Does your small business need quick funding? Then give PayPal a try. This online payment giant has come up with business loans, which get approved in minutes! In this article, I have explained how to get a PayPal business loan without collateral and time-consuming paperwork!
Since you are reading this article, I can assume that you do have an idea about PayPal. Perhaps you are already using it to accept payments from buyers, which means, you might be having a PayPal business account. The good news is that you can use this business account to apply for a PayPal business loan, provided your business is located in the United States.
The pandemic has adversely affected conventional lending offered by banks. However, non-bank lenders have reported the highest growth during this period. PayPal has emerged as the largest non-bank lender in the world with assets totaling $54 billion+. To date, PayPal has processed more than 15.4 million transactions. This is an approx. 25% rise on a year-on-year basis. To further strengthen its presence in the digital payment space, PayPal is now making concerted efforts to present users with simple yet advanced contactless.payment options.
No wonder then that the U.S. lending market is now dominated by the four Fintech companies i.e. PayPal, Visa, MasterCard, and Square. They have overpowered the “Big Six” banks in the U.S. i.e. Bank of America, Citigroup, JPMorgan, Morgan Stanley, and Goldman Sachs.
All these factors indicate that a PayPal business Loan is a smart way to fund your business since you can get a better deal than the conventional lenders.
How to Get a PayPal Business Loan – All The Steps Explained
Before you seek an answer to this question, it’s better to ask whether PayPal will let you borrow money. So, let’s take a look at the eligibility criteria to qualify for PayPal loans.
Are You Eligible For a PayPal Business Loan?
It is true that you can borrow from PayPal in a hassle-free manner. And yet, you need to fulfill a few criteria to actually receive the money in your bank account the next working day. So, what are the eligibility clauses for PayPal business loans?
You can check the eligibility only if you have a Business account with PayPal. If you don’t have one, create a PayPal business account before answering the online questionnaire.
- You should own a business in the United States.
- Your credit score needs to be a minimum of 550. This means you can get a PayPal business loan with an average credit score.
- You can get a PayPal business loan only if you are running the business for a minimum of 9 months.
- PayPal offers loans to businesses whose annual revenue is a minimum of $42,000.
- Have you ever declared personal bankruptcy? Then PayPal may reject your loan application.
Finally, you need to remember that it is up to PayPal to decide whether you are eligible for the business loan. And this eligibility is assessed based on information that you have provided in the online questionnaire. Once the online application is completed and submitted, PayPal does its assessment. Then it informs you about the approval/rejection within a business day or two.
Do You Need a PayPal Business Loan?
You might be eligible for a business loan, but do you need it? Remember with so many alternative financing options, getting a quick loan is easy now. And yet, you need to seriously consider whether your business is ready to take the loan burden and repay it as per the specified terms. If you don’t have a full-proof repayment plan then think twice before proceeding with the loan application.
Why apply for a PayPal business loan?
- You have an expansion or relocation plan which will help your business grow further
- The loan is needed to buy and/or repair equipment/vehicle/office accessories/software etc. Also, you can use it to buy inventory.
- You need a quick fund to meet some immediate expenses, e.g. vendor payment, rent, salary, etc.
- Marketing is one obvious reason why businesses take loans.
- Use the PayPal business loan to maintain the cash flow, in case of delayed accounts receivables.
- You can’t get a business loan from a bank or you don’t want to go through a lengthy process.
- And last but not the least, a PayPal business loan can come in handy to meet personal obligations too.
How Much Money Can You Borrow From PayPal As Business Loan?
Usually, it depends on the eligibility assessment done by the PayPal team. You can borrow more money if the PayPal team is impressed with the Sales and revenue figures. However, in the beginning, you have to be happy with a loan of $5000. This is not a small amount, considering the quick approval and paperless process. If your business has an impressive track record and a good credit score, then the loan amount may shoot up to a maximum of $500,000.
Now coming to the term, PayPal usually allows a minimum of 13 weeks to repay the loan. The maximum loan repayment period is 52 weeks. This time frame is determined once you complete the online questionnaire during the application process.
How to Get a PayPal Business Loan within 24 hours?
Usually, the PayPal team takes a few business days to review the loan application and inform you of the outcome. However, this waiting period can be shortened if your major payments are processed with PayPal. This helps in quicker verification of the Sales information that you have submitted during the application process. Once the application is approved, the fund is electronically transferred by the next business day into your PayPal business account.
How To Apply For The PayPal Business Loan?
As already mentioned, the very first step is checking your eligibility criteria. For this purpose, PayPal asks you to key-in basic information like:
- Business name, your first and last name, home address, contact number (business/home/mobile)
- Primary loan purpose
- Information about your business, i.e. business address and business phone number, business entity type
- Business starting date, number of employees, current revenue, business industry, and sub-industry
- And finally, your date-of-birth, social security number (for sole proprietorship and single owners) and Federal Tax ID (for other categories). Also, you need to confirm if you are a permanent resident or citizen of the United States.
Once you are found eligible for the business loan, you can select the loan amount and duration which is within the accepted range for your business. You can compare the financing cost by customizing the loan amount and duration.
If any further documentation is needed, PayPal will inform you via the dashboard. After submitting the complete application, you may have to wait for a few days to receive a response from PayPal. If your loan application is approved, they will email you a contract which you need to sign electronically. While signing the contract, you have to provide your business bank account information. Also, you need to mention the preferred payment day.
The approved loan amount will be transferred to your business account within the next working day.
What Are The Interest Rates and Repayment Terms of PayPal Business Loan?
As explained in the PayPal website, you need to pay a fixed fee for the business loan. Yes, they don’t use the term “interest”. However, the PayPal website doesn’t offer any definite information about this fixed fee. But you can get a basic idea from LoanBuilder which is the lending service offered by PayPal. Loanbuilder typically charges an interest rate of 6% to 19% of the loan amount. This is comparatively higher than traditional bank loans. Additionally, PayPal charges a $20 Returned Item Fee. This is applicable only if the payment is returned for some reason.
PayPal allows weekly payment of business loans. It automatically withdraws money from your business account every week, precisely on that day of the week which you have mentioned in the contract. Also, you can pay off the business loan early. However, you need to pay the full amount plus the entire fees as calculated for the original loan term. This means you can’t save on fees even if you opt for an early settlement of the loan amount. Needless to say, this is one of the disadvantages of a PayPal business loan, which you need to consider in the beginning.
Does PayPal ask for Collateral?
No, they don’t! But of course, you need to sign a personal guarantee which is a kind of unsecured loan agreement between the lender and borrower. And yet, this is better than pledging valuable assets and losing them in case you fail to repay the loan in time.
Now that you know how to get a PayPal business loan, it is important to do your research. Decide whether you indeed need fast funding and ready to pay higher charges than traditional bank loans. Perhaps your credit score is not good enough to apply for a bank loan. Or, you are not in a position to pledge assets to get a loan. These are the right circumstances to get a PayPal business loan. Also, you can compare it with PayPal’s working capital loan and decide which one best suits your specific business needs.