PayPal Expands Small Business Lending Program
PayPal launched its Working Capital program in late 2013 as a way to give select PayPal users access to simple business loans. During its three-month test, approximately 90,000 users were given the chance to take out a loan of up to $20,000.
PayPal has decided to expand this program and is hoping to make some exciting changes for new users.
Each business user who qualifies for this program can borrow up to 8% of their annual revenue. There are no interest charges on the loans. Each loan recipient is charged a flat fee plus 10%-30% of the account’s daily receipts. If there are no transactions for a day, PayPal does not take any money out.
A Working Capital loan gives PayPal customers flexible payments and low fees without the hassle of credit checks or conditional approvals. PayPal can afford not to check the credit of these borrowers because it hand selects them. PayPal already knows if a business is capable of paying back their loans.
PayPal has issued over 4,000 loans since the start of the program, and more than half of those loans were used to purchase inventory. With the extension of the Working Capital program, PayPal hopes to go global and increase the loan amounts.