Was your application for PayPal Working Capital declined, but your business still needs additional funding? If so, you may be wondering what to do next. Don’t panic—there are several alternative financing sources that you may qualify for, and also steps you can take to determine which one will best suit your financing needs.
LendingTree is a marketplace with a vast network of lenders, making it a good alternative to PayPal Working Capital. With loan options ranging from SBA loans, short-term loans, and lines of credit, to equipment financing, LendingTree allows you to shop multiple loan offers at the same time. You can apply online and find out if you qualify in a matter of minutes.
6 Steps to Take After Being Denied PayPal Working Capital
While it is always disheartening to be denied financing, having your request for PayPal Working Capital declined doesn’t mean you can’t get financing elsewhere. There are steps you can take to better your position to be accepted at a later date or to find an alternative means of funding your working capital needs.
The six steps to take after being declined for PayPal Working Capital are:
1. Determine Why Your PayPal Working Capital Loan Was Denied
When your PayPal Working Capital loan is declined, you will receive a letter with an error code indicating the reason for the denial. The code should include a description indicating the meaning of the numeric code. If you are unable to ascertain the reason for the denial, contact PayPal customer service for further information.
Sample PayPal declined notice
Image source: PayPal Community
In some cases, you may be able to resolve the reason for which your application was declined. If not, you will know what areas of your business were insufficient, causing the denial. This information can be useful as you search for PayPal Working Capital alternatives. For example, if you were denied financing due to operating in a high-risk industry, you can seek a financing method that is willing to offer loans to your industry type.
Some of the reasons a PayPal Working Capital application is declined include PayPal being unable to verify the information you provided, unsteady sales history, and unsettled holds on your account. Additionally, your request may be declined if you apply too soon after paying off a prior PayPal Working Capital loan.
2. Consider Why You Chose PayPal Working Capital
A working capital loan through PayPal offers many advantages that can be appealing to small business owners. Aspects such as a simple application process, fast funding, and automatic payment deductions entice many small business owners. Consider what aspects of the PayPal Working Capital loan were most appealing to you as a business owner.
With these features in mind, you, as the business owner, will be able to evaluate other potential means of financing. Based on those characteristics that are most important to you, you will be able to compare other lenders and financing products that may suit your business needs.
3. Choose the Right Type of Business Financing
Once you have determined why you applied for a working capital loan through PayPal, you can better determine potential alternatives that will meet your financing needs. Whether you were seeking fast funding, automatic repayment, or financing that didn’t require a credit check, there are other options available to you.
Some alternative types of financing include:
Short-term Loan
With a short-term loan, you receive a lump sum advance of funds from the lender, which is then repaid on a prescribed payment schedule over the term of the loan. The payments may be made daily, weekly, or monthly depending on how your loan is set up. You are charged interest on the remaining principal balance until the loan is repaid in full.
Line of Credit
Unlike a short-term loan, where you receive a lump sum upfront, a small business line of credit allows you to draw against a predetermined credit limit as you need the funds. As you repay the borrowed funds, they become available for you to draw again, without requiring you to reapply for additional financing. An additional advantage of this type of financing is that you only pay interest on the funds you draw.
Invoice Financing
Invoice financing allows small businesses to establish a line of credit based on the value of their unpaid customer invoices due within 90 days. Invoice financing turns business-to-business, business-to-government, and business-to-customer invoices into short-term working capital. APRs for invoice financing typically range from 26% to 80%, with loan amounts ranging from $1,000 to $5 million.
Merchant Cash Advance
Though merchant cash advances operate similarly to PayPal Working Capital, they should be a last resort source of financing. Merchant cash advances are repaid based on an upfront fee—known as a factor rate—and daily payments are collected as a percentage of your credit card receipts. This type of financing often results in APRs in excess of 100%, making it a very expensive source of working capital.
4. Review Other Lenders That Offer What You Need
There are many lenders that offer fast financing or an easy online application process. There are lenders that offer various forms of financing, and those that don’t require credit checks. By carefully reviewing the specific requirements and offerings of multiple lenders, you are likely to find a suitable alternative to the PayPal Working Capital loan for which you were declined.
5. Compare Your Business to the Minimum Requirements
Each lender has its own set of qualification requirements. Being aware of these requirements prior to applying can save you the hassle and frustration of being denied financing. Before submitting your application, be certain to review the lender’s qualification requirements to ensure you meet or exceed what is listed.
6. Apply With a Different Lender
There are many PayPal Working Capital alternatives that may be able to provide your business financing even though you were denied by PayPal Working Capital. Whether you have decided that a short-term loan, line of credit, or invoice factoring may be the best choice for your business, there are a number of lenders that may be able to provide the financing you need.
Alternatives to PayPal Working Capital
Provider | Best For |
|---|---|
Business lines of credit up to $250,000 with weekly payments | |
Working capital loans up to $50,000 | |
Reviewing multiple financing options with one application | |
Business lines of credit up to $250,000 with monthly payments | |
Invoice financing up to $100,000 |
Some PayPal Working Capital alternatives include:
BlueVine
If your business needs the flexibility of weekly or monthly payments, BlueVine offers short-term loans and business lines of credit with terms ranging from six months to one year. You can get up to $250,000 in funding with APRs ranging from 10% to 79%. BlueVine also offers invoice factoring in addition to its term loans and lines of credit.
LendingTree
LendingTree is a business loan marketplace that provides unsecured working capital loans, and various other forms of small business financing, through its network of lenders. Repayment terms, qualifications, and APRs vary by lender and by loan product. As a loan marketplace, LendingTree allows you to shop multiple financing offers through one application.
Lendio
Lendio, a small business loan broker, can help you find the best loan option for your business. With one application, Lendio allows you to view the best loan offers from its extensive network of lenders. Many of the lenders in the Lendio marketplace can provide funding in as little as 24 hours.
Kabbage
For businesses needing a line of credit up to $250,000 with monthly payments, Kabbage may be a good financing option. You only pay interest on the amount you draw and the credit line is revolving. Kabbage charges a flat fee, starting as low as 1.5% each month, until you repay the borrowed amount.
Fundbox
Fundbox is an invoice financing company that offers small business lines of credit up to $100,000 based on the value of your outstanding customer invoices. While many invoice financing companies retain a holdback percentage, Fundbox will advance up to 100% of the invoice value. APRs range from 10% to 79%. Additionally, while your credit will be checked, there is no minimum credit score requirement to qualify.
How PayPal Working Capital Works
PayPal Working Capital is similar to a merchant cash advance (MCA), where you are charged an upfront fee known as a factor rate. After receiving the loan, you will make daily automatic payments based on a percentage of your PayPal revenue until the principal and factor rate have been repaid.
PayPal Working Capital loans are repaid via a percentage of your daily PayPal sales, which makes the repayment term variable. The specific length of your PayPal Working Capital loan will vary based on the factor rate, the daily payback percentage, and the volume of sales coming into your PayPal account. Higher payback percentages and lower fees result in a faster repayment term.
PayPal Working Capital Loan Requirements
PayPal Working Capital offers small business loans up to $250,000, but loan amounts are limited by the amount of your PayPal sales. To qualify for PayPal Working Capital, you will need to have at least $15,000 in annual PayPal sales, with at least three months of PayPal sales history. PayPal will review your credit history, but does not list a stated credit score requirement.
The qualifications PayPal Working Capital will use to evaluate you as a borrower include:
- Credit score: Checked but no stated minimum
- Time in business: At least three months
- Annual revenue: At least $20,000 annually for premier PayPal accounts and $15,000 annually for business PayPal accounts
Reasons Why Your PayPal Working Capital Was Declined
There are many different reasons why your application may have been denied. The reason will be listed on your denial letter, along with an error code. The most common reasons for loan denial include unverifiable information, unsteady sales history, and operating in an industry that PayPal has deemed to be high-risk.
Some common reasons why a PayPal Working Capital loan may be declined include:
- PayPal was unable to verify information provided
- Unsteady or abnormal sales history
- There are holds or unsettled disputes on your account
- Applying too soon after paying off another PayPal Working Capital loan
- Your business is in a high-risk industry
While your application may have been declined for one of these reasons, or possibly another reason not listed here, there are opportunities to correct any deficiencies to allow your application to be approved in the future.
Tips to Increase Your Chances of Getting Approved
For those who still find a loan through PayPal Working Capital to be the best financing solution for their business, there are actions you can take to improve your chances of being approved in the future. Taking the time to address the deficiencies that were found in your prior application may make your next attempt successful.
Four actions you can take to increase your chances of being approved for PayPal Working Capital include:
1. Contact PayPal Customer Service
If you aren’t clear as to why your loan request was denied, contact customer service. Once you understand the reason for the denial, you are better prepared to fix the deficiency.
2. Wait Until Your Sales Are Steady
If your PayPal account shows inconsistent sales, wherein there are multiple days in which you don’t receive any funds, PayPal will deny your loan request. To avoid this, be sure to apply during a time period where your account is showing consistent sales activity.
3. Resolve Any Holds or Disputes on Your Account
Prior to applying for financing through PayPal, review your account. If there are any unresolved holds or disputes on your account, wait until they are resolved before submitting an application for financing. PayPal will want to see that your account is unencumbered by such actions before approving a loan request.
4. Wait at Least 72 Hours After Paying Off Your Loan
Many prior borrowers report that their new loan applications were rejected after recently repaying a prior working capital loan. In order to avoid this, wait a full 72 hours after making the final payment on your prior loan before applying for another. It can take up to three days for your final payment to fully process and clear your previous loan from your PayPal account.
PayPal Working Capital Frequently Asked Questions (FAQs)
A lot of information has been covered in this article about what to do if your application for PayPal Working Capital is declined, including the steps you can take to find alternative financing. If you have any questions about any of the information presented here, you can post them in the Fit Small Business forum.
Some frequently asked questions pertaining to PayPal Working Capital include:
Is PayPal Working Capital a good idea?
If you are seeking financing that doesn’t require a credit check, and have a steady stream of income being processed through your PayPal account, a PayPal Working Capital loan may work well for your business. However, this loan won’t help you build your credit, as PayPal does not report your payments to credit bureaus.
How much can you get from PayPal Working Capital?
The maximum PayPal Working Capital loan amount is $250,000. However, the amount of funding your business can receive is based on your PayPal revenues. To be eligible, you will need to have at least three months of business activity on your account and annual revenues of at least $15,000.
Can I get another PayPal Working Capital loan?
PayPal will only allow you to have one loan at a time. Once your loan is repaid, you can apply for another loan. You will have to wait 72 hours from the time the current loan is repaid before applying for another loan in order to avoid an automatic denial while your final payment is processed.
Bottom Line
Having your application for PayPal Working Capital declined may be disappointing as a business owner, but there are other forms of financing available for which you may qualify. With the variety of financing products and the number of available lenders, you will likely be able to find an option that suits your needs. Should you choose to reapply for a PayPal loan, there are actions you can take to improve your chances of being approved.
If your PayPal Working Capital Loan was declined, and you need funding quickly, LendingTree may be a good alternative. Through its network of lenders, LendingTree provides a variety of different financing options. You can apply online in minutes and evaluate multiple unique loan offers within minutes.
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