PayPal offers new financing solution for online merchants

January 7th, 2019, editor: MyBusinessFuture

PayPal expands its offering for small and medium businesses. With PayPal Businesskredit, the company will offer its merchants a financing solution in the future, instant loans up to 24,999 euros. Repayment will be made via the merchant’s PayPal sales. 

The payment service provider PayPal is further expanding its business model and adding a financing solution for online merchants to its product portfolio. Applying for a PayPal business loan is done completely online. The approval and financing is decided directly during the application process. The verification is carried out primarily on the basis of the data available at PayPal. Within a few minutes, merchants receive information on whether they are granted a loan, the possible amount and the conditions. If an entrepreneur decides to make use of this business loan, the amount is made available directly on his PayPal account.

“Since our start in Germany almost 15 years ago, we have supported companies of all sizes in successfully operating their online business. With PayPal Businesskredit we now offer small and medium-sized merchants a financing solution. With it they receive simply and fast the necessary means, in order to develop their business further.”, says Michael Luhnen, Managing Director, PayPal Germany, Austria and Switzerland.


Simple model

For the use of a business loan, merchants pay a one-off fixed fee, which is transparently notified to them in advance when applying for the loan and which they agree to when taking out the loan. This fee remains the same regardless of how long the merchant needs to repay the loan. There are no other fees, administrative or handling charges. Traders therefore do not have to worry about periodic interest payments or hidden fees.

This is how repayment works

The repayment will be made via the incoming payments on the PayPal account. When making the application, merchants select which portion of their PayPal revenues they want to use for repayment. This percentage can be between 10 and 30 percent. When payments are received via PayPal, this repayment portion is then automatically deducted. In addition, merchants have the option of making voluntary special payments or even early repayments at any time. There are no additional fees. With regard to the repayment, the merchant is obliged to make a minimum payment of a maximum of 10 percent of the total amount every 90 days. The repayments already made automatically will be credited.

Further important information

The respective maximum possible amount for a PayPal business loan is based primarily on the PayPal sales volumes of the merchants and amounts to a maximum of 24,999 EUR at the start in Germany. In the medium term, it is planned to increase this figure. Among other things, applicants must have held a PayPal business account for at least three months and must have been running their business for at least as long. The PayPal business loan will be available to selected merchants from mid-November. Broad availability is planned for early 2019. From now on you can also register as an interested party by clicking on the link.

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Source cover image: unsplash/ Ibrahim Rifath