PayPal Working Capital
October 2, 2018 by BlueSky Capital Funding
For more than two decades now, PayPal has been the undisputed “King of the Ring” when it comes to processing online payments.
First gaining notoriety as the number one tool for online buyers and sellers to safely process transaction on eBay, it didn’t take long for that auction house giant in history to snap them up and integrate them into the eBay fold.
Today, however, PayPal is so much more than just a payment processor for buyers and sellers on eBay.
PayPal has become an easy way to send and receive money between friends and family (as well as complete and total strangers), provides for a safe way to handle personal and professional transactions online without giving out your credit card information or banking details, and makes it effortless for small businesses to get up and running while processing credit and debit cards.
E-commerce and small online business platforms in particular have made PayPal a major force in the world of online payment processing. Each year, billions of dollars move throughout PayPal and their digital services – changing hands from consumer to business owner every second of every single day.
Sure, there have been a couple of black eyes and bumps in the road for PayPal in the past. But what technology giant is free from a little bit of controversy in their past?
Over the past 20 years, almost all of the bugs have been ironed out of the PayPal platform. There’s a reason why millions and millions of people all over the world continue to use PayPal daily for all of their digital transaction needs.
But today business owners and entrepreneurs get to take advantage of even more leverage with PayPal – all thanks to PayPal Working Capital.
PayPal Working Capital Focuses On Serving Entrepreneurs
PayPal as an organization has really fleshed out the services and solutions that they make available to small business owners.
No longer just the “main game in town” when it comes to inexpensively processing credit cards without having a dedicated merchant account, PayPal has become a clearinghouse of sorts for entrepreneurs – particularly digital entrepreneurs – that want to be able to bootstrap their operation in record time. They’ve now made it possible to collect payments for their products and services in no time.
In fact, some entrepreneurs are set up and running with PayPal before they even finish up their business website!
This functionality is getting easier to use every day, but PayPal wants to make sure that entrepreneurs are able to gain access to the much-needed capital they deserve to build and grow their businesses with lightning like speed.
Recognizing that traditional lenders are still a little bit gun shy about making small business loans and working capital loans to entrepreneurs after the massive global credit crunch in the mid-2000’s, PayPal has stepped into the void with their Working Capital services.
What Exactly Is PayPal Working Capital, Anyway?
It’s best to think of Working Capital like this:
If you were to add up all of the capital you as a business have available (after you have subtracted the value of all your liabilities from the value of all of your assets), you’d be left with a final lump sum of cash that you could use to build and grow your business – and that’s your “working capital” figure.
This is the capital on hand that you’ll use to cover your day to day operations, to expand your marketing and advertising reach, and to handle your rent payments, your payroll, any of your business loans, etc.
It’s basically the capital you need as a business owner to keep the lights on, so to speak.
The overwhelming majority of businesses out there (particularly startups and first time small business owners) are trying to gain traction while running a negative working capital figure.
They have more cash going out than they have coming in, are forced to bootstrap almost everything, and end up struggling to achieve any real success – let alone grow and create the financial future they been dreaming of.
With PayPal Working Capital, you’re able to flood your coffers with cash that you can take advantage of immediately.
This capital infusion guarantees that you have more than enough money to “keep the lights on”, giving you a chance to reinvest some of your profits into the growth of your business. You’ll be able to grow sales and profits, earn more capital, and build your business – and your bottom line – all at the same time.
How Do I Get Set Up With PayPal Working Capital?
Right out of the gate, you’ll have an opportunity to apply for this kind of lending offer any directly from PayPal – but only if you have already operated a PayPal Merchant Account for at least three months.
This means you’ll have to have held a PayPal Business or PayPal Premier account for 90 days before you even get an option to apply for this kind of loan.
Secondly, you’re going to need to have processed anywhere between $15,000 and $20,000 in annual PayPal sales over the last calendar year before you’re eligible for this kind of loan.
That’s the baseline minimum for application, and obviously if you move more than that in sales (through PayPal, specifically) your odds of being approved will increase – and the working capital figures you’ll have access to will increase well.
There is a bit of a rub here, however.
While you’ll have an opportunity to borrow upwards of 30% of your last 12 calendar months’ worth of sales figures through PayPal (up to $97,000 with your first PayPal Working Capital Loan, and up to $125,000 for all subsequent loans), you’re also going to have to pay back a portion of your loan on EVERY single transaction you make until it has been repaid in full.
You’ll be in the driver’s seat in regards to determining how much in loan repayment fees are deducted from each transaction, with loan repayments ranging from anywhere between a single penny for every dollar borrowed up to $.87 for every dollar borrowed.
The repayment schedule you choose to move forward with will be put in place immediately, and every transaction will have the same deduction made universally and on autopilot. On top of that, a one-time loan fee is going to be added to your final loan repayment figures, too. This figure will vary depending on the amount of capital you’re getting from your Working Capital loan.
You should also know that PayPal may be handling the transaction and the lending for you, but a lending partner – WebBank – is the actual financial institution behind these kinds of loans. They’ll be the ones that determine whether or not you qualify and whether or not to issue your loan. PayPal might facilitate the transaction from start to finish, but WebBank is the one making the final call on who gets access to this kind of capital.
Is PayPal Working Capital Worth Moving Forward With?
One of the biggest advantages for the PayPal Working Capital lending opportunity is that there is no credit check involved whatsoever.
Your annual sales figures that are processed through PayPal will be the only determining factor behind whether or not you receive this kind of loan and also just how much you are able to take out from the lender.
If you are approved, your funds are available immediately – directly in your PayPal account – and even if you are declined you won’t have to worry about any black marks on your business credit score (or personal credit score, for that matter).
Flexible payments or the opportunity to move forward with a singular fixed fee make PayPal Working Capital a very attractive opportunity, particularly for smaller entrepreneurs just getting started. The ability to gain access to much-needed capital immediately, without any credit check and without any credit penalties, is almost unheard of these days.
On the flip side of things, there are definitely some alternatives that you’ll want to consider moving forward with as well. We highlight some of the better services that you want to consider below, and if you’re interested in digging a little bit deeper into PayPal Working Capital and the alternatives you’ll want to review this quick guide.
You’ll be able to uncover critical details of these lending opportunities that you might not have found elsewhere. This kind of inside information has the potential to transform your financial future almost overnight.
Definitely have a look at the Evergreen Funders guide here while also looking at the quick overview of PayPal Working Capital alternatives we highlight below.
How Does PayPal Working Capital Stack Up Against…
Amex Cash Advance
You’re going to need pretty impressive credit to be approved for an American Express card (any American Express card), but once you are “a part of the club” you’ll be able to take advantage of some of the best benefits of any financial operation today.
AMEX Cash Advances can be taken advantage of if you have a handful qualifying credit cards or accounts through this company, including the:
- Blue Cash Everyday Card
- Blue Cash Preferred Card
- Starwood Preferred Against Card
- Plum Card
… And that’s just the tip of the iceberg.
Cash advances through AMEX can get a little bit pricey, however, as you’ll be charged an immediate cash advance fee of 3% of the money that you are getting as a loan. If you’re looking to take advantage of significant cash advances, that 3% advance fee can get really steep in a hurry.
On top of that, you’ll have to deal with a variable APR of 26.99% across the board. Should you end up carrying a balance on your cash advance things can get expensive overnight.
Capital One Cash Advance
Depending upon the specific account terms you have with Capital One (one of the most reputable credit card and lending institutions on the planet) your ability to leverage cash advances will be almost effortless.
These kinds of transactions will inevitably include a fixed rate percentage transaction fee, similar to the 3% that American Express charges. Again, the specific fixed rate percentage you’ll be charged per transaction with a Capital One Cash Advance is going to be wholly dependent on the specific account terms you have agreed to when you became a Capital One customer.
Front-end service fees are also going to be charged with these kinds of transactions. You should expect a variable APR similar to the 26.99% APR American Express charges. By visiting your member portal at the Capital One website – or through their mobile applications – you’ll be able to figure out exactly how much capital you would have access to right now.
These cash advances are usually a little bit smaller than the ones available from American Express, and certainly aren’t quite as large as the ones available from PayPal. But you will be able to receive your cash advance from any local ATM. You’ll have access to that capital instantly.
OnDeck Cash Advance
From day one, the OnDeck organization has been committed to helping thousands of small business owners expand their base of operations.
They’ve been able to help more than 80,000 small businesses expand through their cash advance and business loan programs, helping to make the financial future and entrepreneurial dream of their clients come true faster than they would have been able to on their own.
Unlike the American Express and Capital One programs we highlighted above, the OnDeck Cash Advance is almost identical to the PayPal Working Capital program. It takes into account the amount of cash flow you’ve been able to accumulate over the past 12 months, advances you cash against that sales history, and allows for relatively flexible repayment plans to be taken advantage of so that you can grow your business without taking on any extra stress or crippling debt.
Differing from the PayPal plan in one major area, however, the OnDeck Cash Advance is going to take your credit score into account before you’re able to take advantage of this lending opportunity.
OnDeck definitely places a lot of value on your transactional history and sales flow, but your credit history – business and personal credit – will inevitably play some role in whether or not you are able to leverage this lending opportunity. It’s also going to impact the amount of cash you are able to receive as part of your capital advance.
At the end of the day, there are always going to be a number of things you have to seriously consider when you’re looking for capital to grow your business and accelerate your success.
Traditional lending opportunities aren’t the only option you have available any longer. PayPal Working Capital, as well as the three options we highlighted above – and so many others – give you an opportunity to more flexibly move forward with your finances while pursuing business success.
If you’d like to learn just a bit more about everything PayPal Working Capital brings to the table, and be sure to check out the Evergreen Funding PayPal Working Capital guide we mentioned above. It has all kinds of inside information and insight that will help you make the strategic move for your business going forward!