PayPal is set to enter the online loans market to offer advance cash to help small, online UK businesses, Cameron McLean has announced.
The managing director of PayPal said: “According to the government, around a third of SMEs rely on retained earnings or the owner’s own finances rather than bank or equity funding.
“This means that many find it difficult to finance their present needs or future growth. And the problem is acute for smaller, online businesses.”
Launching later this year, the PayPal Working Capital fund will offer its business customers, including those on its eBay platform, the ability to secure working capital against their future sales in exchange for a single fee.
Fees will depend on sales history with PayPal, the size of the advance and the repayment schedule. Businesses will not require a credit check and may be eligiable for a cash advance of up to 8 per cent of their business’s PayPal sales over the past 12 months, according to the lender.
The eBay-owned company said that customers could secure an advance within minutes of the online application being submitted.
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Paul Coffin, wealth manager at London-based Capital Financial Markets, said: “This is good news as any new entrants that are reasonably well-funded should be welcomed. There has not been a good history of authorising new banks, and giving them licencing so challenger banks can be a viable source of finance for small firms.”
