If you use PayPal to handle some of your business’s sales and need to borrow money, a PayPal Working Capital loan could be a solution. It’s beneficial for business owners who are short on cash, don’t want fixed payments because their sales are variable, and don’t have excellent credit.
PayPal offers small businesses both working capital and traditional term loans to businesses. You’ll need a PayPal Business account to acquire these loans. As a reputable company, PayPal’s loan offering is backed by a major financial institution that’s qualified to provide you with the funding you need.
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How to apply for a PayPal business loan
The PayPal Working Capital application is made entirely online. To apply for working capital, most people will need to provide basic information about themselves, their business, and the loan they’d like to get. In some cases, you might need the following information for all owners and managers of your business:
Social Security number
If you need help, the PayPal Working Capital phone number is 877-981-2128. If you’re approved for funding, you could see it in your PayPal account in as little as five minutes.
Rates and Terms
For term loans, businesses can apply for $5,000 to $500,000 with terms ranging from 13 to 52 weeks. Compared to other lenders we evaluated, this is a short-term loan option. PayPal advertises on its site that this type of loan provides fast cash with lower qualifications and requirements than big banks. PayPal syncs directly with your bank account and automatically deducts weekly payments until the loan term is complete. There are no additional fees with this loan, except for a $20 returned-item fee-only assessed if an amount is returned. You can pay back the loan at any time, but you’ll have to pay the entire principal and interest at the time of the payment.
Individual interest rates on these loans vary depending on your business’s financial situation. PayPal doesn’t advertise its rates publicly, but you can get a quick idea of what your business qualifies for by filling out and submitting an application. The application is not a commitment and is an excellent way to inquire about your overall loan situation. While the rates are not available publicly, PayPal says its rates are fixed and do not fluctuate throughout the loan term.
Interested business owners can complete an application online or over the phone. The application asks for basic business information, like name, address, and years in business. PayPal may request additional financial information and documentation once you apply. Thus, you can get pre-approved within minutes of submitting your application. Once your application is approved, you can customize your loan term and amount and get your funds.
How does the business loan work?
The fee, terms, and loan amount your business receives vary depending on factors like your revenue, credit score, and time in the industry. For example, if you make the 550 credit score and $42,000 annual revenue cutoffs, you’ll likely receive a fee on the higher end and qualify for a lower maximum loan amount.
What do you need to qualify?
You and your business must meet the following requirements to qualify for a PayPal business loan.
PayPal business account
At least $42,000 in annual revenue
At least nine months in business
550 personal credit score or higher
No active bankruptcies
PayPal loans require a personal guarantee, a legally binding agreement that you will pay back the loan. Beyond private security, businesses may not be required to put up individual assets as collateral. This is ideal for small business owners looking to protect their personal and business support.
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What information do you need to apply for a loan?
What you need to apply varies depending on your business. PayPal typically requires you to submit at least four months of business bank statements.
What industries does PayPal give loans to?
PayPal works with over 550 industries. However, the following types of businesses are ineligible.
Business or professional associations
Businesses involved in gambling
Car, recreational vehicle, and watercraft dealerships
Civic and social organizations
Foundations offering grants
Holding or management companies
Human rights organizations
Independent artists, including writers or performers
K-12 schools or junior colleges
Labor and political organizations
Manufactured mobile home dealerships
Organizations or companies in public administration
Talent and public figure management agencies
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Voluntary health organizations
Benefits of PayPal Business loan
- Fast funding: funding may take a few days after you apply.
- Strong credit not required: You can qualify for a PayPal loan with bad credit. The business loan requires a minimum FICO score of 550. Banks and other lenders typically need good credit (above 689 FICO) to qualify.
- No collateral required: PayPal doesn’t require collateral, which means you won’t have to pledge assets such as real estate or equipment that PayPal can seize if you fail to repay the loans. However, PayPal’s business loan does require you to sign a personal guarantee.
PayPal business loan review: Should you apply?
The PayPal Working Capital loan isn’t our first-choice recommendation for anyone due to its lack of transparency. Without applying, you can’t know anything about the loan you might get — and if you do use it, that could put you in a high-pressure sales situation.
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That said, if you use PayPal for a good chunk of your business, need fast funding, and don’t have excellent credit, it could very well be worth at least checking your rates with PayPal. Just remember to keep an open mind and know how much other loans might cost you too.