PayPal Pays Out $1 Billion in Small Business Loans

Financing small business ventures have always been a challenge for small business owners.

By: Robert C. Bess Sr.

Those challenged particularly are African American entrepreneurs, who are continuously challenged by inconsistent incomes and less than perfect credit.

According to an analysis by the Wall Street Journal, the total volume of loans black-owned small businesses received before the recession is 8.2 percent of all loan money from the Small Business Administration (SBA). That figure declined since that time to 1.7 percent. Other groups have fared much better. For instance, Hispanic businesses are getting 4.7 percent of total loan volume. According to the same source, about 7 percent of American business owners are black compared to 10 percent for Hispanics. What these entrepreneurs have had to do is find alternative sources of working capital. One such company is PayPal Working Capital (PPWC).

PayPal CEO Dan Schulman announced that PPWC has provided more than $1 Billion in funding in the US, UK, and Australia. They have assisted more than 60,000 small businesses owners. Schulman also said, “since late 2013 we’ve been providing access to working capital to small businesses through PayPal Working Capital. PayPal is now lending $100 million per month to businesses.”

Since small businesses have had trouble getting loans, PayPal’s emergence has proven very beneficial. When polled, their customers were asked to rate how likely they would be to recommend PayPal’s Working Capital program to others (on a scale of 1-10, with 10 being the highest); between 85-90% responded with a 9 or 10.

There is no credit check or extensive paperwork because PayPal can check the company’s history with their service. Schuman commented, “Daily issue now exceeds $3 million; we’ve more than tripled the pace from a year ago. More than 60,000 unique merchants have used this program to date-an increase of 150% year over year.”

There are other non-traditional financing sources to note: OnDeck Capital, Square Capital, Funding Circle, Lending Club, Angel List, and EquitNet to name a few. These are other options that are out there for small business owners; however, with PPWC you can borrow up to 8 percent of your annual PayPal sales. Sites approve funding within minutes of applying for the loan.

Gustav Reyes, owner of a retail store based in Chicago called Simply Wood, expressed that PayPal knew that he generated the income, as it all came through PayPal.

Comments