LoanBuilder: A PayPal Service Review

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Pros

• Borrower qualifications are lower than banks
• Low credit score requirements
• No extra fees
• The application process is fast and easy
• Funds get disbursed quickly

Cons

• Not available to businesses in some industries
• No discounts for repaying early
• No long-term financing options available
• A blanket lien is required

Overview

LoanBuilder is a small business loan service offered by PayPal. Originally a product of Swift Capital, a small business financier, LoanBuilder was folded into the PayPal brand when the payments company acquired Swift in 2017. The LoanBuilder platform is also currently being marketed as PayPal Business Loans.

LoanBuilder offers short-term business loans, a type of interest-free loan in which borrowers repay a predetermined fixed fee along with the borrowed amount. While many other business financiers offer similar funding, LoanBuilder stands out from the pack for a few reasons: the loans are relatively inexpensive, borrowers don’t have to pay an origination fee (or any other upfront fees), and borrower requirements are low.

Is a small business loan from LoanBuilder right for you? Read on for the details.

Services Offered

LoanBuilder offers short-term business loans in which you repay a predetermined fee instead of interest. Business loans from LoanBuilder are fast and easy. To check eligibility, business owners simply need to fill out a short questionnaire online. If prequalified, borrowers can see their estimated terms and fees and adjust the loan amount and term length to their liking.

How Is LoanBuilder Different From PayPal Loan?

LoanBuilder and PayPal Business Loans are one and the same. In fact, you may notice that when you begin the application questionnaire, the service is called PayPal Business Loan instead of LoanBuilder.

How Is LoanBuilder Different From PayPal Working Capital?

PayPal Working Capital is another business loan service offered by LoanBuilder’s parent company. Like LoanBuilder, PayPal Working Capital provides short-term business loans.

PayPal Working Capital is a useful tool, but it’s only available to PayPal sellers. By contrast, LoanBuilder can be used by most businesses — PayPal sellers or otherwise. LoanBuilder also offers higher possible borrowing amounts, and the amount merchants can borrow is based on the business’s entire revenue (not just its PayPal sales). Check out the next section to see if you have a good chance to qualify for a LoanBuilder loan.

Borrower Qualifications

LoanBuilder has pretty relaxed borrower qualifications, but its list of ineligible industries is rather lengthy and includes attorneys, nonprofits, financial services, and others. Below are the minimum requirements your business must meet to have a good chance of qualifying for a LoanBuilder loan:

Your business must also be based in the United States. Additionally, you must not have any active bankruptcies.

Terms & Fees

Here are the current rates and fees for LoanBuilder loans:

LoanBuilder borrowing fees are usually not too high. However, the loans have relatively short repayment terms, making for large weekly payments. On the positive side, rates and terms are refreshingly transparent, with no hidden fees.

One of the main advantages of LoanBuilder is that you can check your eligibility, view the terms of your prospective loan, and customize your offer after filling out a short questionnaire.

LoanBuilder expresses the cost of the loan as a Total Interest Percentage. Determining your borrowing fee is easy — simply multiply the Total Interest Percentage by the borrowing amount. For example, if you are borrowing $100,000 and you have an interest percentage of 10%, you will have a borrowing fee of $10,000. In total, you would have to repay $110,000. Note that the Total Interest Percentage is not the same thing as an interest rate or APR. Unlike interest, which accrues over the life of the loan, LoanBuilder’s borrowing fees are only calculated once and stay the same for the loan term.

Notably, LoanBuilder does not charge an origination (or similar) fee, so you won’t have anything deducted from the amount of money you receive. Aside from potential late or NSF fees, the fixed borrowing fee is the only fee you will be charged. As for LoanBuilder’s borrowing fees, they are not expensive, but they’re not the cheapest either, and could potentially be as high as 18.72% of the borrowing amount. The repayment term is pretty short, with a maximum term of 52 weeks, which means that it’s not a viable long-term financing option, and each weekly repayment will be significant.

Repayment is hands-off. Each week, LoanBuilder will deduct a fixed amount from your business bank account via an automated clearing house (ACH). It’s worth mentioning that many of LoanBuilder’s competitors withdraw payments daily, making LoanBuilder’s system a little easier than most to plan for. You can pay the loan off early without penalty if you choose, but unfortunately, there’s no monetary benefit to doing so.

LoanBuilder does not require any specific collateral, but like many online lenders, LoanBuilder does require a UCC-1 blanket lien.

Application Process

LoanBuilder has a quick and easy application process.

The first step is to fill out an online prequalification form. You can choose to sign in using your PayPal account (in which case LoanBuilder will already have some of your information) or as a guest. The application has five steps: Contact Info, Personal Info, Business Location, Business Details, and Verify Identity. In all, LoanBuilder advertises that this form only takes five to ten minutes to complete.

Here is the type of information you’ll have to provide in each step (note that the information might vary based on your type of business):

• The first step is Contact Info, in which you must supply contact information, such as your name, email address, phone number, and intended use of the loan proceeds.
• Next is Personal Info, in which you must supply your home address and personal phone numbers.
• For Business Location, you will have to submit your business address and business phone numbers.
• For Business Details, you’ll supply relevant information, such as your business entity type, trade name or DBA, state of incorporation, annual business revenue, business start date, number of full-time employees, and business industry and sub-industry.
• On the final section of the loan application, Verify Identity, you will include information such as your date of birth, SSN, what percentage of the business you own, and your federal tax ID. LoanBuilder will use this information to perform a soft pull on your credit, which will give the lender a sense of your credit history. Supplying this information will not affect your personal credit score.

What Happens After I Apply Online?

On submitting the application, LoanBuilder will let you know if you’ve been approved to continue the process or not. To determine eligibility, LoanBuilder evaluates your business’s financials and overall health as well as your personal credit history. If preapproved, you will receive estimated rates and fees, and you will be able to customize your borrowing amount and term length.

When you have settled on your terms, you will have to complete a full application. The documentation required varies based on your business’s situation, but you should expect to submit various documents, such as recent bank statements. In this stage, LoanBuilder will perform a hard check on your credit, which might have a small impact on your credit score. If approved for a loan, you must electronically sign a contract before receiving your funds.

I Got A Loan From LoanBuilder. Now What?

On approval, WebBank (the bank responsible for originating LoanBuilder loans) will deposit the funds into your bank account. If your loan is approved before 5 PM EDT on Monday through Friday, the funds will generally transfer the next business day. If you are approved later than 5 PM, or during a weekend, the transfer might take a little longer.

To repay, LoanBuilder will automatically deduct payments every week. You will be able to choose the day of the week on which payments are withdrawn.

LoanBuilder Declined My Loan. Now What?

If your loan gets declined, LoanBuilder will let you know immediately, and it will follow up via email a few days later with additional details and reasons. Applicants who didn’t qualify can try again after 30 days have passed.

Sales & Advertising Transparency

LoanBuilder puts most of its cards on the table. In fact, you can find just about all the information you need on the site. Just be aware that to get the full picture, you’ll need to submit some information.

Customer Service & Technical Support

Customer service is available by phone Monday through Saturday. Support is also reachable via email and social media. There is no live chat feature, however.

Though customers in the past have complained about the difficulty of reaching a customer support representative, LoanBuilder appears to have taken great pains to improve its customer service experience, and most recent reviews of the company’s customer experience are positive. Additionally, its live phone-based support was designated a J.D. Power 2017 Certified Contact Center for “outstanding customer service experience.”

User Reviews

Overall, LoanBuilder enjoys a mostly positive reputation online.

Negative Reviews & Complaints

LoanBuilder doesn’t have much of its own user profile at the moment — many customer review sites still list it under the Swift Capital brand. Swift has an A+ rating on the BBB and has a healthy presence on Trustpilot with a 4.5/5 score. Still, there are some negative reviews out there. Here’s a rundown of the complaints against this service:

• Unforeseen Roadblocks: Some customers, either due to miscommunication or mishap, said the application and funding experience turned out to be more complicated than anticipated.
• Confusing Terms: Though sometimes due to unfamiliarity with short-term loan terminology, some customers found themselves unprepared to meet the terms.
• Short Repayment Terms: Repayment must take place in a maximum of 12 months. That’s not a long time. The weekly repayments will be much higher than they would be if you got a more extensive term length.

Positive Reviews & Testimonials

LoanBuilder has several testimonials on its website, a lot of positive reviews on Trustpilot, and a few positive experiences on the BBB. Customers usually like the following:

• Fast Time To Funding: Despite the costs of doing so, being able to get capital fast has its virtues.
• Helpful Customer Service: For the most part, customers appear to be satisfied with the service and support offered.
• Weekly Repayment Terms: Most MCA and short-term loan providers deduct a portion of your sales every day. For many businesses, weekly deductions are much easier to handle.
• Transparent Fees: LoanBuilder has few surprises as far as fees go, which is somewhat rare for this type of product.

Final Verdict

LoanBuilder’s loans are fast, easy, and a little more flexible than your average business loan. While some borrowers might want to look for a loan with longer repayment term lengths, LoanBuilder has a lot to offer the right type of business. In other words, if your business needs a short-term infusion of capital, or you can’t qualify for financing elsewhere, LoanBuilder is worth including in your comparisons.

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