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7 Best Alternatives To Try When Your PayPal Working Capital Loan Is Declined

    Shannon Vissers
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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 frequently report that their application for PayPal Working Capital was denied, often without a clear explanation as to why. 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 that you can find the right type of funding for your business.

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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.

FAQs About The PayPal Working Capital Algorithm & Error Codes

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.

What do the PayPal Working Capital error codes mean?

Here are the meanings of some common PayPal Working Capital error codes:

  • Identification Error: The system could not verify your information
  • Error Code 646: Abnormal sales
  • Error Code 641: Sales holds or a pending balance on your account
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.

What Next? How Do You 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 in 2020, 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 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 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.

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. 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 PayPal Working Capital Alternatives

Was your Paypal Working Capital loan declined? Here are the top Paypal Working Capital alternatives to check out if your PayPal Working Capital loan was denied. Read about each of these PayPal Working Capital alternatives in detail so that you can see which alternative loan is best for your small business.

1. OnDeck: Best For Fast Funding


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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, 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. 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)
  • Higher borrowing amounts (up to $250,000)
  • Potentially lower borrowing rate, depending on your business’s credentials

OnDeck is similar to PayPal Working Capital when it comes to term length (up to 18 months for both lenders) and speedy time to funding (same-day funding available from both lenders).

OnDeck Pros & Cons


  • Same-day funding
  • Builds business credit
  • Lower costs for repeat customers


  • Harder to qualify for than some other online loans
  • Fees can be expensive

Get Started with OnDeck

Read our in-depth review

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2. Lendio: Best For Most Businesses


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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.  If the following aspects appeal to you, you might want to apply for Lendio:

  • More financing options to choose from
  • Higher borrowing amounts (up to $2 million for qualified businesses)
  • Potentially lower rates than PayPal Working Capital (for an established business with good credit)

Lendio Pros & Cons


  • Loans for any type of business, from startups to established businesses
  • Apply to multiple loans with one application
  • Makes it easy if you don’t know which loan to apply for


  • Not all businesses will qualify
  • Funds can take awhile to disburse

Get Started with Lendio

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3. BlueVine: Best For B2B Businesses


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Although this funder 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.

BlueVine VS PayPal Working Capital

BlueVine works differently than PayPal Working Capital. BlueVine invoice factoring is a loan alternative, which gives you an advance on your customers’ unpaid invoices. BlueVine’s lines of credit are more like traditional loans that charge interest. However, only established businesses will qualify for a credit line. Here’s how BlueVine compares to PayPal Working Capital:

  • Invoice factoring and line of credit options
  • Higher maximum borrowing amounts (up to $250,000 for lines of credit 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 our piece on Fundbox vs. BlueVine.

BlueVine Pros & Cons


  • Transparent fees and terms
  • Fast time to funding
  • Invoice factoring is startup and bad-credit friendly


  • Lines of credit are difficult to qualify for
  • Quick repayments required

Get Started with BlueVine

Read our in-depth review

Jump back to comparison chart

4. Fora Financial: Best For Bad Credit

Fora Financial

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Fora Financial is an alternative online lender suited for quick business financing. This 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. You can apply for either a merchant cash advance or a short-term loan with Fora Financial.

Fora Financial VS PayPal Working Capital

Fora Financial’s merchant cash advance works very similarly to PayPal Working Capital. With merchant cash advances, you receive funds that you repay via automatic daily repayments, which represent a percentage of your daily credit card sales. Fora Financial also offers short-term loans. Most businesses that have been in business a year and have gross monthly credit/debit card sales of at least $12,000 should qualify.

Here are some ways Fora Financial differs from PayPal Working Capital:

  • Two types of financing to choose from (merchant cash advances and short-term loans)
  • Higher borrowing amounts (up to $500,000)
  • No maturity date on merchant cash advances (term ends whenever your advance is repaid from your daily sales)
  • Weekly repayment option for short-term loans

Fora Financial Pros & Cons


  • Bad credit-friendly
  • Fast funding
  • Discounts for repaying early


  • Fees can be expensive
  • Not available to startups

Get Started with Fora Financial

Read our in-depth review

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5. Fundbox: Best For Startup Financing


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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 a loan through Fundbox.

Fundbox VS PayPal Working Capital

Fundbox offers similar amounts of financing 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. However, Fundbox financing is structured a little differently. Here are a few things that differentiate Fundbox from PayPal Working Capital:

  • Invoice financing and line of credit options available
  • Requires only two months in business (vs. three months with PayPal)
  • Weekly repayments
  • Requires a credit check (but your score only needs to be 500)

Because of 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.

Fundbox Pros & Cons


  • Startup-friendly
  • Bad credit-friendly
  • Easy to apply for


  • Potentially high fees
  • You must repay the loan quickly (in 12 or 24 weeks)

Get Started with Fundbox

Read our in-depth review

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6. SmartBiz: Best For Long-Term Loans


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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(7) loans or even commercial real estate 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
  • Long-term loans (10-year working capital and debt refinancing loans)
  • Higher borrowing amounts (up to $350K on working capital and debt refinancing 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 meet its borrower qualifications, you’ll get a much better loan than you would from PayPal.

SmartBiz Pros & Cons


  • Simplifies SBA loan application process
  • Easier to qualify for than a typical bank loan
  • Larger loans for established businesses


  • Lengthier application process compared to other online loans
  • Not available to new businesses or businesses with bad credit

Get Started with SmartBiz

Read our in-depth review

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7. LoanBuilder: Best For Short-Term Loans


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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 has the following differences compared to 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 process sales using PayPal
  • Weekly loan repayments (vs. daily repayments with PayPal Working Capital)
  • Shorter loan term lengths (13-52 weeks vs. up to 18 months 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.

LoanBuilder Pros & Cons


  • Fast and easy to apply for
  • Rapid time to funding
  • Larger loans up to $500K


  • Short repayment terms requiring large weekly payments
  • Requires fair credit score

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.

In Summary: Best PayPal Working Capital Alternatives

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

Shannon Vissers

Expert Analyst & Reviewer at Merchant Maverick
The former editor-in-chief of SteelOrbis, Shannon has been researching and writing about small business software and financing since 2015. Her shopping and retail expertise has been cited in numerous publications, including Reader's Digest, MSN, Yahoo Finance, and GOBankingRates . She has also published articles for LIVESTRONG.COM, eHow, Life'd, and other websites. Shannon attended San Diego State University, graduating in 2005 with a BA in English.
Shannon Vissers
View Shannon Vissers's professional experience on LinkedIn.
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