If you’re looking to grow your business, you know that funding is a critical part of the process. Without it, even the best business ideas can fail due to not moving quickly enough. That’s why we’ll cover how to get a PayPal business loan in this article.
Why Business Loans Are Important
Taking out a business loan generally boils down to scaling up your current operations. If you have an already-proven business model but want to take things to the next level, a business loan could be one to do so.
You may need to purchase inventory or equipment. Perhaps you have a great business model but you need to market your business to a larger audience.
Without the necessary capital to do these things, your ideas could be stifled. While you could, in theory, just wait until you work up the revenue yourself, markets change. In order to maintain your competitive advantage, you don’t want money to be the factor that limits your business expansion.
Getting Started with PayPal Business Loans
The process for getting a PayPal business loan is simple. The very first thing you’ll need a PayPal business account. You won’t be able to get approved for a business loan without one.
Once you have a PayPal business account, just fill out the loan application online. According to the website, the application should only take 5-10 minutes to complete. The main purpose of the application is to determine your eligibility.
You can also call 1-800-941-5614 for assistance.
Who is Eligible for a PayPal Business Loan?
There are specific requirements your business must meet in order to be eligible. Of course, business loans work both ways. While you as the business owner hope for a deal that will benefit you, it must also be beneficial to the lender.
In other words, it must be mutually beneficial. Here are the qualifications your business must meet in order to qualify for a PayPal business loan:
- You must have been in business for at least nine months.
- You must have at least $42,000 in annual revenue.
- You must have a PayPal business account.
That’s it! While there may be other things PayPal considers behind the scenes, these are the only specific requirements you must meet before applying.
And these requirements are quite reasonable. PayPal simply wants to know that you are a dependable company that is actually bringing in revenue and that you are not some newly-fledged scam hoping to take the money and run.
But if you are a legitimate business that is simply trying to scale up, these requirements shouldn’t be too much of a problem.
What Size Business Loans Are Available Through PayPal?
Business loans range from $5,000 to $500,000. As you might expect, you won’t know the exact loan amount available to you until after you apply.
Once approved, PayPal will use a complete picture of your business to determine the loan terms to offer you. In addition, you’ll have some control over the terms of the loan – such as how many weeks the repayment will last.
Depending on the loan amount and the terms you select, the repayment will last anywhere from 13 to 52 weeks.
Personal Guarantee Required
If you aren’t familiar with personal guarantees, the easy way to explain it is that if the business becomes unable to repay the loan, then the individual becomes legally obligated to pay it back.
This is something that is (perhaps understandably) not mentioned first thing, in bold letters. Still, it’s an important point.
And it’s why the business should be financially viable before applying for a loan.
What Happens if I Pay Late (or Early)?
One of the best things about these loans is that there are no fees whatsoever. That includes late fees, fees for paying early, and even processing fees.
If you pay off the loan in full early, you won’t be able to avoid fees as a result. The fee assessed on the loan is based on the original loan terms, regardless of when you actually repay the loan in full.
How Quick is the PayPal Business Loan Process?
Another one of the nice things about these loans is that the process is quick and easy. If all goes well with the process, your business loan could be funded as soon as the next business day.
If you are approved, the money will be transferred to your PayPal business account during regular business hours (excluding bank holidays).
Will the Application Hurt My Credit Score?
If you apply for a PayPal business loan, your credit score will not be checked during the initial qualification process. That said, if you pre-qualify and then decide to move forward with applying for the loan, there will be a hard inquiry on your credit report.
This is typical when opening any new lines of credit and should be expected. Yes, technically it is the business that needs funding, not you, but there must still be a person behind the business.
This is made obvious by the fact that a personal guarantee is required to apply for a PayPal business loan.
That said, hard inquiries never stay on your credit report forever. They will automatically drop from your credit report after a period of time.
The exact amount of time can vary quite a bit, though – anywhere from two months to two years. And they only impact your credit score for the first 12 months.