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What to Do If Your Application Is Declined for PayPal Working Capital

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For business owners already using PayPal to make and accept payments at work, the company’s Working Capital program may be a convenient financing option. The loan application process is simple, and funds are distributed quickly.

However, you could be denied if you don’t meet PayPal’s sales threshold and other requirements. But don’t worry – there are plenty of options to obtain working capital financing if your first choice doesn’t work out.

What is PayPal Working Capital?

PayPal Working Capital allows business owners to borrow money based on their PayPal sales history. For those with at least $15,000 in annual sales, you can borrow up to 35 percent of your sales through the service and no more than $125,000 for your first PayPal loan.

PayPal charges one fixed fee based on the amount of your loan, your business’ sales history and the repayment percentage on your loan, which you would choose when you apply. To repay the loan, you would automatically give PayPal a percentage of your future sales through the service.

Here’s an example for a borrower with $100,000 in annual sales interested in taking out a $25,000 loan:

Repayment percentage Percentage you keep Fixed fee Total to be repaid
30% 70% $3,079 $28,079
25% 75% $3,823 $28,823
20% 80% $5,049 $30,049
15% 85% $7,456 $32,456
10% 90% $14,524 $39,524


Repayment terms are based on your daily sales. The higher your PayPal sales, the faster you would repay the loan. But PayPal does require you to pay a minimum of 5 to 10 percent of your loan every 90 days to remain in good standing. PayPal also allows you to make manual payments and doesn’t charge an early repayment fee.

PayPal Working Capital is similar to a merchant cash advance, or MCA. When you take out an MCA, the provider gives you a lump sum in exchange for a portion of your future receivables, typically your credit card sales. The MCA provider takes a percentage of each transaction until you’ve paid back the advance. But unlike PayPal Working Capital, MCAs are not small business loans.

PayPal’s application takes a few minutes and you could see funds in your PayPal account almost immediately. Unlike a traditional bank loan or credit card, PayPal Working Capital doesn’t require a credit check or a personal guarantee. Merchants are assigned a score between 350 and 750 based on an internal risk model — the weighted average on outstanding loans as of Dec. 31, 2017, was 619.

What to do if you’re declined

As a small-business owner, you’re bound to face a few bumps in the road. One of those bumps could be the denial of a loan application. When you need funding to cover business expenses, being denied for a loan could feel like a setback. But there are lessons to be learned from rejection.

All types of lenders, including banks, alternative online lenders and PayPal, could reject your loan application for a variety of reasons, said Jim Holtzman, an adviser at Legend Financial Advisors in Pittsburgh. You may not have a high enough credit score, enough collateral to secure the loan or the lender may not see enough cash flow in your financial statements. If you have too much debt already, a lender probably wouldn’t want to approve you for financing.

Whatever the reason, getting denied for a loan can be a turning point for your business, Holtzman said. It represents an opportunity to make improvements.

“Each one of those reasons would have a lesson that can be learned,” he said.

Learn from the experience

When your PayPal Working Capital application is denied, the company sends a letter detailing the reasons behind the decision.

Approval is based on factors such as consistency in your PayPal processing volume, transaction disputes, and usage and age of your account. PayPal looks at real-time data when making application decisions.

Once you get your letter from PayPal, you should take a look at the reasons you were denied and figure out what changes you could make within your business. You could also call or email the company for more information.

“The lesson will be understood from what’s provided as feedback on why you got rejected in the first place,” Holtzman said.

Why did you apply for PayPal Working Capital?

Identifying some of the benefits of PayPal Working Capital may help you better understand what you are looking for in a lender, which would make it easier to choose a different financing solution.

Here are a few features of PayPal Working Capital that may have caught your attention.

Credit is not a factor. Your eligibility for PayPal Working Capital is not based on your personal or business credit score. Since PayPal doesn’t check your credit when processing your application, you don’t have to worry about your credit being impacted when you apply.

Automatic repayment schedule. To repay your loan, PayPal deducts a percentage of each sale until your debt is paid in full. You only make payments on days when you make sales through PayPal. You’ll pay off your loan faster if you have higher sales volume, and PayPal doesn’t charge an early repayment fee. Although you wouldn’t make payments on days when you don’t have any PayPal transactions, you would still be required to pay at least 5 to 10 percent of your loan amount every 90 days.

Fast time to funding. If your application is approved, you could see funds in your PayPal account within minutes. Automatic repayments don’t start until 72 hours after you receive your financing.

One-time fee. PayPal calculates a single, fixed fee based on your PayPal sales history, loan amount and repayment percentage. The lower your repayment percentage, the higher the fee. PayPal does not charge periodic interest, hidden fees or late fees.

What other lenders can meet your needs?

Many alternative online lenders have features similar to those of PayPal Working Capital. To meet your working capital needs, you could apply for a short-term business loan, MCA or a line of credit from a reputable online lender.

If your PayPal Working Capital application has been denied, here are a few funding providers you could turn to instead. These lenders typically require lower fees than PayPal for working capital financing.


OnDeck is an online small-business lender offering term loans up to $500,000 and lines of credit up to $100,000. Applying for OnDeck financing does not impact your credit score and you could receive funding in as few as 24 hours. OnDeck’s short-term loans range from three to 12 months, while long-term loans span 15 to 36 months. You would make fixed daily or weekly repayments, which would be automatically deducted from your business bank account. Lines of credit require fixed, automatic weekly payments.


ForwardLine operates online and offers short-term and medium-term loans up to $500,000. Submitting a ForwardLine application would not impact your credit score and you could receive a decision instantly. Once approved, you could see your funds in your business bank account in a little as one business day.

Rapid Finance

Rapid Finance, also an online alternative lender, provides small-business loans, MCAs, lines of credit and SBA bridge loans to business owners. You could be approved in 24 hours and receive funds in three days. Approval for funding is not reliant on your credit score alone, and you would make daily scheduled payments to repay your loan.


BlueVine, another online lender, offers lines of credit up to $250,000 and invoice factoring up to $5 million for small businesses. Applying for BlueVine capital will not affect your credit score. BlueVine typically makes funding decisions within 24 hours. Weekly payments would be debited directly from your business bank account.

Do you meet their minimum borrower requirements?

To avoid being declined a second time, make sure you understand the lender’s requirements before you apply.

OnDeck requirements

  • One year in business
  • $100,000 in annual revenue
  • Minimum personal credit score of 500

ForwardLine requirements

  • One year in business
  • At least $100,000 in annual revenue

Rapid Finance requirements

  • Two years in business
  • At least $5,000 in monthly revenue

BlueVine requirements

  • Three to six months in business
  • $100,000 in annual revenue
  • Personal credit score of 530 for invoice factoring; 600 for a business line of credit

Jump back in: Apply to your new lender

Before applying for another loan, you should address the issues that led to your first rejection, Holtzman said.

For example, if you were denied for a loan because you didn’t have enough cash flow, you shouldn’t apply for financing until you’ve made improvements. Waiting to apply for funding until your business is in better condition would save you from the disappointment of another rejection, Holtzman said.

It may also be a good idea to review your business’ credit report before applying to make sure all the information is accurate, Holtzman said. You could check your personal credit score as well. Making credit inquiries may not hurt your credit score, but multiple lenders pulling your credit could negatively impact your score. Be selective with your loan applications to avoid any impact on your credit.

Researching a lender before applying would give you a better sense of your chances for approval, Holtzman said. You should ask the lender about the underwriting process before you apply so you have a clear idea of how your business would be judged.

A lender may have strict requirements that you must meet, or they may be willing to holistically consider your business, Holtzman said. You should choose a lender with an underwriting process that gives you the best opportunity to be approved for a loan.

“Make sure you’re in the right place,” he said.


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