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27 User Reviews

7.2

Overall Score

LAST UPDATED: July 19th, 2022

PayPal is a company known primarily for their online payment system, which serves as an alternative to traditional paper checks and cash. PayPal was launched in 1998 as a money transfer service for a company called Confinity. Later, Confinity merged with an online bank known as X.com under then-president Elon Musk. Eventually, Musk decided that money transfer was the future of the company, and he terminated the other internet banking services that X.com provided. In 2001, the company took on the name PayPal and began a period of rapid expansion. Eventually, a few other services were added back into the mix. One of those is their business loan service, which PayPal calls Working Capital. Consumers that choose PayPal should remember that they must have a credit score of 550 or higher.

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The Good

  • Simple Process
  • Fixed Fee
  • Money in Hours

Simple Process

The biggest draw of the PayPal Working Capital loan is that it avoids much of the hassle and complexity involved in the business loan process. Since these loans are only available for businesses that use PayPal processing, loan payments are paid directly as a percentage of future sales. Applicants select the percentage of sales to apply to the loan, with a minimum of 10 percent every 90 days. This covers both the loan and the loan fee, which is single fixed amount. Additional payments toward the loan can be made at any time and the loan can be paid in full without prepayment penalties. The balance of the loan is paid automatically as a percentage of incoming sales at the repayment percentage that the business owner has selected, which means if sales go down, the percentage deducted for the loan goes down as well. This protects business owners from being stuck with a huge payment they can't afford when they have a bad week or month.

Fixed Fee

There is no traditional periodic interest rate, which makes this loan program fairly unique. Instead, applicants are charged a single fixed fee on the loan, the amount of which is determined by the individual business's sales history, the amount of the loan, and the repayment percentage. A higher repayment percentage will lower the fixed loan fee. Surprisingly, eligibility has nothing to do with a business's credit score. Instead, it is based solely on the sales history that the business has with PayPal. This is great news for companies that might have bad credit who can now get access to badly-needed funds for renovations or equipment that they otherwise couldn't afford.

Money in Hours

Because of the way this system works, once the application process is complete, funds are transmitted to the business's account within a matter of hours. It is hard to think of a loan process that works faster than PayPal Working Capital. And since this program is available to businesses that process payments through PayPal, it is basically available just about anywhere in the world.

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The Bad

  • Limited Loan Amount
  • Repayment Restrictions
  • Process Confusion
  • Customer Feedback
  • Term Lengths

Limited Loan Amount

Perhaps the biggest drawback to PayPal's Working Capital loan program is that it only provides loans up to 15 percent of total sales in the past 12 months, up to $97,000. This makes it a suitable option for smaller businesses and can help with renovations or equipment purchases, but it simply won't be enough for larger financial needs. On the other hand, traditional business loans often go up into the millions of dollars. Other limitations include:

Repayment Restrictions

Paying back the loan is also inflexible. Businesses can only repay the loan as a percentage of the sales that are processed through PayPal. If sales are high one month, they can make additional payments but only through the PayPal system. There is no other way to repay the loan, so businesses are essentially stuck using PayPal processing for the duration of the loan.

Process Confusion

The website for Working Capital is a bit scanty on specific information. Though a video tutorial is provided to guide people through the loan process and a FAQ answers the most basic questions, there is some information that is simply not available without going through the application process. Most significantly, the website gives no idea what to expect with the loan fee. A single fixed fee is added to each regular loan payment, but the website only says that this fee is based on sales history, loan amount, and the repayment percentage.

Customer Feedback

It is also difficult to track down a lot of customer feedback about the program. Customer testimonials and reviews are relatively scarce compared to other loan programs. This might be because Working Capital is a lot newer than traditional business loan companies. What is out there seems to be fairly positive, but more personal information would be helpful.

Term Lengths

Since the repayment amount is a percentage of sales, it is almost impossible to know how much a business will be able to put toward the loan in any particular month. While there is an upside to this, the downside is that it can make it hard to know how long it will take to pay off the entire loan. This might add to overall anxiety when there is a slump in sales.

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The Bottom Line

Overall, PayPal Working Capital is an efficient alternative to traditional business loans. As long as a business uses PayPal to process payments, this loan program is a great way to get money for smaller projects, and the loan process is just about the fastest on the market. Though it won't meet larger needs, it might be just what smaller businesses are looking for, especially for companies that might have a low credit score. Since the repayment amount is a percentage of sales, companies are less likely to be stuck with a big loan payment they can't afford during hard times. Of course, there is a major restriction in that it requires applicants to process payments through PayPal. For that reason alone, many people will not even consider it. However, it does provide another option, and it's a great way to get money fast for those vital and essential business expenses.

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Star Rating

4.2

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27 Reviews

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Tara Gillispie Hurricane, WV

The ease of PayPal is why I continue to use them every single day. I actually have credit accounts with PayPal and Venmo, which is owned by PayPal. They make it very simple to be able to pay lenders. Which is why I chose PayPal as my business lender. I’m so happy with my decision.

2 months ago

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Ralph Walls Wilmington, DE

I have had a PayPal account for several years. I have a small online business selling collectables. I wanted to try some different ideas I had to expand my sales and increase inventory. I applied a couple of places for a small loan and most places had a higher minimal amount than I wanted or something else held me up. I was online one day and saw that PayPal had small business loans. They advertised smaller amounts and easy application. I went for it and got basically everything I needed. The loan arrived quickly and repayment options were fair. I would definitely recommend them as an option if your looking for a loan.

3 months ago

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William Wallworth Fall River, MA

I've had a loan in the past and I have had no problems with anything from this company customer service was right there to help with any questions and they had every answer I was looking for so I would say there rates are fair and I would recommend them to any one looking for a business loan

2 months ago

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scotty Saint Paul, MN

I applied for a business loan with PayPal, I already had a PayPal credit card and fluently kept money in my PayPal cash account they approve me for a PayPal digital credit account. Very similar to a business loan it's credit I can use on the spot whenever I need it wherever I need it and it's all managed my PayPal there's no credit card there's no card that even comes with it everything's done online for any online purchases you may make so I used that for my business selling vintage stereos and electronics and it helped me out tremendously since PayPal is very good with merchants and has all the tools on their site in the invoices and sell receipts to customers and keep track of all your expenses. They're also very forgiving if you need help paying bills or even paying your credit account payments.

5 months ago

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Abi Deen Dallas, TX

I needed a loan to pay for a few bills to get caught up, Pay pal loan process was fast and easy. I got my funds within 3-5 business as stated. I will definitely used them again if needed in the future.

2 months ago

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sunday toler Matthews, NC

The PayPal line of credit was great for my eBay business. The bank they use is called Bancorp which is licensed by Mastercard I believe. They do not have an annual fee and do have good rewards. Credit score needed is 700 but check on that. You can get no interest if paid full in 6 months of purchases $99 or more when you use PayPal. The best way is to pay your bill off monthly so you don’t get interest. It is a good way to securely send money. Just use it responsibly and it will be a good thing!

6 months ago

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M. Nielsen South Bend, IN

I use PayPal for several of my business financial needs , I have a business loan that I have used to help grow my business inventory and needs as well as use their business debit card for any future purchases. I would recommend PayPal for all your business needs in the future.

6 months ago

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Ryan Vett Phoenix, AZ

I applied for their working capital loan to start a production run of an electronic device I made, and was denied due to not meeting the minimum requirement of $20,000 in sales during the past year. This would be a great option for a very active business that has been using PayPal for a long time, but as a first-time PayPal business user, it is not a good option.

5 months ago

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Autumn Lewiston, ID

When searching for a lender I looked into PayPal business loans because I use PayPal frequently. I liked that the PayPal process to be approved for a loan was clear and easy, that I could be approved in a matter of minutes, and that payments would be deducted daily. I ended up going with another lender that had lower loan fees.

6 months ago

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Ashlyn Elwood Marietta, GA

PayPal business loans have made it super easy for my company to stay on track of payments. They are automatically and incrementally taken out of our bank account and there is a fixed fee that we knew in advance so we are never surprised. I love how simplistic and fast the process is.

6 months ago

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A 1 Mesquite, TX

I took out my first Paypal loan over a year ago. There was a coupon code given at the beginning of my transaction that somehow seemed to disappear after I validated my payment details the coupon code just happen to disappear that initially allowed me to have 6 months of no interest. When I called PayPal they were unwilling to honor the code that disappeared and said that they couldn't reverse the transaction. This was very disappointing. I would be careful using PayPal again.

6 months ago

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Crystal Connell Denver, CO

Went through the whole process and even got a hit on my credit to get turned down, they didn’t offer me a pre-qualification

2 months ago

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Russell Vastine Aurora, CO

PayPal is straightforward and simple when trying to obtain a loan. I like was able to see what I could get I thought it impacting my credit score.

5 months ago

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Tiffany Robinson Richmond, VA

PayPal comes in handy,when you need a good card to get loans on little or no fee at all... good job

4 months ago

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MRCONSULT Ukiah, CA

VERY GOOD CONDITIONS, EASY TO SETUP, GOOD OVERVIEW ABOUT PAYMENTS SCHEDULES AND REMINDERS

5 months ago

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Laura Mccall Reno, NV

PayPal loan was super easy and I feel they were very fair. Custom service is amazing and very helpful

6 months ago

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Casey Br ,

thats probably the best service ive ever used! it really made my payments easier, quicker, better and made me feel safer about my money

2 years ago

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Darren Cardwell Riverton, UT

Love that they were on of the first to the table with online pay accounts and that they continue to make their services better.

4 years ago

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Phillip Stephens North Las Vegas, NV

I LIKE THAT PAYPAL IS AVAILABLE HOWEVER I DONT LIKE THE FACT THAT THERE FEES ARE ALLWAYS THERE IN THE BACKGROUND!

4 months ago

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anupam sumessur

I used Paypal when I started my online shop. So secure and cost effective. Love it.

6 months ago

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Nichole Hiatt Eagle Mountain, UT

PayPal is easy enough to use; I closed my account in the end because I was hacked and money was withdrawn from my bank account. I got it returned but it was a hassle.

2 years ago

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shawne bradley San Francisco, CA

I was very impressed with the turn around time of the loan information and approval.

6 months ago

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Tom Pleasant Grove, UT

It works well, but seems to be outdated and not enough people use it anymore. People use Venmo now and it is easier.

4 years ago

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Angie Seguin, TX

My business loan was professionally handled by experts. Interest rates were a bit high though.

6 months ago

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Evan Rasmussen Sandy, UT

Dont do nothing online without paypal its a must

4 years ago

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Stephen Veal

PayPal has great customer service and is security conscious.

5 years ago

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SHAN S Fayetteville, NC

Long application but worth it in the end

6 months ago