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Declined for a PayPal Working Capital loan but still need funds? Here are the top alternatives to PayPal Working Capital loans.
Jason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University.
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Jason VissersJason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University.
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Erica has been writing about small business finance and technology since 2008. She joined Merchant Maverick in 2018 and specializes in researching and reviewing business software, financial products, and other topics to help small businesses manage and grow their operations. Her expertise has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll, a graduate of Limestone University, and currently resides in Greenville, South Carolina.
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Erica SeppalaErica has been writing about small business finance and technology since 2008. She joined Merchant Maverick in 2018 and specializes in researching and reviewing business software, financial products, and other topics to help small businesses manage and grow their operations. Her expertise has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll, a graduate of Limestone University, and currently resides in Greenville, South Carolina.
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If your small business uses PayPal to accept payments, PayPal Working Capital is a convenient and relatively low-cost way to get funding. As we noted in our PayPal Working Capital review, the loan applications are short, repayment is automatic, and fees tend to be fairly low. But what if your PayPal Working Capital loan is declined? Should you just apply again?
Many merchants have their PayPal Working Capital loan declined, often without a clear explanation. While some merchants report success after waiting a few days and reapplying, many lack the time or patience to wait for acceptance. If this is you, what should you do next if you’re looking for the best working capital loans?
In this rundown of the best PayPal Working Capital alternatives, we’re highlighting lenders similar to PayPal Working Capital, both in terms of the small business loans offered and the business requirements you’ll need to meet.
7 Best PayPal Small Business Loan Alternatives In 2024
If your PayPal Working Capital loan was declined, read on to learn about the top PayPal Working Capital alternatives in detail. The following lenders have something to offer a wide range of different business types and situations, so at least one of these working capital providers should fit your needs.
As one of our favorite PayPal Working Capital alternatives, Lendio isn't a direct lender -- instead, it aggregates loan offers from its lender network that are tailored to your particular business, relieving you of the need to seek out lenders individually.
Borrower requirements vary by lender, and the service is completely free to use.
We love that Lendio offers lines of credit, SBA loans, both short- and longer-term loans, and more, while PayPal Working Capital only offers short-term loans. Lendio also offers higher borrowing amounts to qualifying businesses, and due to the range of offers you may get, established businesses with good credit may get lower rates with Lendio than with PayPal.
Lendio Services
Lendio offers the following types of business funding:
Short-term loans up to $500,000
Startup loans up to $150,000
Term loans up to $2 million
Lines of credit up to $500,000
Merchant cash advances (listed as “business cash advances”) up to $1 million
Equipment financing up to $5 million
SBA loans up to $5 million
Business acquisition loans up to $5 million
Lendio Rates & Fees
Lendio’s rates and fees vary depending on the lender and loan type you’re matched with. Get an SBA loan through Lendio, and your Lendio’s options range from low-interest SBA loans to high-interest MCAs for borrowers with bad credit.
Lendio Eligibility Requirements
Lendio’s partner lenders all have their own eligibility requirements that must be met. As is the norm with business loans, the more revenue and time in business you have and the higher your FICO score, the more likely it is that you’ll qualify for favorable rates and terms.
When To Use Lendio
You want a range of loan options tailored to your business, drawn from a large and varied lender network
You want to easily compare loan options with one application
What Makes BusinessLoans.com Great For Bad-Credit Borrowers?
BusinessLoans.com is a business loan marketplace that matches applicants to the loan products they seek -- and which they will qualify for.
We chose BusinessLoans.com as one of our preferred PayPal Working Capital alternatives due to its willingness to work with borrowers with bad credit. If you're struggling to find business funding due to a low FICO score and/or a short time in operation, BusinessLoans.com will still try to match your business with the best possible funding options.
BusinessLoans.com Services
BusinessLoans.com matches applicants to the following loan types:
Short-term loans
Term loans
Lines of credit
Merchant cash advances
BusinessLoans.com Rates & Fees
Your rates and fees will depend on the specific lender and loan product you’re matched with. However, on the whole, BusinessLoans.com’s lending amounts range from $5,000 – $3 million, its shorter-term loans have term lengths of 3 to 24 months, and its longer-term loans have term lengths from 2 to 5 years.
BusinessLoans.com Eligibility Requirements
Though BusinessLoans.com doesn’t specify a minimum credit score, the company does recommend that applicants have at least 6 months of business history and at least $100,000/year in business revenue.
However, even if you fall short of these guidelines, BusinessLoans.com will try to match you with a lending product that can accommodate your business.
When To Use BusinessLoans.com
You want to choose from a range of loan options tailored to your business
Your credit score is fair to poor, and you’re seeking a lender willing to work with you
OnDeck may be the most well-known PayPal alternative in the lending industry. OnDeck may be a better choice than PayPal Working Capital for established businesses that need capital quickly. Its application process is fast and easy, and once you accept your loan, you may get funding as quickly as the same business day.
OnDeck is similar to PayPal Working Capital when it comes to term length and speedy time to funding (same-day funding available from both). OnDeck loans may come with a lower borrowing rate, though, depending on your business's credentials.
Just know that OnDeck's fees can be on the high side, and you need at least fair credit to qualify.
OnDeck Services
OnDeck offers the following loan types.
Term loans up to $250,000 with repayment terms up to 24 months
Lines of credit up to $100,000 with repayment terms up to 24 months
OnDeck Rates & Fees
The APR of OnDeck’s term loans starts at 29.9%. An origination fee of 0% – 5% may apply.
For OnDeck’s lines of credit, APRs also start at 29.9%. There are no origination fees, but most borrowers will pay a $20/month maintenance fee.
The average APR for each product falls between 50% and 60%.
OnDeck Eligibility Requirements
To qualify for an OnDeck term loan or line of credit, you must meet these requirements:
Time in business: 12 months
Business revenue: $100,000/year
Credit score: 625
When To Use OnDeck
Your FICO score is 625+, and you want small business funding as quickly as possible
What Makes Fora Financial Great For Merchant Cash Advances?
Fora Financial is a PayPal Working Capital alternative suited for quick business financing. This online lender accepts applicants with credit scores as low as 570, making it well-suited to business owners with bad credit who have had difficulty finding funding elsewhere.
Unlike PayPal Working Capital, you can apply for either a merchant cash advance (repaid via automatic daily or weekly repayments, very similar to PayPal Working Capital) or a short-term loan with Fora Financial.
Fora Financial Services
Fora Financial offers the following:
Merchant cash advances up to $1.5 million
Short-term loans up to $1.5 million
Fora Financial Rates & Fees
With Fora Financial’s loans, you’ll pay a borrowing fee of 10% – 30%of the borrowing amount and an origination fee of 1% – 4% of the borrowing amount.
Fora Financial Eligibility Requirements
For both merchant cash advances and term loans, Fora Financial requires at least 6 months in business and a credit score of at least 570. As for business revenue requirements, you must generate at least $20,000/month in revenue to qualify.
Also, there is no maturity date on merchant cash advances — the term ends whenever your advance is repaid from your daily sales.
When To Use Fora Financial
Your FICO score is 570+, and you want a merchant cash advance of up to $1.5 million
What Makes National Funding Great For Startups & Young Businesses?
We put National Funding on our list of PayPal Working Capital competitors due to its quick, accessible loans that come with early payoff discounts -- something not many business lenders offer.
Even if your business is just 6 months old, you may still qualify for a National Funding loan, provided you're on a path to earning $250,000/year.
National Funding Services
National Funding offers short-term business loans up to $500,000 ($400K in some markets) and equipment financing loans up to $150,000.
National Funding Rates & Fees
National Funding’s business loans are short-term loans with factor rates starting at 1.11. You’ll pay a fixed fee of 11-36% of the amount you borrow. You’ll also likely pay an origination fee of 1% – 3% of the amount borrowed. Also, if you repay your balance in full early, you’ll receive a discount.
National Funding provides few pricing details regarding its equipment financing loans, but the company is currently offering a Guaranteed Lowest Rates promotion on equipment leases. After receiving a quote from National Funding, lessees have 7 days to submit a competing offer. If the offer is valid, National Funding can either beat the competitor’s rate or pay $1,000 to the lessee. Leases must exceed $10,000 to qualify for the program.
National Funding Eligibility Requirements
National Funding states that qualifying applicants should have 6 months of business history, $250,000/year in annual revenue, and a credit score of 600.
When To Use National Funding
Your business is young but earning revenue at a healthy clip
PayPal competitor SmartBiz is in the business of simplifying SBA loans by matching eligible applicants with the right lenders. Loans procured through SmartBiz can be used for working capital, debt refinancing, or commercial real estate.
While harder to qualify for (only established businesses need to apply), SmartBiz is a great option for established businesses looking for low-cost SBA(7) loans with 10-year terms. Commercial real estate loans are available as well.
In addition to SBA loans, SmartBiz offers other business funding types, all of which can be applied for with just one single application.
SmartBiz Services
SmartBiz offers the following types of business funding:
SBA loans up to $500,000 (10 year repayment terms)
Term loans up to $350,000 (2-5 year repayment terms)
SmartBiz has competitive rates that vary by product.
SmartBiz Eligibility Requirements
SmartBiz requires loan applicants to have 2 years of business history. SmartBiz also requires SBA loan applicants to have a credit score of 650 and term loan applicants to have a score of 660.
When To Choose SmartBiz
You want an SBA 7(a) loan you can repay over 10 years, and your FICO score is 650+
You want a regular term loan with reasonable rates, and your FICO score is 660+
What Makes LoanBuilder Great For Short-Term Loans?
LoanBuilder is another PayPal loan service, but unlike PayPal Working Capital, it is available for PayPal business account users and non-users alike.
Known for low borrower requirements, quick eligibility checks, and no origination fees, LoanBuilder is a great option for businesses looking for short-term loans. It's worth applying with LoanBuilder if you were rejected for a PayPal Working Capital loan, as some businesses may find it easier to get a LoanBuilder loan.
LoanBuilder Services
LoanBuilder offers short-term loans of $5,000 – $150,000, although first-time borrowers may only borrow a maximum of $100,000. LoanBuilder loans are repaid over 17 – 52 weeks.
LoanBuilder Rates & Fees
LoanBuilder’s loans do not feature a traditional interest rate. You’ll instead be charged a one-time fee. These fees are no longer disclosed, but they were previously 2.9% – 18.72% of the borrowing amount to give you an idea of what to expect.
With LoanBuilder, there are no origination fees. In fact, according to PayPal/LoanBuilder, apart from the fixed fee, “the only other cost is a $20 Returned Item Fee that is only assessed if a payment is returned.”
LoanBuilder Eligibility Requirements
Your business will need to meet the following requirements to get a LoanBuilder loan:
Time in business: 9 months
Business revenue: $33,300
LoanBuilder no longer lists a minimum credit score.
When To Use LoanBuilder
You’re interested in a business loan from PayPal, but you don’t use a PayPal account to conduct business
You’ve applied for PayPal Working Capital but have been denied
Business Loan & Funding Products Review Methodology
We spend hours researching and evaluating each business loan and funding product that we review at Merchant Maverick, placing special emphasis on key characteristics to generate our ratings.
Weighted Rating Breakdown
Rates & Fees 20%
Services 20%
Eligibility Requirements 20%
Application 15%
Sales & Advertising Transparency 10%
Customer Service 10%
User Reviews 5%
When rating lenders and funding providers, we use a 31-point rubric that looks at rates and fees, services, eligibility requirements, application, sales and advertising transparency, customer service, and user reviews. We weigh each section differently to calculate the total star rating. This rubric is applied to traditional term loans, as well as short-term loans, start-up loans, lines of credit, online lending products, merchant cash advances, and equipment financing products.
Rates & Fees: 20% of the total star rating
Services: 20% of the total star rating
Eligibility Requirements: 20% of the total star rating
Application: 15% of the total star rating
Sales & Advertising Transparency: 10% of the total star rating
Customer Support: 5% of the total star rating
User Reviews: 5% of the total star rating
Each section is further broken down into granular, weighted subsections, in which we examine specific attributes like terms lengths, conditions of repayment, credit score and revenue requirements, ease of application, length of time to funding, the ethics involved in promoting the lending product, customer support, and the overall reputation of the lender or funding provider.
Reasons Why Your PayPal Small Business Loan Was Declined
Your PayPal Working Capital loan can be declined for several different reasons. When PayPal declines your application, it will send you a letter explaining why you were rejected. This letter usually includes an error code, but from what we’ve gathered, the company isn’t very clear about the exact reason it rejects applicants.
According to PayPal Working Capital applicants, some of the most common problems appear to be:
Trouble verifying information
Abnormal sales
Sale holds or a pending balance on your account
Applying too soon after paying off another loan
Being in a high-risk industry
However, other factors can affect loan approval — being unrealistic about the amount you ask to borrow, for example. When applying for a loan, always make sure your borrowing amount is reasonable, and make sure to show potential lenders exactly how you plan on using the new funds.
Also, don’t forget to complete your application and provide the proper documentation.
PayPal Working Capital Error Codes
Here are the meanings of some common PayPal Working Capital error codes:
Identification Error: The system could not verify your information
Error Code 650: Sales volume fluctuations
Error Code 646: Abnormal sales
Error Code 641: Sales holds or a pending balance on your account
If you get one of these error codes when you apply, you can always attempt to rectify the situation. However, judging by the comments posted by rejected PayPal loan applicants, your efforts may not be successful.
Can I Reapply For The PayPal Working Capital Loan?
Yes. You can reapply for a PayPal Working Capital loan, and it will not affect your credit score. Of course, there’s no guarantee that you’ll eventually be successful if you just keep applying, so at a certain point, it makes sense to start considering alternative funding plans.
PayPal Working Capital Algorithm
How does the PayPal Working Capital algorithm work?
The PayPal Working Capital algorithm verifies your identity and your PayPal account history — this includes your PayPal sales, whether your account has any fund holds or pending balance, and how long your account has been active.
It also checks the status of any previous or existing PayPal Working Capital loans issued to you. The algorithm does not check your credit.
Why aren't I eligible for a PayPal Working Capital Loan?
To be eligible for a PayPal Working Capital loan, you need to satisfy the following minimum qualifications:
Have a PayPal Premier or Business account that’s at least three months old
Process annual sales of $15K/year with a Business PayPal account or $20K/year if you have a Premier PayPal account
Pay off any existing PayPal Working Capital loans before applying for a new one
How many times can you apply for PayPal Working Capital?
There is no stated limit on the number of times you can apply for PayPal Working Capital. Applying once or multiple times will not affect your credit score.
Just keep in mind that if you currently have a PayPal Working Capital loan, you cannot apply for another one until you’ve paid off the first one.
How is PayPal Working Capital calculated?
PayPal Working Capital loan eligibility is calculated primarily on your PayPal sales history and the status of any PayPal Working Capital loans you’ve taken out previously.
If you’re eligible, your loan amount is calculated based on your sales and the number of past loans. PayPal will loan you a maximum of 35% of your annual PayPal sales, capped at $125K for your first two loans, and $200K for loans after that.
How much can I get from a PayPal Working Capital loan?
With PayPal Working Capital, you can borrow 35% of your annual PayPal sales up to a maximum of $125,000 for your first two loans and $200,000 for any subsequent loans.
Does PayPal Working Capital affect my credit score?
No. When you apply for a PayPal Working Capital loan, PayPal doesn’t run a credit check on you. Instead, PayPal bases its decision on your PayPal account history.
Additionally, if you get a Working Capital loan, PayPal doesn’t report your payments to the personal or business credit bureaus, so you can’t build up your credit by repaying your loan.
How To Find Alternative Funding After Having Your PayPal Working Capital Loan Declined
When you get declined for the loan you want, it can feel like a huge setback, to put it mildly. The good news is that there are practical steps you can take to qualify for a different, if not even better, loan. If your application for PayPal Working Capital was declined, try these next steps to get your business the funding you need fast.
Ask Yourself Why You Chose PayPal Working Capital
The first step in your search for a PayPal Working Capital loan alternative is to ask yourself: Why did I apply for a PayPal Working Capital loan in the first place? What aspects of the loan drew me to PayPal Working Capital?
If you chose PayPal Working Capital because it was convenient, look for a loan with an easy application process and quick funding time, such as OnDeck. Did you appreciate the low borrower requirements and the lack of a credit check? You might want to look into the best small business loans with no credit check instead.
By identifying what you liked about PayPal’s Working Capital loan product, you can try to find a lender that offers similar, if not better, financing options.
Identify Your Business Loan Needs
Go on to identify your business’s needs. Ask yourself these questions:
What is a realistic repayment period for my business?
Before applying for any business loan, you should have a firm grasp of why you need the loan, how much you need to borrow, and what payment terms you can afford. A clear understanding of your business’s needs can help you narrow down your search to find the perfect lender with the best offerings and borrowing requirements. You should also try to understand the debt service coverage ratio to learn how to calculate the max monthly payment you can afford for a loan.
Choose The Right Type Of Business Financing
Choosing the right lender for your business also means choosing the right type of loan. Not all loans are created equal, and not all small businesses are borrowing money for the same reasons. Some businesses may be looking to purchase inventory, while others might need to upgrade their equipment or require a cash flow solution. Some have good cash flow but need extra funds for a new project or building.
Here is a breakdown of the most common types of small business loans and when to use them.
Short-Term Loans
A short-term loan is a sum of money that the borrower pays back in frequent, regular installments over a short time frame.
The unique thing about short-term loans is that there’s no interest rate. Instead, this type of loan has a factor rate — a multiplier used to calculate a fixed fee that gets added to your loan.
Short-term loans are relatively low-risk, making them a suitable choice for many businesses in need of fast funding and ideal for short-term business needs, such as working capital, payroll, inventory, etc.
Installment Loans
Installment loans, also called term loans, are loans where the borrower receives a lump sum of money that they pay back in regular installments (plus interest). Installment loans are ideal for established businesses looking for a more extended repayment period.
Lines Of Credit
When you get approved for a line of credit, a lender gives you access to a credit line with a certain amount of money that you can draw from at any time. Any draws made on a line of credit are repaid in regular installments.
A line of credit is ideal for businesses in need of cash flow solutions or that are looking for a cash cushion to cover unexpected expenses and emergencies.
Invoice Financing
There are two main types of invoice financing: selling your invoices (invoice factoring) or using your invoices as collateral for securing a loan (called invoice financing).
Invoice factoring and invoice financing are ideal for businesses that struggle with cash flow due to slow-paying customers.
Merchant Cash Advances
When you get approved for a merchant cash advance, a cash advance company purchases the business’s future revenue at a discount in exchange for immediate cash.
Merchant cash advances are ideal for short-term business needs, such as working capital, payroll, inventory, etc.
SBA Loans
SBA loans are loans granted by the Small Business Administration and its partners. While these loans are harder to qualify for, they usually have low costs and are ideal for nearly any business need.
Final Thoughts On The Best PayPal Working Capital Alternatives
PayPal Working Capital is the most convenient form of financing available to sellers who use PayPal. However, if you need other options, the seven lenders above are your next best bet.
Jason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University.
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The vendors that appear on this list were chosen by subject matter experts on the basis of product quality, wide usage and availability, and positive reputation.
Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.
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