PayPal has released new data regarding the volume of financing placed with small business borrowers via the PayPal Working Capital solution. Reports in IBS Intelligence on Wednesday (May 9) said PayPal Working Capital has provided U.K. small businesses with more than $847 million, up from $542 million last June.
Launched in 2014, PayPal Working Capital has provided $5 billion in small business loans around the world, the company noted. The solution service makes use of the financial data it holds as a result of other services provided to small business customers. Small businesses automatically repay loans as a set portion of sales.
According to reports, the latest figures are a 56 percent year-over-year increase in loan volume. That compares with its 116 percent year-over-year volume increase between 2016 and 2017. PayPal highlighted the solution’s ability to meet demand for borrowers, which cannot always be met by traditional banks — 70 percent of loans issued in the last year were made outside of traditional bank branch hours, the company said.
PayPal U.K. Director of Business Financing Norah Coelho said, “Almost a decade after the credit crunch, many British small businesses are still struggling to get funding for their future development. We launched PayPal Working Capital in the U.K. in 2014 to help fill this funding gap. It’s obviously meeting a real need, as since the launch PayPal has advanced £625 million [$847.3 million] to more than 30,000 British businesses.”
According to Coelho, PayPal Working Capital is not looking to replace traditional small business lenders, which “will always play an important role in business financing.”
However, the finding that most loans were issued outside of normal bank branch hours suggests small businesses are not having all of their financing and servicing needs met by the traditional banking sector.
“We’ve replaced the lengthy in-branch application process for traditional business finance with a fast, online alternative for PayPal’s small business customers,” Coelho continued. “As PayPal knows the applicant’s business, we typically approve and issue a cash advance in minutes. The business owner can spend the time saved on what really matters: running their business.”