PayPal to Provide Financing for Small Businesses

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Small businesses often struggle with problems of capital when they need it most. Small business owners might need a not-so-large amount of funding to go through with an upgrade or for any other reason that might come up during the hectic life of running a business. Thanks to PayPal, it looks like there will be a way for small business owners to get working capital fast and without the fine print and hidden fees.

PayPal Working Capital

In an effort to enhance and increase its interaction with businesses, PayPal today announced a service called PayPal Working Capital. According to Catherine Clifford at Entrepreneur, PayPal Working Capital is a “lending platform … whereby business owners can apply for access to capital and be approved in minutes.” If you run a small business, you know how difficult getting a good deal on loans can be, and apparently PayPal does too.

With PayPal Working Capital, the company is directly targeting small businesses. It looks like they’ve done their homework, too. The rules for a small business to get capital are relatively simple, straightforward, and they make good sense. As Catherine informs us, “the funding tool allows business owners to pay back their loans based on a fixed percentage of sales.” This way, businesses aren’t stuck repaying a loan based on some arbitrary percentage, which could hurt them in the long run.

PayPal Working Capital also has a fixed fee for any loans with the service. The good part about this is that the fee is dependent on how fast a small business decides it wants to repay its loan. Even better, there are no hidden fees like many loan products have in regards to payments, lateness, termination, and more.

PayPal Is Reaching Out to Pull Business Into Its Ecosystem

While this appears to be a great offering from PayPal for small businesses, it’s not the first of its kind. Amazon has a similar program called Amazon Lending that it launched almost a year ago.

Still, the demand for financing is growing as small businesses grow and take advantage of opportunities. Having easy access to capital with fair rules to it is sometimes vital for a small business to grow and improve. As Alistair Barr writes at USA Today, small businesses, online or off, “need financing to pay upfront for inventory, buy supplies and even hire extra staff, especially ahead of the annual holiday shopping rush.”

It looks like small businesses out there now have another option when it comes to preparing for the coming holiday shopping season. The introduction of PayPal Working Capital as another option for financing is good for all small businesses. More competition means better rates and easier access to capital. The more the better!

Will you use PayPal Working Capital with your small business?

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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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