PayPal launched its small-business lending program in Canada, it announced on Monday. “This will enable small business owners to easily access loans of $5,000 to $100,000 at competitive prices,” it stated.
It’s inviting a subset of PayPal merchants to apply, and it will make the PayPal Business Loan program more widely available to Canadian PayPal business account holders in 2020
PayPal financing products are also available in the US, UK, Australia, Germany, and in Mexico (with partner Konfio).
PayPal announcement by Paul Parisi, President of PayPal Canada, follows:
Introducing PayPal Business Loan for Small Businesses in Canada
For nearly two decades, PayPal has helped over a quarter of a million Canadian businesses benefit from e-commerce by delivering solutions that meet their evolving needs. In the beginning, we provided marketplace sellers with a secure way to accept electronic payments from buyers. Subsequently, we helped small businesses across Canada access digital tools and payments that opened their doors to global customers. From digital invoices and getting paid to opening up online stores and offering mobile payment solutions—we’ve helped small business owners achieve their dreams.
We are excited to announce that for the first time in Canada, we are introducing PayPal Business Loan. This will enable small business owners to easily access loans of $5,000 to $100,000 at competitive prices.
Canadian small businesses struggle with getting access to capital. In addition to traditional business loans and lines of credit, many small businesses rely on alternative sources of financing. A Canadian Federation of Independent Business (CFIB) report[i] revealed that the most common sources of small business financing are personal funds, equity and other assets, at 49%. What’s concerning is the percentage (30%) of small business owners that have had to resort to credit cards as a source of capital. The use of credit cards suggests that small business needs are not being met by traditional sources of financing especially among the smallest and youngest businesses, which banks view as high risk. Some small business owners are left with no other choice than to rely on higher cost borrowing options to maintain a steady cash flow and grow. Personal financing (e.g. personal loan, line of credit) through a bank is used by one in five business owners [ii]. Other alternative sources used by small business owners include leasing (14%), personal loans from friends and family (13%), commercial mortgages (7%), Business Development Bank of Canada (6%), and venture capital (3%)[iii].
Small businesses often need a small loan to help manage cash flow shortages and they prefer it to be quick. The PayPal Business Loan program can provide funding from $5,000 – $100,000 for small businesses looking for quick decision-making and settlement. Approved applicants get the money in their business’ bank account in as fast as one or two business days.
Benefits of PayPal Business Loan
- Fast access to cash. Check eligibility in minutes online. If your application is approved, funds are transferred as fast as one to two business days[i].
- Clear, competitive pricing. Pay one, competitively-priced, fixed fee that you know in advance. No late fees, no early repayment fees, and no hidden fees[ii].
- Tailored terms. Choose the loan amount and term—13 to 52 weeks based on loan amount—that fit your business needs.
- Hassle-free repayment. Predictable weekly payments will be made automatically from your bank account so there are no monthly bills to remember.
Ahead of peak holiday sales, we are inviting a select group of PayPal merchants to apply for a PayPal Business Loan. If you are on the invitation list, you need to fill out a simple online form to find out if your business is eligible within minutes. If your loan gets approved, funds will be transferred to your business’ bank account within one to two business days.
Merchants who have taken a PayPal Business Loan in the US and grew experienced average growth of 21%. Eighty-eight percent of US borrowers reported seeing a revenue boost in the first three months after accepting the loan[i]. The most common uses of the loans include managing cash flow (44%), purchasing inventory (37%) and investing in marketing (31%)[ii].
Many PayPal Business Loan borrowers have shared feedback that they appreciate knowing the total cost of the loan in advance. Before accepting the loan, a merchant is informed of the fixed fee. There are no hidden fees, including origination fees, late payment fees, early repayment fees or application fees. The loan applicant can request their loan amount ($5,000 – $100,000) and term (13-52 weeks). Many borrowers have shared feedback that the automatic weekly repayment plan is simple and predictable.
Since launching business financing solutions almost six years ago, PayPal has provided access to more than $10 billion in funding to nearly a quarter of a million business owners around the world. We are aiming to make the program more widely available to Canadian PayPal business account holders in 2020. Beyond Canada, PayPal financing products are available in the US, UK, Australia, Germany, and in Mexico (with partner Konfio).
We’re proud to help our merchants by providing them a more efficient and effective way to access the capital they need to grow their businesses, expand into new markets and achieve their dreams.
i) PayPal Business Loan Impact Survey, Q2 2018
ii) PayPal Business Loan Impact Survey, Q2 2018
i) PayPal Canada Co. will transfer funds to your business bank account typically within 1 to 2 business days following loan approval, if approved before 3:30 p.m. Eastern Time
ii) In addition to the fixed fee (Total Loan Charge) for the loan, the only other cost is a $20 Returned Item Fee that is only assessed if a payment is returned.
i) CFIB Report, SME Financing Indicators, October 2016
ii) CFIB Report, SME Financing Indicators, October 2016
iii) CFIB Report, SME Financing Indicators, October 2016
SOURCE: PayPal Announcement