I was recently sent an email from Paypal about Working Capital Loans that they are now offering to select merchants.
Here is the tour with a quick video explanation on how it works: https://www.paypal.com/webapps/workingcapital/
It is not available to everyone but the terms sound pretty awesome:
- Pay when you get paid
- Get funding in minutes
- Pay one affordable, fixed fee
- No credit check
There are no late fees. You just choose a percentage of sales that they take as repayment. Plus, you know upfront how much the total fee is going to be. In addition, since they already have your merchant account history, the application process only takes a few minutes.
As with any debt instrument, it is a tool. You must know how to use that tool properly in order to help you and not hurt you. We will occasionally use short term, interest-free loans from credit card companies to finance things in our business. These come in the form of a paper check with special instructions and terms on how the interest-free loan works. With these, the catch is that if you don’t pay back the loan in the time they set, all of the interest was accumulating that whole time and you are responsible to pay it back. If you pay it before the set amount of time, you don’t pay any interest. It takes planning to make it work, but it can be worth it.
Here are some screen shots of the tour: