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Paypal announced this month that through its lending scheme ‘Paypal Working Capital’ it’s managed to provide £1 billion of finance to small businesses throughout the UK.

Paypal Working Capital

The alternative lending service allows PayPal users to apply and receive cash within minutes. The ease and simplicity of this alternative finance mean they’ve hit their £1 billion targets pretty easily. The Paypal cash advance is released to customers against future sales, meaning it really is a lifeline to small businesses in tough times.

Increase in use

The amount advanced through the Paypal Working Capital loan has shot through the roof recently, increasing by 60% in 2018 alone. This figure clearly shows how quick and easy it is for small businesses to get their hands on that much-needed cash. Small businesses are looking elsewhere for flexible lending with recent figures from the UK government showing that traditional bank lending hasn’t increased at all in the last few years.

Growth of merchant cash advance funding

Since launching in 2014, PayPal Working Capital has helped over 37,000 businesses access funds. It’s helping companies to expand quicker than they thought they ever could. With 116,000 cash advances already being completed in the UK, 21% of those are planning to be used to help grow their business. Plus, with PayPal upping the limit for advances from £100,000 to £150,000. It means more businesses can fast track their growth. The demand for alternative funding is clearly shown in PayPal adjusting its lending limits.

Funding for small UK business

Norah Coelho, Director of Business Financing at PayPal UK explains why the £1 billion milestones is such a significant one, “The support we offer businesses extends far beyond processing online payments. PayPal Working Capital launched five years ago in response to a real need for finance that works just as flexible as the smaller businesses we serve. Since then we have advanced over £1 billion to more than 37,000 UK small businesses, clearly showing we’re still helping our customers bridge a gap where more traditional financial services are coming up short.

Same day business funding

Small business owner, Aaron Flanagan, of Comic Book Guys, is just one of the small UK businesses to have benefited from the funding. He notes that “PayPal’s solution gave me access to funds in the same evening as the application was made online” also mentioning why he ditched traditional forms of lending: “Interest rates were high and the application process was intense – as a small retailer, you don’t have the time for all those forms.”

Financial lending is changing because the way we do business is changing. No longer do small businesses have to fill in lengthy application forms or even physically meet with a financial advisor who decides whether they get the funding or not.

Our view on the Paypal product

“As there are now more direct merchant cash advance lenders than ever before, we suggest to business owners they shop around for the best quote. They can do this easily by using our services here at Merchant Loan Advance and receive a comparison quote quickly. The product has changed over the last few years, it’s not only for those small companies who use a physical card terminal, but it also works for online businesses who use software-based merchant services.” Rich Wilcock MLA