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7 Best Alternatives When Your PayPal Working Capital Loan Is Declined

Declined for a PayPal Working Capital loan but still need funds? Here are the top alternatives to PayPal Working Capital loans.

    Jason Vissers
  • UPDATED

Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.
Professional filling out business loan form online

If your small business needs funding, PayPal Working Capital is a convenient and relatively low-cost way for merchants who use PayPal to borrow. Business loan applications are short, repayment is automatic, and fees tend to be fairly low. But what if your application is declined? Should you apply for PayPal Working Capital again?

Unfortunately, merchants frequently report that their application for a PayPal Working Capital loan was denied, often without a clear explanation. While some merchants report success after waiting a few days and reapplying, many simply do not have time (or patience) to wait for acceptance. So if you need working capital, what should you do next?

If you have been declined for a PayPal Working Capital loan but still need funds for your business, don’t worry. There are plenty of other great lending options out there! The following are the lenders most similar to PayPal Working Capital, both in terms of the loan products offered and the business requirements necessary to qualify for a loan.

Keep on reading to find out more!

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Table of Contents

Reasons Why Your PayPal Working Capital Loan Was Declined

You could be denied a PayPal Working Capital loan for a number of reasons. When PayPal declines your application, it will send you a letter explaining the reason 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 show potential lenders exactly how you plan on using the new funds.

Also, don’t forget to fill out your application completely and provide the proper documentation. Read 20 Tips To Improve Your Loan Application for expert advice on how to increase your chances of being approved for the loan you want.

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

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, and process annual sales of $15K/year with a Business PayPal account or $20K/year if you have a Premier PayPal account. Also, you must pay off any existing PayPal Working Capital loans to apply 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.

Why did I get denied for PayPal Working Capital?

You can get denied for a PayPal Working Capital loan for any number of reasons, including:

PayPal can’t verify your information
Your sales appear abnormal/infrequent
Your account has a sale hold or a pending balance
You applied too soon after paying off another Working Capital loan
Your business is considered high-risk

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 For Your Business Fast

When you get declined for the loan you want, it can feel discouraging and hopeless, to say the least. 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? Check out 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:

  • Why do I need the loan?
  • How much money do I need to borrow?
  • How much can I actually afford to borrow?
  • 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.

If you need extra help discovering exactly how much your company can afford to borrow, read Can I Afford A Small Business Loan? Also, check out our post on 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.

Now that you have a basic understanding of the options available, we can move on to the fun part — finding the perfect loan for your business!

If you want more information on any one of these loan types or need extra help figuring out which type is best, learn the ins and outs of applying to business loans online in our comprehensive guide.

Compare The Top PayPal Working Capital Alternatives

Now that you have a clear idea of what you’re looking for in a loan and which types of loans might best fit your needs, it’s time to compare the best options for your business. It’s good to limit your search to highly-rated lenders that share some characteristics of PayPal Working Capital loans. For example, a bank loan bears very little resemblance to a PayPal loan, so I would not start my search there.

Most businesses that are declined by PayPal Working Capital will be best served by an online loan, such as a short-term loan, merchant cash advance, or line of credit.

Best 7 PayPal Working Capital Alternatives In 2022

If your Paypal Working Capital loan was denied, read on to learn about the top PayPal Working Capital alternatives in detail so that you can see which PayPal competitor loan is best for your small business.

1. Lendio: Best For Most Businesses

Lendio



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Best for most businesses.

As one of our favorite alternatives to PayPal Working Capital, Lendio is a business financing aggregator, meaning it matches small businesses to lenders. The best part about Lendio is that you don’t have to spend hours searching for individual loans and can more quickly find a lending solution tailored to your particular business. Borrower requirements vary by lender, and the service is completely free to use. Lendio’s main advantage over PayPal Working Capital is that Lendio offers lines of credit, SBA loans, both short- and longer-term loans, etc., while PayPal Working Capital only offers short-term loans. Lendio also offers higher borrowing amounts to qualified businesses.

How Lendio Is Different From PayPal Working Capital

Types Of Funding Lines of credit, term loans, SBA loans, equipment financing, MCAs, short-term loans, credit cards
Borrowing Amount Up to $2 million

What’s more, due to the range of offers you may get, established businesses with good credit can potentially get lower rates with Lendio than with PayPal Working Capital.

Get Started With Lendio

Read our in-depth review

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2. OnDeck: Best For Fast Funding

OnDeck



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Best for fast funding.

OnDeck is perhaps the most widely-known PayPal competitor in the lending industry, and for good reason. Although its fees can get a little high, and you need at least fair credit to qualify, OnDeck may be a better choice for established businesses that need capital quickly. OnDeck offers multiple financing products in amounts up to $250K to borrowers with a credit score as low as 600. Currently, OnDeck provides short-term loans and lines of credit to eligible borrowers.

How OnDeck Is Different From PayPal Working Capital

Types Of Funding Lines of credit, term loans
Borrowing Amount Up to $250,000

OnDeck is similar to PayPal Working Capital when it comes to term length (up to 18 months for both) 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.

Get Started With OnDeck

Read our in-depth review

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3. Fora Financial: Best For Bad Credit

Fora Financial



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Best for bad credit.

Fora Financial is a PayPal Working Capital alternative suited for quick business financing. This online lender accepts applicants with credit scores as low as 500, making it suitable for business owners with bad credit who have had difficulty finding funding elsewhere. And unlike PayPal Working Capital, you can apply for either a merchant cash advance (repaid via automatic daily repayments, very similar to PayPal Working Capital) or a short-term loan with Fora Financial.

How Fora Financial Is Different From PayPal Working Capital

Types Of Funding Merchant cash advances, term loans
Borrowing Amount Up to $500,000
Short-Term Loan Repayment Weekly repayment option

Most businesses that have been in business a year and have gross monthly credit/debit card sales of at least $12,000 should qualify. Also, there is no maturity date on merchant cash advances — the term ends whenever your advance is repaid from your daily sales.

Get Started With Fora Financial

Read our in-depth review

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4. SmartBiz: Best For Long-Term Loans

SmartBiz



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Best for long-term loans.

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 apply), SmartBiz is a great option for established businesses looking for low-cost SBA(7) loans or even commercial real estate loans.

How SmartBiz Is Different From PayPal Working Capital

Types Of Funding SBA loans (10-year working capital and debt refinancing loans)
Borrowing Amount Up to $350,000
Borrowing Fees Lower than PayPal Working Capital (based on the prime rate)

SmartBiz and PayPal Working Capital are very different; the only real commonality is that they both offer business loans you can apply for online.

Get Started With SmartBiz

Read our in-depth review

Jump back to comparison chart

5. Fundbox: Best For Startup Financing

Fundbox



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Read our Review

Best for startup financing.

PayPal alternative Fundbox started as an invoice financing solution in 2013. Since then, the company has grown to offer lines of credit as well. Fundbox has easy-to-meet borrower requirements, a simple application process, and good customer support. Even if you have a very small fledgling business, you might still be eligible for a loan through Fundbox. This lender offers similar funding amounts as PayPal Working Capital and has similarly relaxed borrower requirements. You can borrow up to $100,000 if you have a credit score of 500 or higher.

How Fundbox Is Different From PayPal Working Capital

Types Of Funding Invoice financing, lines of credit
Time In Business Required 2 months (PayPal requires 3)
Repayment Schedule Weekly

With its relaxed borrower requirements, Fundbox may be a suitable alternative to PayPal Working Capital, especially if your business is new and/or you struggle with unpaid invoices.

Get Started With Fundbox

Read our in-depth review

Jump back to comparison chart

6. BlueVine: Best For B2B Businesses

BlueVine



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Best for B2B businesses.

Although this PayPal Working Capital alternative has primarily made waves with its invoice factoring services, BlueVine also offers revolving lines of credit to established businesses. Because BlueVine has relatively low borrower requirements for invoice factoring, this lender may work well for B2B businesses struggling with inconsistent cash flow and unpaid invoices.

How BlueVine Is Different From PayPal Working Capital

Types Of Funding Invoice factoring, lines of credit
Borrowing Amount Up to $5 million for invoice factoring
Repayment Schedule Weekly

BlueVine’s loans can potentially offer lower fees and interest than PayPal Working Capital depending on the strength of your business.

Get Started With BlueVine

Read our in-depth review

Jump back to comparison chart

7. LoanBuilder: Best For Short-Term Loans

LoanBuilder



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Best for short-term loans.

LoanBuilder is another PayPal loan service, but it is available for PayPal users and non-PayPal 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 definitely 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.

How LoanBuilder Is Different From PayPal Working Capital

Borrowing Amount Up to $500,000
Repayment Schedule Weekly
Loan term lengths 13-52 weeks (shorter terms than PayPal Working Capital)

Get Started With LoanBuilder

Read our in-depth review

Jump back to comparison chart

Final Thoughts: Alternatives To PayPal Working Capital If Declined

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. Whichever one you choose, don’t forget to optimize your loan application and check your application’s strength before applying.

Are you looking for more options? Read our small business loan comparison or check out this full list of small business loan reviews.

FAQs: PayPal Working Capital

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, and process annual sales of $15K/year with a Business PayPal account or $20K/year if you have a Premier PayPal account. Also, you must pay off any existing PayPal Working Capital loans to apply 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.

Why did I get denied for PayPal Working Capital?

You can get denied for a PayPal Working Capital loan for any number of reasons, including:

  • PayPal can’t verify your information
  • Your sales appear abnormal/infrequent
  • Your account has a sale hold or a pending balance
  • You applied too soon after paying off another Working Capital loan
  • Your business is considered high-risk

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.

In Summary: Best 7 PayPal Working Capital Alternatives In 2022

  1. Lendio: Best for most businesses.
  2. OnDeck: Best for fast funding.
  3. Fora Financial: Best for bad credit.
  4. SmartBiz: Best for long-term loans.
  5. Fundbox: Best for startup financing.
  6. BlueVine: Best for B2B businesses.
  7. LoanBuilder: Best for short-term loans.
Jason Vissers

Jason Vissers

Expert Analyst & Reviewer at Merchant Maverick
Jason Vissers has been researching, analyzing, and writing about small business software and finance since 2015. His financial expertise has been cited in numerous publications, including The Ladders. Jason graduated with a Political Science degree from San Diego State University in 2001.
Jason Vissers
View Jason Vissers's professional experience on LinkedIn.

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