PayPal to start offering advances to small businesses
The popular online payments firm PayPal is about to start giving advances to small businesses in the UK, according to the recent announcement from the company. The company will be launching the PayPal Working Capital fund this year in the months to come.
The advance will be available only for businesses that sell through PayPal. The company also said that the rates are yet to be fixed and will depend on the previous transaction history of the business with the service.
Those who are on the good books of the firm can get advances often for a lower rate while those who transact minimally might have to put up with a high rate of interest compared to the others. The company remained tight lipped about the amount of fund. However, it revealed that it has given almost $140 million to US businesses as advances since September 2013.
The fund will be available as traditional bank loans and customers need not pass through a background check in order to avail the advance. This move from PayPal will likely hit others like Kabbage that offer cash advance firms that function online. The fund is expected to start functioning in the early autumn this year.
Customers can repay the advance with a share of the sales proceeds through PayPal, hence making it easy for them to repay. However, there are several complaints filed by US customers about unsatisfactory service of cash advance.
My PayPal account was emptied as an unauthorised payment was deducted this morning and sent to my Working Capital paypack,” wrote a US customer.
“I just had $68 sent to PayPal Working Capital when I only had $48 in sales yesterday! Not very happy here,” said another.
PayPal has replied that there were some issues like this and that the amounts will be credited to their accounts soon.