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Did You Know PayPal Has Two Types of Loans for Sellers?

PayPal offers loans to sellers

PayPal offers loans to sellersOnline payment services have gotten into small-business lending through working capital loans, but did you know ecommerce payments giant PayPal also offers a more traditional flavor of lending?

A reader forwarded us a marketing email PayPal has been sending online sellers touting PayPal Working Capital and PayPal Business Loans. “I see that there is another product besides Working Capital. It allows for weekly payments instead of a per sale cut,” the reader wrote.

The email linked to a landing page that touted the benefits of PayPal’s two lending products – “Fast access to cash at a competitive price can be a game changer for your business. Whether you need help stocking up on inventory or bridging a cash flow gap, PayPal can help you access the financing you need to move your business plans forward.”

The landing page went on to describe the two offerings as follows:

PayPal Business Loan
A fixed term loan based on a full picture of your business with a predictable, weekly payment. Processing payments with PayPal is optional.

PayPal Working Capital
Based primarily on your PayPal Business account, automatically repay the loan with a percentage of PayPal sales.2 No credit check required.

The EcommerceBytes reader also noted that the email stated, “Processing payments with PayPal is optional,” which they believed was “likely directed at eBay Managed Payments.”

As we reported in this post, PayPal told sellers they would be out of compliance with their Working Capital provisions if they were participating in eBay managed payments, while eBay reportedly encourages such sellers to pay off their PayPal loans by turning to rival Square Capital, with which eBay has partnered.

It seems that while eBay and PayPal remain dependent on each other, they’re also becoming rivals.

Kabbage made working capital loans for online merchants popular, and there are many other alternatives, including those from Square and Payability. And Amazon offers its own lending service for its sellers.

As a reminder, PayPal also lends to buyers through PayPal Credit. It’s currently promoting an offer of interest-free credit on purchases of $99 or more if paid in full in 6 months “when you check out with PayPal and choose PayPal Credit,” subject to credit approval.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.