PayPal Working Capital Loan Declined? Try These 7 Alternatives
PayPal Working Capital loans are a great fit for many small businesses. The service is a convenient and relatively low-cost way for merchants who use PayPal to borrow money. Applications are short, repayment is automatic, and fees are normally very low.
Unfortunately, merchants report being denied access to this service, often without a clear explanation as to why their application was declined. While some merchants report success after waiting a few days and reapplying, many simply do not have time (or patience) to wait for an acceptance. So what happens 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. These lenders cover everything from traditional installment loans to lines of credit to invoice financing and even SBA loans, so you can find exactly the right type of financing for your business.
Rundown of the Best PayPal Working Captial Alternatives
Table of Contents
Reasons Why Your PayPal Working Capital Loan Was Declined
You could be denied for a PayPal Working Capital loan for a number of reasons. When PayPal declines your application, they 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 they reject applicants. According to PayPal Working Capital applicants, some of the most common problems appear to be:
- Trouble verifying information
- Abnormal sales
- Sales holds or pending balance on your account
- Applying too soon after paying off another loan
- Being in a high-risk industry
However, there are other factors that 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.
What Next?
When you are 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, and if not even better, loan. If your PayPal Working Capital application has been 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 on 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 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, like OnDeck. If you liked the competitive working capital terms and fees, consider an equally competitive alternative like StreetShares. Did you appreciate the low borrower requirements and the lack of a credit check? Check out The 4 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 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 on 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 on 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; 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 period of time. 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 is added to your loan. Short-term loans are relatively low risk with low borrower requirements, making them a good choice for many businesses in need of fast funding and ideal for short-term business needs like 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 is paid back in regular installments (plus interest). Installment loans are ideal for established businesses looking for a longer repayment period.
- Lines Of Credit: When you are 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 (simply 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 are 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 like 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, read Finding The Right Type Of Online Loan For Your Business.
Take A Look At 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.
And without further ado, here are the top seven alternatives to PayPal Working Capital. We’ll give you the full scoop on each lender, including which services they offer, their borrower requirements, and their terms and fees.
Your Options At A Glance
PayPal’s LoanBuilder
Best For…
Businesses looking for a short-term loan with a quick eligibility check and low borrower requirements.
Products Offered
- 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.
LoanBuilder vs. PayPal Working Capital
LoanBuilder offers the following advantages over PayPal Working Capital:
- Higher borrowing limits (You can borrow to $500,000 with LoanBuilder vs. $125,000 for your first loan with PPWC)
- Doesn’t require your business to have a PayPal account
- Weekly loan repayments (vs. daily repayments with PPWC)
LoanBuilder has a lot in common with PPWC, being that they’re both PayPal short-term business loan products, but for some businesses it might be easier to get a loan from LoanBuilder. It’s definitely worth applying with LoanBuilder if you were rejected for PPCW loan.
How To Apply For A LoanBuilder Loan
To apply for a LoanBuilder loan, simply fill out a quick online pre-qualification form and PayPal user will have the option of connecting to their PayPal account. If declined, LoanBuilder will tell you right away. If pre-approved, you’ll be presented an offer with estimated rates and fees and then asked to complete a full application. Once approved, the funds will usually be transferred the next business day.
Takeaway
For businesses looking for a short-term loan, LoanBuilder is a quick funding option with low borrower requirements and competitive rates and terms. It’s also a great alternative if you’re looking for a PayPal loan service that isn’t PayPal Working Capital.
BlueVine
Best For…
Small businesses looking for invoice factoring or a line of credit for consistent cash flow.
Products Offered
- Invoice factoring
- Lines of credit
- Term loans
Though they’ve primarily made waves for invoice factoring services, BlueVine also offers revolving lines of credit, as well as traditional term loans. Because BlueVine has relaxed borrower requirements, this lender may work well for very new businesses struggling with inconsistent cash flow.
BlueVine vs. PayPal Working Capital
Bluevine recently started offering 6- and 12-month term loans, in addition to their invoice factoring and line of credit options. Compared to PPWC, BlueVine offers a more traditional term loan, which charges interest instead of a factor rate. Here’s how BlueVine compares to PPWC:
- Term loan, invoice factoring, and line of credit options
- Doesn’t require a PayPal account
- Higher maximum borrowing amounts (up to $250,000 on lines of credit and term loans)
- Weekly repayments
- Potentially lower fees/interest, depending on the strength of your business
In case you’re wondering how BlueVine compares to another similar PayPal Working Capital alternative, Fundbox, read Fundbox vs. BlueVine.
How To Apply For A BlueVine Line Of Credit
To apply to BlueVine, all you need to do is fill out a short questionnaire. If you’re a good fit, you can gather and send in documents for verification. In general, the application process takes 24 hours or less.
Takeaway
BlueVine is a good choice for new businesses that need dependable sources of capital. Older and more creditworthy businesses may be able to find better terms and fees elsewhere.
 Get an offer today | Fast funding for your business.Apply in under 5 minute and applying won't impact your credit score. Get funds in as little as 24 hours. |
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Lendio
Best For…
Businesses with fair to good credit looking for small business financing.
Products Offered
- Short-term loans
- Term loans
- Merchant cash advances
- Lines of credit
- SBA loans
- Equipment financing
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 for your business. Borrower requirements vary by lender and the service is completely free to use.
Lendio vs. PayPal Working Capital
The main advantage Lendio has over PPWC is that Lendio offers more product variety and flexibility—you can apply for lines of credit, SBA loans, longer-term loans, etc., vs. only short-term loans with PPWC. Because Lendio works with a number of different lenders, you have a lot more options to choose from, and you could potentially get better financing rates and repayment terms than with PPWC as well, particularly if you have at least fair-to-good credit.
How To Apply For A Lendio Loan
To start using Lendio’s matchmaking service, begin by creating an account and filling out an application. Within 72 hours, Lendio will get back to you with any loan offers you are eligible for. You can then proceed to get funding from the lender of your choice.
Takeaway
Lendio is an easy way to compare the best loan offers for which your small business is eligible.
OnDeck
Best For…
Small- to medium-sized businesses looking for a loan or line of credit with a fast application process.
Products Offered
- Short-term loans
- Lines of credit
OnDeck is perhaps the most widely-known alternative lender out there, for good reason. Although fees can get a little high, OnDeck is able to offer multiple financing products to a variety of different businesses. Currently, the lender offers short-term loans and lines of credit to eligible borrowers.
OnDeck vs. PayPal Working Capital
Here are a few reasons it might be preferable to get a loan through OnDeck instead of PPWC:
- Line of credit option (in addition to term loans)
- Doesn’t require you to have a PayPal account
- Higher borrowing amounts (up to $500,000)
- Longer repayment terms on term loans (up to 36 months vs. 18 months with PPWC)
- Potentially lower borrowing rate, depending on your business’s credentials
Overall, OnDeck may offer more qualified businesses a loan better suited to their needs. Even if you are approved for a PPWC loan, it may be a good idea to also apply for an OnDeck loan to see how their offer compares to PPWC’s.
How To Apply For An OnDeck Loan
Fill out a short application on the website. If you like the terms and fees you’re offered, you may have to submit additional documents for verification before you can finalize the deal. A typical application takes one to two days.
Takeaway
OnDeck is a fast and convenient way for businesses of most sizes to get funds to grow or maintain their business.
SmartBiz
Best For…
Established businesses looking for low-cost SBA loans.
Products Offered
- SBA loans
- Commercial Real Estate Loans
- Bank term loans
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, SmartBiz is a great option for established businesses looking for low-cost SBA loans.
SmartBiz vs. PayPal Working Capital
SmartBiz and PPWC are very different; the only real thing they have in common is that they’re both business loans you can apply for online. As follows are some of the advantages you’ll get with a SmartBiz loan:
- SBA loan, commercial real estate, and bank loan options
- Doesn’t require a PayPal account
- Long-term loans (10-year SBA and bank loans, 25-year commercial real estate loans)
- Higher borrowing amounts (up to $350,000 on SBA loans and $200,000 on bank loans)
- Lower borrowing fees based on prime rate
SmartBiz is a more traditional type of financing that only established businesses will qualify for. However, if you do meet their borrower qualifications, you’ll get a much better loan than you would from PPWC.
How To Apply For A SmartBiz Loan
After you fill out an online questionnaire, SmartBiz will tell you if you have a good chance of qualifying within minutes. If you pass the initial questionnaire and credit pull, a personal “relationship manager” will help you fill out your application. Once approved, the time for funding can take anywhere from one week to three months.
Takeaway
While approval from SmartBiz can take longer than from the other contenders on this list and the borrower qualifications are more stringent, the low cost of SBA loans could be more than worth it.
Fundbox
Best For…
Micro-businesses looking for invoice financing or a line of credit for consistent cash flow.
Products Offered
- Invoice financing
- Lines of credit
Fundbox started out as an invoice financing solution back 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 financing through Fundbox.
Fundbox vs. PayPal Working Capital
Fundbox offers similar amounts of financing as PPWC (credit lines up to $100,000 vs. a maximum of $125,000 for your first loan with PPWC), but Fundbox financing is structured differently, as they offer invoice financing and lines of credit instead of term loans. Here are a few potential things that make Fundbox a better fit than PPWC for some businesses:
- Invoice financing and line of credit options
- Doesn’t require a PayPal account
- Weekly repayments
Fundbox has similarly relaxed borrower requirements compared to PPWC—neither lender has firm requirements for credit score or time in business. Fundbox may be a suitable alternative to PPWC, especially if your business is a very small startup and/or you struggle with unpaid invoices.
How To Apply For Fundbox
Fundbox makes it easy to apply for a loan. Simply create an account and attach your accounting software to apply for invoice financing, or link up to your bank to apply for a line of credit. You’ll generally hear back from Fundbox within one to two hours. If approved, you can start requesting funds right away.
Takeaway
Fundbox is a great lending solution for small businesses looking for invoice factoring or a line of credit.
Best For…
Small- to medium-sized businesses looking for a loan or line of credit to be used for working capital needs.
Products Offered
- Installment loans
- Lines of credit
- Contract financing
StreetShares is a peer-to-peer (P2P) lender that offers business funding services to eligible merchants, including installment loans, lines of credit, and contract financing. Although the service was originally created to help veterans access funding, you don’t need to be a veteran to use the service.
StreetShares vs. PayPal Working Capital
There are a number of reasons some small businesses prefer StreetShares financing over PPWC:
- Term loan, line of credit, and contract financing options
- Doesn’t require you to have a PayPal account
- Larger borrowing amounts (up to $250,000 on lines of credit and up to $500,000 on term loans)
- Longer repayment terms (up to 36 months on lines of credit and term loans)
- Weekly repayments
- Potentially lower rates/fees, depending on your business’s qualifications
If you were rejected by PPWC but meet StreetShares’ borrower requirements, this lender can be a great source of working capital.
How To Apply For A StreetShares Loan
To check your eligibility, you must fill out an online application. If you’re eligible, you will need to submit documents for verification, and your loan will be funded by investors. When funding is complete, you will be able to review and accept your loan offer.
Takeaway
StreetShares provides low-cost and convenient business loan products to eligible businesses. If you have fair credit, this is an excellent source of financing.
Final Thoughts
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.
Looking for more options? Read our small business loan comparison or check out this full list of small business loan reviews.
A Last Look At Our Top Picks
Shannon Vissers
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