While PayPal is a great resource for many reasons, if you’re looking into small business loans, they may not be right for your situation!
You want to build credit
PayPal Working Capital Loans do not impact your personal or business credit. No matter how much you borrow or how fast you pay your loan back, it won’t be reported to the credit bureaus. You want your business to grow and the only way to achieve this growth is a sustainable and documented record with banks and lenders. Avoid PayPal Working Capital loans if you can and utilize small business loans with companies like Financing Your Way and their new inventory Business to Business Lending program.
You want to take your time to pay your loan back
PayPal earns a fortune on loan origination fees, so they encourage you to quickly pay your loan balance. They even provide graphics and metrics to display how quickly you are paying down your balance. Paypal’s focus on speedy payback doesn’t help you at all, because each time you finish paying off your balance, you are encouraged to take on a new loan and pay new loan origination fees. Get out of the rat race and pay back your loan on your terms. Financing your Way encourages borrowers by educating them on the facts about payback. Paying back your small business loans faster does not help you save money in the long run, because the funds you invest in payback could have been invested in your business. Create amortization schedules and stick to your plan for pay back, while investing additional cash flow into inventory.
You want to know your interest rate
PayPal Working does not make it easy to find the interest rate of your loan. It is important to recognize that your payback percentage is not equal to your interest rate. The payback percentage is simply the percent of each dollar you earn that will go toward paying back PayPal. This can make accounting for your loan difficult because you won’t automatically know which part of your monthly payment goes toward the principle, and which part should be expensed as interest. In order to obtain the interest rate you will have to use a loan calculator. Your small business deserves funding with terms that are clear and easy to understand, Financing Your Way goes above and beyond to keep borrowers informed!
You will need additional funds in the future
As we highlighted above, PayPal Working Capital Loans charge an origination fee each time you borrow funds. If you foresee that your company will need additional funds soon, save money and use the fund reload option offered by Financing Your Way. This option allows borrowers to reload funds after paying down a minimum of half the loan balance.
You want to keep some business functions separate
If you use PayPal as your merchant account, you should think twice about borrowing from them. While it may seem logical to combine the two services, it is a best practice in business to separate duties. This rule should be applied to people and companies. Disputes and chargebacks happen from time to time, a domino effect will be experienced in your company if you these chargeback cause overdraft and subsequently cause your percentage based loan payments to be returned.