PayPal Working Capital UK

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• New businesses and start-ups often need cash in a
  hurry. The same can actually be true of any
  business that is still in its early growth
  stages. Getting a traditional business loan from
  a High Street bank is increasingly difficult
  however, leaving businesses to look for a loan
  alternative that will a) provide them with the
  cash they need fast b) not charge too much in
  interest fees and c) be offered by a reputable
  provider, not a fly by night potential scammer.
• At first glance, it may seem like PayPal Working
  Capital UK offers all of this. But does it
  really, and is taking a PayPal Working Capital
  advance a good idea, from both a financial and
  business growth standpoint? Thats what we are
  going to take a closer look at here.

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What is PayPal Working Capital UK Anyway?

• You may be able to acquire funding for your
  business if you have a PayPal business account
  and use it to collect card payments online or in
  person. PayPal Working Capital offers merchant
  cash advances, which means you pay back the loan
  as a proportion of your PayPal sales.
• There do seem to be a lot of advantages to this
  loan scheme, including all the following
• The loan isnt based on credit ratings- yours or
  your firms instead its based solely on your
  PayPal sales performance. Your credit score, or
  that of your business, wont be affected
  positively or negatively if you take a PayPal
  Working Capital Loan.
• The process is fast. Once approved, most people
  see the funds in their PayPal account in minutes,
  which is a lot faster than pretty much any other
  loan offering, and certainly much quicker than
  you could expect from a bank.

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• You can borrow up to 35 of your annual PayPal
  sales. The actual amount is determined on your
  PayPal accounts history. You can borrow up to
  150,000 using PayPal Working Capital, but only
  if you have the PayPal sales to back up that
  large of an amount.
• You pay back the loan automatically will a
  portion of your profits. Furthermore, you can set
  it yourself, starting with a percentage as low as
  10. The repayment percentage options you have
  will also be determined by the amount you want to
  borrow. Because youll repay the loan faster if
  you choose a higher percentage, the total cost of
  the loan will be lower as a result.
• Application that is simple and quick. It takes
  about five minutes, according to PayPal.
• The loan will cost you a single, all-inclusive
  price. There are no hidden charges or interest
  rates. The loan has a single set fee, which is
  determined by the amount you wish to borrow, your
  annual PayPal sales and account history, and the
  repayment percentage you choose.
• Once a loan is paid off successfully, most people
  find they can get another one almost immediately,
  leading some to use PayPal Working Capital UK as
  a revolving line of credit.

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Do I Automatically Qualify for a PayPal Working
Capital UK loan?

• No. To qualify for a loan youll need more than a
  PayPal Business account, you will have to meet
  all the following criteria
• Have a PayPal Business or Premier account for at
  least three months.
• Be registered in the United Kingdom.
• Make at least 12,000 in PayPal sales annually if
  you have a Premier account, or 9,000 if you have
  a Business account. If you have had the account
  for less than a year, you may still qualify,
  based on your YTD sales.

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What are the Disadvantages of a PayPal Working
Capital Loan?

• Even though for some this all probably sounds
  great so far, there are downsides to taking a
  loan like this. The biggest is that you will be
  losing a percentage of your PayPal sales for some
  time. So before you commit, think it through. Do
  you REALLY need the cash? Youll need to balance
  the need for funding now with that loss of income
  for what could be several months or longer,
  factoring in the interest fee as well.
• Can you get around this in a crunch by not taking
  sales via PayPal? You could, as there is a fairly
  low minimum payment to be made every month.
  However, if you make use of the PayPal service
  often enough to qualify for a loan, would your
  customers accept the change? And while PayPal
  does not report the loan itself to a credit
  bureau, they will send it to collections if you
  default, which will have a significant negative
  impact.
• This also brings up another issue. A business
  loan from a more traditional institution, like
  your bank, will, if paid of in a timely manner,
  give you and your business a nice little credit
  score boost, something that you will find is
  crucial for business growth. A PayPal Working
  Capital UK loan will not.

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Should We Take a PayPal Working Capital UK Loan?

• PayPal Working Capital is not the cheapest option
  available. Although you wont pay interest
  monthly a lump sum will be added up front. PayPal
  could charge you anything between 0.01 and 0.58
  in fees for every 1 you borrow, according to its
  website. Which could be pricey, and have you
  paying the loan back a lot longer than you
  expected unless you do your homework first.
• As accountants, this is where we also point out
  an accounting wrinkle youll need to keep in
  mind. With no monthly payment due, and repayments
  taken as a portion of your sales, youll have
  plenty of revising to do in terms of sales
  projections. You will also need to bar in mind
  that youll be taxed on the whole amounts
  received from customers, not the money PayPal
  passes on after it takes its share.

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• So, for which businesses is a PayPal Working
  Capital UK loan something worth considering? It
  may be right for you if
• A lot of your sales are made through PayPal
• You need a cash injection via a business loan
  very quickly
• For general operating expenses, youll need a
  small amount of working capital (not to cover a
  major acquisition or business expense)
• Other, less expensive solutions are not available
  to you.
• You have an accountant who can help you make sure
  that loan repayments dont negatively affect your
  bottom line or your tax bill. Need one of those?
  Contact us here to find out how Pearl lemon
  Accountants can help you (and maybe get some
  small business loan advice too.)

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