PayPal, Inc.

PayPal Working Capital is a financing product offered by PayPal to eligible business account holders who process payments through the PayPal platform. It is a form of merchant financing that ties your borrowing directly to your PayPal sales history.

The way it works is straightforward. PayPal reviews your history of sales processed through your PayPal business account and, if you qualify, offers you a lump sum of working capital. You do not make fixed monthly payments as you would with a traditional loan. Instead, PayPal automatically deducts a small fixed percentage from each PayPal sale you make until the advance plus a fixed fee is fully repaid. On days when sales are slow, you pay back less. On days when sales are strong, you pay back more.

Because repayment is based on a percentage of sales rather than a fixed schedule, PayPal Working Capital does not charge interest in the traditional sense. Instead, there is a fixed fee that you agree to upfront. To understand the true cost of borrowing, you should calculate what that fixed fee works out to as an effective annual rate and compare it against other financing options.

PayPal Working Capital is only available to businesses that already use PayPal to process a meaningful volume of sales. If your business does not use PayPal as a payment processor, this product is not available to you.

This type of platform-based financing can be convenient because the application is simple and approval is based on your existing PayPal track record rather than a traditional credit application. However, it is best suited to businesses that process a significant portion of their sales through PayPal and want a simple, automatic repayment structure. Always compare the cost against bank loans, credit union products and other lenders before deciding.