PayPal Loan |‌ BankruptcyHQ

Lisa Brooks, an entrepreneur, has transformed her catering and meal-delivery company, Heart & Soul Personal Chef Service, from a one-woman operation into a growing business with ten employees through small-business loan via PayPal.

Brooks used PayPal’s working capital loan. This loan allows Brooks to borrow amounts that are based on her PayPal sales. Brooks has taken out additional loans to cover her increased sales. A percentage of every PayPal sale is used to repay the loan.

Brooks states that it doesn’t feel like an unsecured loan.

PayPal has offered more than $10 billion in financing for businesses since 2013. PayPal offers more traditional loans for small businesses in addition to its working capital loan.

Joseph Gallo, senior communication manager at PayPal, says that the business loan doesn’t require you to make payments through PayPal to be eligible.

Here are the facts about PayPal loans and how they compare to other small business loans.

PayPal Working Capital Loan

Ideal for: Businesses who process sales via PayPal and require working capital to cover payroll costs or seasonal drops in revenue.

PayPal Working Capital allows you to finance up to 35% of your annual PayPal sales. You can borrow up to $125,000 for your first two loans and $200,000 after that.

PayPal charges one fixed fee. This fee is based on your sales volume, your account history, the amount you borrowed, and the percentage of sales that PayPal directs towards repayment.

When you apply for a loan, you can choose to repay a percentage of your sales (5%, 15%, 20%, or 25%), and payments are automatically taken from your PayPal account until repayment is complete.

Approved loans can be funded in minutes. Repayments begin 72 hours after the loan has been received. To keep your loan in good standing, PayPal requires that you repay at least 10% or 5% of the total amount each 90 days.

Here are the requirements to be qualified:

  • PayPal Premier or Business accounts for at least three consecutive months. PayPal uses these accounts to determine if you are eligible.
  • PayPal Premier accounts must have at least $20,000 in sales, and Business accounts must have at least $15,000 in sales annually.
  • You will need to repay any existing PayPal working capital loans in full before you can apply for another round.

Gallo states that approval and funding are quick and easy since the company already has your account history and information.

PayPal working capital example

Let’s assume you have an average of $100,000 in PayPal sales each year and that you have been approved for a $25,000 working cash loan to hire employees. As the table below illustrates, the fees are lower the higher your repayment percentage.

Your fixed fee for having 30% of your daily sales go towards repayment is $3,079. This brings your total repayment amount up to $28,079, according to PayPal’s sample fees calculator. While you’ll pay more in ongoing payments, the loan total cost will be lower.

PayPal Business Loan

Ideal for: Companies that require quick cash but aren’t eligible for a bank loan or need funds to expand their business, such as purchasing equipment or opening a new office.

PayPal business loans are available from $5,000 to $500,000. The amount that you are eligible for depends on your credit score and financial strength.

There is a fixed fee for the business loan and weekly repayments. However, PayPal will withdraw repayments from your bank account rather than from your PayPal account. It can be repaid in 13 to 52 weeks, depending on how large the loan is.

You must meet these requirements to be eligible:

  • You can open a PayPal Business account to process payments through PayPal.
  • Minimum FICO score: 550
  • A minimum of nine months must be spent in business.
  • A minimum annual income of $42,000
  • There are no personal bankruptcies.

If you do not process PayPal payments, the application process will take longer. You must also submit sales information, according to Gallo.

Funding can take longer than traditional bank loans, however. You can expect to get a decision on your loan application within 24 to 48 hours. If the loan is approved before 5 p.m., funding will be available the next day—ET on a weekday.

PayPal business loans require that borrowers sign a personal guarantee. This gives PayPal the right to seize its personal assets in the event of default.

Pros and cons of PayPal loans


Quick funding: Funding can be transferred to your PayPal account within minutes for the working capital loan. Funding for a business loan may take up to a few days once you have submitted your application.

No need to have strong credit. You can still qualify for a PayPal loan even if you have bad credit. Personal or business credit scores don’t matter when you apply for a working capital loan. However, the minimum FICO score required for the business loan is 550. To qualify for a bank or other lender, you will need good credit (above 689 FICO).

PayPal does not require collateral. This means that you don’t need to pledge any assets, such as real property or equipment, that PayPal could seize if you default on your loan repayments. PayPal requires you to sign a personal guarantee for the business loan.


Limited availability: PayPal’s working capital cannot be accessed by businesses that use PayPal to process payments. A business loan can only be obtained for businesses that have a PayPal Business account.

You must continue to accept payments from customers through PayPal to repay the working capital loan. Loan repayments are taken out of your PayPal account.

There is no benefit to making early repayments: PayPal charges a fixed fee for each loan that you apply.

The maximum loan amount is low: You can borrow up to 35% from your annual PayPal sales on the working capital loan. Your first two loans may not exceed $125,000. A borrower who has $100,000 in annual PayPal sales could qualify for up to $35,000

No boost to credit: PayPal Working Capital does not report payments to any credit bureaus. Therefore, on-time repayments will not affect your credit score. They can increase your chances of getting another loan via PayPal and may lead to better terms. PayPal Business Loan reports only payments to business credit bureaus.

PayPal Loan vs. Other Small-Business Loans

Understand how a PayPal loan compares to other options, including total borrowing costs, repayment terms, and maximum borrowing amounts.

Traditional bank loans

PayPal loans are more expensive than traditional bank loans. They typically have lower annual percentage rates than 10%.

A traditional bank loan is only available to those with good credit and a business that has been established. You may also need collateral. If you can wait for funding to be approved, a bank loan may be an option.

Small Business Administration 7 (a) loans are federally guaranteed, low-interest loans with long repayment terms. The terms will depend on how you intend to use the money—for example, seven years for working capital and ten years for equipment purchase. Real estate purchases can take up to 25 years.

Merchant cash advances

PayPal’s working capital loan is similar to a merchant advance that takes a daily portion of sales to repay.

MCAs have high fees and are highly controversial. APRs can range from 40% to 35% depending on the lender, amount of advance, additional fees, and repayment length. PayPal loans will likely have lower APRs than MCAs.

Online loans for small businesses

There are many online small-business loans available. Terms range from 12 weeks up to 10 years, and APRs are as high as 99%. PayPal loans are typically repaid within a year. If you need a longer repayment term, consider an online loan.

Although PayPal’s working capital loan won’t boost credit for businesses, online small business loans can help build credit. 

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