PayPal Generosity Network: What is it and how does it work?

PayPal announced an expansion of its PayPal Giving program that will allow businesses to raise money through crowdfunding. Anyone can create a campaign — but the strict limits on how much you can raise may not be enough for your business.

How PayPal Generosity Network works

PayPal Generosity Network allows anyone with a verified PayPal account to raise up to $20,000 over a 30-day campaign period. These donations don’t need to be repaid and there are no fees to create a campaign. However, PayPal states in its terms of service that it reserves the right to charge a fee in the future — although it isn’t clear what this fee might look like.

All donations are final and are immediately transferred to the PayPal account connected to the campaign. While you can use the funds for business, you cannot sell any goods through the Generosity Network or offer an incentive for donations. Linking to an outside website — including your own business website — is also prohibited under PayPal’s terms of service.

To create a campaign, you only need to sign in to your PayPal account and provide details about how much you want to raise and what you’re raising money for. From here, it’s all about promotion. Posting on social media and asking for donations from your customers can be effective ways to draw attention to your need for funding.

PayPal Generosity Network vs. peer-to-peer loans

The amount you can raise through the Generosity Network is limited, and you still have to promote your campaign on social media to raise awareness.

If your business is established and you have fair credit, you may want to consider peer-to-peer business loans. Your business will need to pay interest — something you won’t need to worry about with the Generosity Network — but you won’t have to rely on donations to get funded. You may also be eligible for a larger amount: some peer-to-peer lenders offer up to $50,000.

4 more funding options for small businesses

For larger amounts of working capital, PayPal offers loans up to $300,000. These loans are only available to businesses that have a PayPal Premier or Business account and make at least $15,000 in annual sales. Other business owners might want to consider one of these options to get the funding their businesses need:

1. Crowdfunding. PayPal Generosity Network is new, but it isn’t your only option. There are multiple types of crowdfunding opportunities available to businesses, including big names like Kickstarter and Indiegogo.
2. Microloans. If you only need a small amount, look into microloans. These small-dollar options are good for newer businesses.
3. Term loans. Term loans cover a wide range of loan amounts and funding options for all businesses. While your business will need to be at least a few years old and meet revenue requirements to qualify for most funding, there are some loans available to startups.
4. Lines of credit. Lines of credit are much more flexible than term loans or microloans. Your business can borrow what it needs when it needs it — and it will only pay interest on that amount. Rates tend to be much lower than credit cards.

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