Launched as recently as 2013 in the US, and 2014 in the UK, PayPal Working Capital is quickly establishing itself as a force to be reckoned with in the online lending sector. The company’s close ties to existing small business customers has proven a rock-solid foundation for growth. The company describes itself as “uniquely positioned” to assist small businesses with working capital constraints.
With demand trending upwards, PayPal has now increased the maximum available advance to £60k. Of the $2bn lent globally, £185m has been lent to UK businesses. PayPal Working Capital crossed the $1bn mark in global advances in late October last year.
PayPal Working Capital is able to draw on a customer's sales history data to power rapid lending decisions. There are no external credit checks for loan applicants, and funding can be approved and issued within minutes. Repayments are automatically applied as a fixed percentage of a company’s daily sales, in the style of a merchant cash advance. Business owners have a say in fixing that percentage prior to drawing down funds.
Major financial services institutions are clearly seeing short-term, data-driven business lending as something of a sweet spot within the wider world of online lending. Only this morning we saw American Express announce its intention to launch a working capital solution for its small business customers, by the name of Working Capital Terms. Similar steps have also been taken by JPMorgan Chase, via a tie-up with OnDeck in December last year.
Nicola Longfield, a director at PayPal, commented on the $2bn milestone: “Small businesses play a crucial role in powering the UK economy – last year small businesses accounted for 99.3% of all private sector business, with a combined annual turnover of £1.8 trillion. At PayPal, because of our close relationships with small businesses, we are uniquely positioned to help them succeed. We understand that for small businesses the pace of change is rapid and, on occasions, unpredictable. PayPal Working Capital is designed to respond to this by providing flexible capital, which can typically be approved and funds obtained within minutes.”