Corporation). Also, PayPal Business Loans are serviced by Swift Financial, LLC, a subsidiary of PayPal, Inc. LoanBuilder, A PayPal Service. In addition to their legitimacy, compared to other financial products for business owners, PayPal Business Loans can be easier to qualify for and funded faster.
One of the benefits of pursuing a PayPal Business Loan is that it’s relatively easy to get. For example, the FICO score minimum requirement is only 580. Other factors considered in obtaining a PayPal Business Loan include being in business for at least nine months and having an annual revenue of at least $33,000. If your business meets these qualifications, you can qualify for a loan between $5,000 and $150,000 with a loan duration of 13 and 52 weeks.
There are two financial products offered by PayPal:
PayPal Working Capital can be a good fit for smaller businesses with less consistent cash flow. Compared to PayPal Business Loans, PayPal Working Capital only requires a business to have three months of PayPal account history and $15,000 in annual sales. Similar to PayPal Business Loans, instead of interest, you’ll pay a single, fixed fee over the life of the loan.
There are five basic requirements for a PayPal Business Loan, as follows. Requirements can vary, though, or go beyond these so be sure to check with PayPal for current requirements.
You are likely eligible for a business loan if your business meets the above loan requirements.
Other questions PayPal will ask about your business include the business entity type, annual business revenue, business start date, number of full-time employees, business industry, business address, and phone number, your federal tax ID, and what percent of the business you own.
PayPal works with over 550 industries; however, the following types of businesses are ineligible:
In the first stages of exploring your PayPal Business Loan options, which include completing the questionnaire (to assess the business’s eligibility) and reviewing estimated offers, your credit score will not be impacted. If you decide to move on to the loan application part of the process, credit checks and other public record checks will be performed, which may impact your credit score.
Applying for a PayPal Business Loan is simple. Here are some steps to follow:
#1. Check your business credit score. You can view your credit through the lens of a lender by using mySMBscore, which empowers businesses to access credit data and helps them improve their financial position.
#2. Complete PayPal’s questionnaire. Go to PayPal’s website and complete a 5–10-minute online questionnaire to determine your business’s eligibility. After completing the questionnaire, you can customize and play around with the loan terms by adjusting the loan amount and duration and comparing the financing costs.
#3. Select terms and apply. Once you have selected your desired loan amount and duration, you complete an application. If approved, you should be prompted to electronically sign a contract that will be emailed to you and which includes bank instructions so that payments can be transferred by the lender directly into your PayPal Business account.
If your application is approved, the lender transfers the funds directly into your PayPal Business account. The lender transfers funds as fast as the next business day for applications approved by 5 pm Eastern Time (USA) on bank business days.
The best alternative option for you will vary based on your business credit score, business history, collateral, and more. You can empower yourself as a business owner by accessing your detailed business credit data at mySMBscore before making loan decisions. You can also access loan offers that can be a good fit for you at mySMBscore.
The four main alternatives to PayPal Business Loans are as follows.
1. PayPal Working Capital loan. This could be a good option if your business account history is less than nine months, annual revenue is less than $33,000 (but more than $15,000), and you can pay at least 5% of the total loan amount every 90 days (if your loan term is 12+ months).
2. Online Small-Business loans. These loan options vary widely, with interest ranging from 8% to 99% and terms ranging from 12 weeks to 10 years. Online business loans differ from traditional loans because the application is usually 100% online, and a financial technology company usually offers the loan instead of a bank. Unlike bank funding, an online lender generally has more flexible criteria and a more streamlined underwriting process. Therefore, these loans can be a good option if you cannot qualify with a bank or are willing to pay extra for faster funding.
3. SBA (U.S. Small Business Administration) Microloans. The microloan program offers up to $50,000 to help small businesses and not-for-profit childcare centers start up and expand. The average microloan for this program is $13,000, with an average SBA loan interest rate between 8 and 13 percent, and the maximum repayment term allowed is six years. The program works by the SBA, providing funds to specially designated intermediary lenders and nonprofit community-based organizations, who then administer the microloan. Each intermediary lender will have its own lending and capital requirements, which often include some type of collateral as well as the personal guarantee of the business owner.
4. Bank Loan. Data proves that only about 15% of business loan applications get approved. Banks are one of the strictest when it comes to requirements. Some requirements for obtaining these loans include an existing relationship (at least a business checking account at their institution), good credit (at least in the 700s), strong revenue (this will vary based on whether the loan is secured or not), business history (two years under the same ownership is standard), and collateral (although not required.) Business owners able to put up collateral as a business owner will likely enjoy better funding opportunities with longer terms and lower interest rates.
Before applying for any business loan, you should view your business credit report through the lens of a lender. At mySMBscore, you can do just this and much more to prepare your business better to get the loan it needs for an affordable cost.
In the market for a business loan? Check your SMBscore to unlock the best rates!