PayPal is offering small businesses that already transact over its network another reason to stick with the digital payment network ? working capital.
The digital commerce arm of eBay is giving its merchants relatively cheap cash at a fixed fee, using its own data about these companies to determine their creditworthiness. The terms come with no hard repayment dates. And the money is paid back through daily sales made using PayPal, which is enticing to small business owners that have traditionally relied on credit cards to survive. For example, a small business with $100,000 in annual PayPal sales that borrows $8,000 and chooses to pay it back at a rate of 30% of its daily sales might pay a fee of $281. (Lighter Capital has a similar lending model.)
That means no minimum monthly payments. («If you have no sales on a particular day, you owe no payments for that day,» said Darrell Esch, PayPal’s vice president and general manager of the company’s newly created small business lending group, in a blog post.)
The Working Capital service is initially only being offered to the roughly 90,000 existing PayPal merchants that have been using PayPal for at least three months. In most cases, they’ve been using PayPal for years, says Esch, a former Bank of America executive, who came to his new role about two months ago after being with PayPal since 2010.
That’s right, PayPal is making loans
«It’s about solving these sellers’ needs and pain points, [because] of course we want a strong merchant network,» he says. «We would expect that, ultimately, this translates into things like stronger, deeper relationships.»Seguir leyendo