PayPal Expands SMB Lending Program

The program was made available to select businesses that already process payments with PayPal with the loans issued through WebBank. The loan is available for a single, fixed fee that is displayed to a business before signing up. There are no periodic interest charges, late fees, pre-payment fees, or any other fees, so a merchant knows exactly what they’ll pay. With the program WebBank uses PayPal sales history to extend credit, so no credit check is required and the loan does not affect a business’s credit score. Loan balances are repaid using a share of their sales, with no fixed payment dates to remember and no monthly minimums.

Steve Contratto, owner of CF Sales, a company that sells Logitech computer accessories on eBay says that he “decided to apply for PayPal working capital after seeing how hard it would be to get a traditional bank loan, it just became a headache, to where we decided to just drop out and not even try”.

PayPal reports that they have received strong feedback from those who participated in the pilot program and 90% of their customers gave them a 9 or 10 (on a scale of 0-10) on their likelihood to recommend PayPal Working Capital to other merchants.

Contratto, reports that he  was able to leverage his $20,000 PayPal Working Capital loan to purchase inventory, which he turned into $40,000 in sales, growing his business by 40 percent for that month.