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PayPal Working Capital Loan Declined? Try These 7 Alternatives

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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 tend to be fairly low.

Unfortunately, merchants report being denied access to this service, often without a clear explanation as to why PayPal had declined their application. 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 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 the right type of funding for your business.

Learn More About Our Top Picks

CompanySummaryNext Steps
Best for businesses looking for a short-term loan with a quick eligibility check and low borrower requirements.

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Best for small businesses looking for invoice factoring or a line of credit for consistent cash flow.

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Best for businesses with fair-to-good credit looking for small business financing.

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Best for small- to medium-sized businesses looking for a loan or line of credit with a fast application process.

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Best for established businesses looking for a low-cost SBA loan.

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Other Featured Options:

  • Fundbox: Best for micro-businesses looking for invoice financing or a line of credit for consistent cash flow.
  • StreetShares: Best for small- to medium-sized businesses looking for a loan or line of credit to be used for working capital needs.

Read more below to learn why we chose these options.

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, 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 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.

What Next?

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 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 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. If you liked the competitive working capital terms and fees, consider an equally competitive alternative, such as 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 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 good 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 is paid 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 (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 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, 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 and how they compare to PayPal Working Capital.

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1. LoanBuilder

LoanBuilder



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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 up to $500,000 with LoanBuilder vs. $125,000 for your first loan with PayPal Working Capital)
  • Doesn’t require your business to have a PayPal account
  • Weekly loan repayments (vs. daily repayments with PayPal Working Capital)

LoanBuilder has a lot in common with PayPal Working Capital, being that they’re both PayPal short-term business loan products. For some businesses, though, it might be easier to get a loan from LoanBuilder. It’s definitely worth applying with LoanBuilder if you were rejected for a PayPal Working Capital loan.

Get Started with LoanBuilder

Read our in-depth review

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2. BlueVine

BlueVine



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Although this funder has primarily made waves with its invoice factoring services, BlueVine also offers revolving lines of credit and traditional term loans. Because BlueVine has relatively low 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 six- and 12-month term loans, in addition to its invoice factoring and line of credit options. Compared to PayPal Working Capital, BlueVine provides a more traditional term loan, which charges interest instead of a factor rate. Here’s how BlueVine compares to PayPal Working Capital:

  • Term loan, invoice factoring, and line of credit options
  • Doesn’t require a PayPal account
  • Higher maximum borrowing amounts (up to $250,000 for lines of credit and term loans, and $5 million for invoice factoring)
  • Weekly repayments
  • Potentially lower fees and 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.

Get Started with BlueVine

Read our in-depth review

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3. Lendio

Lendio



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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

Lendio’s main advantage over PayPal Working Capital 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 PayPal Working Capital. Because Lendio works with many different lenders, you have a lot more options to choose from. You could potentially get better financing rates and repayment terms than with PayPal Working Capital as well, particularly if you have at least fair-to-good credit.

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4. OnDeck

OnDeck



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OnDeck is perhaps the most widely-known alternative lender out there and for good reason. Although its fees can get a little high, OnDeck can offer multiple financing products to a variety of different businesses. Currently, this business lender provides short-term loans and lines of credit to eligible borrowers.

OnDeck VS PayPal Working Capital

Here are a few reasons why it might be preferable to get a loan through OnDeck instead of PayPal Working Capital:

  • 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 time frames on term loans (up to 36 months vs. 18 months with PayPal Working Capital)
  • 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 get approved for a PayPal Working Capital loan, it may be a good idea to also apply for an OnDeck loan to see how its offer compares to PayPal’s.

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5. SmartBiz

SmartBiz



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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 PayPal Working Capital 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 the prime rate

SmartBiz is a more traditional type of financing that only established businesses will qualify for. However, if you do meet its borrower qualifications, you’ll get a much better loan than you would from PayPal.

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6. Fundbox

Fundbox



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Fundbox started 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 PayPal Working Capital (credit lines up to $100,000 vs. a maximum of $125,000 for your first loan with PayPal). However, Fundbox financing is structured differently, as it offers invoice financing and lines of credit instead of term loans. Here are a few things that potentially make Fundbox a better fit than PayPal Working Capital 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 PayPal Working Capital. Neither lender has firm requirements for time in business, and both have low (if any) credit score 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

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7. StreetShares

StreetShares



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StreetShares is a lender that offers business funding services to eligible merchants, including installment loans, lines of credit, and contract financing. Although the service was initially 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 several reasons some small businesses prefer StreetShares financing over PayPal Working Capital:

  • 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 and fees, depending on your business’s qualifications

If you were rejected by PayPal Working Capital but meet StreetShares’ borrower requirements, this lender can be a great source of working capital.

Read our in-depth review

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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.

Are you 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

  1. LoanBuilder
    Summary - Best for businesses looking for a short-term loan with a quick eligibility check and low borrower requirements.
  2. BlueVine
    Summary - Best for small businesses looking for invoice factoring or a line of credit for consistent cash flow.
  3. Lendio
    Summary - Best for businesses with fair-to-good credit looking for small business financing.
  4. OnDeck
    Summary - Best for small- to medium-sized businesses looking for a loan or line of credit with a fast application process.
  5. SmartBiz
    Summary - Best for established businesses looking for a low-cost SBA loan.
  6. Fundbox
    Summary - Best for micro-businesses looking for invoice financing or a line of credit for consistent cash flow.
  7. StreetShares
    Summary - Best for small- to medium-sized businesses looking for a loan or line of credit to be used for working capital needs.
Shannon Vissers

Shannon Vissers

Shannon is a writer and editor based in San Diego, CA. Shannon attended San Diego State University, graduating in 2005 with a BA in English. She is the former editor-in-chief of SteelOrbis, an online trade publication. Shannon has also published articles for LIVESTRONG.COM, eHow, Life'd, and other websites. She has been with Merchant Maverick since 2015, writing about POS software, small business loans, and financing for women entrepreneurs.
Shannon Vissers
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Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.

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