PayPal Working Capital business loans review
Lightning-fast financing for your online business — with no credit check.
- Best for new retailers that rely on PayPal payments.
- Pick something else if your business just meets the revenue requirements.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
PayPal Working Capital offers fast funding to small businesses with few requirements. You can get your loan as soon as the same day and qualify with just three months in business — as long as you have high enough PayPal sales.
While technically a loan, PayPal Working Capital works like a merchant cash advance. It’s a steal if you have high PayPal sales and only need to borrow a small amount. But that fee can top 100% APR if you have low revenue and borrow up to the limit.
Don’t rely on enough PayPal sales? Find other business loan options below.
How much will this loan cost me?
PayPal Working Capital charges a fixed fee instead of interest, which PayPal doesn’t disclose. But you can use a calculator on its website to find out how much you might pay, depending on the loan amount and your PayPal sales.
Generally, lower fees go to businesses with high revenue and low advance amounts who pay it off with a high percentage of daily sales.
How it works
PayPal Working Capital works like a merchant cash advance. Instead of monthly repayments, you repay the loan with between 10% and 30% of your PayPal sales each day until it’s fully paid off.
But to really understand how PayPal Working Capital works, let’s take a look at a couple examples.
Example 1: High revenue, low advance amount
Say you had $1 million in annual PayPal revenue and wanted to borrow $10,000.
Here’s how much your loan would cost, depending on the repayment percentage you choose:
This loan costs the equivalent of a low 1.31% APR if you paid it back over a year.
Example 2: Low revenue, high advance amount
But say you brought in just $15,000 in annual PayPal sales and needed to borrow $5,200.
Here’s how much your loan would cost:
This loan costs as much as the equivalent of a 138% APR if you paid it back over a year — or higher if you pay it back in a shorter amount of time.
How much can I borrow with PayPal Working Capital?
You can borrow up to 35% of your annual PayPal sales — as long as it falls into the range of $1,000 to $300,000. And first-time borrowers can only qualify for up to $200,000 in funding.
What do I need to qualify?
You must meet these three requirements to qualify for a PayPal Working Capital loan:
- PayPal account. You must have a PayPal Premier or PayPal Business account open for at least three months.
- Minimum annual revenue. You must bring in at least $15,000 in PayPal Business or $20,000 in PayPal Premier sales each year.
- No outstanding debt. You must have fully paid off any previous PayPal Working Capital loans.
What information do I need to apply?
PayPal should already have most of the info it needs about you and your business when you apply for a loan. But you might need to provide the following details about other primary business owners and business management:
- Phone number, email and address
- Birth dates
- Social Security numbers
What industries does PayPal work with?
PayPal works with any ecommerce business that brings in enough revenue through an eligible PayPal account.
What other types of financing does PayPal offer?
PayPal also offers business term loans from $5,000 to $500,000 to Business PayPal account holders. But you have to apply to find out how much it costs.
To qualify, your business must make more than $42,000 in annual revenue and be around for at least nine months. You can receive funds as soon as the next business day, which your business repays each week.
- Inexpensive if you have high revenue and borrow a small advance
- Funding as soon as the same business day
- No documents needed or credit check required
- High cost for businesses with low PayPal sales
- Not an advance on full business revenue
- Doesn’t display costs in a way that’s easy to compare
See other top business loan options
Is PayPal Working Capital legit?
Yes, PayPal Working Capital is a legitimate lending service. It uses SSL encryption to protect your information when you apply or use its website. While it’s had its share of data breaches — standard for a tech company of that size — it typically patches them up within a day.
It’s also relatively transparent. While it doesn’t advertise a range of fees, you can easily find out how much it’ll cost you by using a calculator on its website.
PayPal reviews and complaints
|BBB customer reviews||1.05 out of 5 stars, based on 1,517 customer reviews|
|BBB customer complaints||13,613 customer complaints|
|Trustpilot Score||1.2 out of 5 stars, based on 13,598 customer reviews|
|Customer reviews verified as of||13 October 2020|
PayPal has overwhelmingly negative customer reviews, though most are about other PayPal services. The few working capital reviews are generally mixed.
Some customers said they hardly noticed the deduction from sales. Others complained that customer service representatives often can’t explain rejections. Some borrowers also report having trouble getting approved after they experienced a significant increase in sales.
How do I get a loan with PayPal Working Capital?
Follow these steps to apply for a PayPal Working Capital loan:
- Login to Paypal and go to PayPal’s Working Capital site. Click Apply Now.
- Wait for PayPal to run your information through an automatic system to tell you if you’re eligible to apply.
- If PayPal gives you the OK, confirm your contact information and PayPal sales information from the past 12 months.
- Choose how much you want to take out and the percentage of your sales you’re willing to let PayPal take for your loan.
- Carefully read and agree to your loan’s terms.
What happens after I apply?
PayPal immediately deposits the loan into your PayPal account upon approval. It doesn’t ask for any extra documentation, and the whole process can take just a few minutes.
Why was my PayPal Working Capital loan declined?
PayPal declines working capital loan applications for four main reasons:
- You don’t have the right type of PayPal account.
- You don’t make enough PayPal revenue for the type of account you have.
- Your loan request was more than 35% of your PayPal revenue — or outside of its $1,000 to $300,000 range.
- You haven’t fully paid off your current PayPal Working Capital loan.
How do repayments work with PayPal Working Capital?
PayPal working capital automatically deducts between 10% and 30% of your PayPal sales each day. If you don’t make any sales, you don’t have to pay anything.
Minimum payment requirement
No matter how much you make, you’re required to pay between 5% of your loan amount every 90 days if PayPal expects you to take over a year to repay. PayPal bases this estimate on factors like your sales history.
If you’re expected to take less than a year, you have to pay 10% of your loan amount every 90 days.
Is PayPal Working Capital worth it?
When you only need to borrow a small percentage of your revenue, a PayPal Working Capital loan might be one of the cheapest options out there — and it’s one of your only options if you need money today. But if you’re looking for a larger loan, you’ll likely find less expensive options elsewhere, even with other online lenders.
Check out our guide to business loans for more options.