Back to Blog Feed

We will help you grow your small business.

Learn More

Join our Newsletter for great tips and updates.

Despite the abundance of glowing reviews, PayPal’s working capital program is far from perfect. Many successful business owners have been denied funding for reasons that have nothing to do with revenue, cash flow, or general financial standing. Various forums are chock full of posts from dumbfounded or frustrated business owners who carefully read the program’s rules for eligibility yet still failed to obtain funding, possibly because of the very nature of their industry.

Before we discuss how easy it is to be denied funding, let’s first go over how PayPal’s working capital program works.

It Seems So Easy

Borrowers are advanced up to 18% of their annual sales conducted via PayPal, with a borrowing limit of $97,000. Similar to a Merchant Cash Advance, the debt is paid off via a percentage of daily sales that go towards the borrower’s PayPal account. The percentage is based on the amount borrowed, which is based on your PayPal sales history. You select a daily repayment rate but no matter what rate you choose, the loan must be paid back in full within 18 months.

Perhaps the program’s biggest selling point is the absence of periodic interest charges, late fees, pre-payment fees, and penalty fees.

As you can probably tell, this program is only available for PayPal users, specifically subscribers of PayPal Premier or PayPal Business for at least three months. In order to qualify, you must process at least $20,000 in annual sales for PayPal Premier or $15,000 in annual sales for PayPal Business.

These are the only requirements listed on the PayPal website, which suggests that approval shouldn’t be difficult for any business that regularly uses PayPal.

Technology Is Technology

A look at some feedback from rejected applicants, however, reveals that the program’s best feature might actually be its worst.

The lack of requirements for eligibility has resulted in an endless barrage of applications. PayPal is able to field these applications because the approval process is entirely automated, with zero human involvement from human beings. No technology, as we all know, can be truly error-free, so applicants are sometimes rejected simply because the automated algorithm incorrectly processes the applicant’s PayPal data.

One former applicant wrote in April of 2015 that due to a glitch in the system, he was told to try applying again next week, only to experience the same result. He soon received a letter from PayPal telling him why he was rejected but the reasoning was reportedly completely inaccurate. “I’ve spoken to a ton of people with the same issue,” the post continued.

Seasonality Is Looked Down Upon

Applicants are also likely to be rejected if they contain frequent fluctuations in sales, which is an inevitable outcome of seasonality, or a higher-than-average number of chargebacks. The latter factor can even apparently ruin an application that shows consistently strong sales.

Many rejected applicants tried calling PayPal for an explanation but with a company of this size, getting a human being on the other line isn’t so easy. And if you do get to speak to a customer service representative, there’s a good chance he or she will not be of much help. There’s little or nothing they can do to fix technical problems, and with so many calls about other issues coming their way every second, customer service reps just don’t have the time to thoroughly examine your account.

You Deserve Better

If you were rejected from PayPal’s working capital program, we are pleased to inform you there is a light at the end of the tunnel: United Capital Source.

Unlike PayPal, we offer not one but numerous business funding programs with flexible requirements.

Here’s why business owners who are interested in PayPal’s working capital will be interested in ours as well:

Credit score doesn’t influence your application for PayPal, and we offer bad credit business loans for applicants with little or poor credit history.

Collateral is not necessary for PayPal’s working capital nor for most working capital programs from United Capital Source.

Volatile fluctuations in sales can potentially ruin your PayPal application whereas United Capital Source has designed funding programs made especially for seasonal businesses, which experience cyclical dips in revenue during certain times of the year. We deal with programs that allow business owners to make lower payments during particularly slow months and make higher payments when the busy season arrives.

Unlike PayPal’s stringent, non-negotiable terms, our terms are extremely flexible and can be customized based on the unique circumstances of your industry, like, say, not being paid up front for services.

This Is The Program You’ve Really Been Looking For

The UCS program that is most like PayPal’s working capital program is a Merchant Cash Advance. This type of working capital loan supplies a lump sum that is paid back via a fixed percentage of future credit card sales. The differences between our Merchant Cash Advance and PayPal working capital, however, are vast.

For example, PayPal working capital must be paid back in full within 18 months whereas our Merchant Cash Advance repayment is tied to sales numbers. This is one of the many reasons a Merchant Cash Advance is so advantageous to seasonal businesses. Borrowers can receive funding during the slow season and, because sales are down, make lower payments for several months until the start of the busy season. This is what makes this type of program flexible.

PayPal’s Weakness Is Our Greatest Strength

A major reason PayPal working capital seems so attractive is the absence of interest rates. Paypal uses a set factor rate so the amount of interest you owe never changes. The company already takes a cut of the revenue that goes into your PayPal account because whatever transactions your business performs, they earn a small fee off. Our rates are highly competitive, and in the case of a Merchant Cash Advance, your effective interest rate decreases if your payments are more spread out.

No, we can’t distribute funding within minutes like PayPal because our application process involves living, breathing human beings who are genuinely interested in your business. It is our hope that you will have the patience to go through what programs are best for your business and to wait an agonizing two to four business days for funding to reach your bank account.

You Won’t Be Waiting Long

Once you choose to work with us, you’ll soon find out that waiting is something our borrowers never have to do. United Capital Source prides itself on providing the best customer service in the business funding industry, so much so that the attention we devote to our clients often catches them off guard. Some of our clients were very skeptical about small business loans when they first spoke to us only to watch their concerns melt away after a single conversation.

If at any time, a client has a question, all it takes is one quick phone call or email to solve whatever the issue may be. The same concept applies to the event of sudden expenses or changes in cash flow. When you enlist the help of UCS, you are not only getting an increase in working capital but a partnership with a team of business financing experts who are happy to guide you every step of the way.

Why Our Clients Wouldn’t Have It Any Other Way

Our number one priority is not drawing a profit but seeing our clients’ companies experience long-term growth. The partnership does not end when the balance is paid back in full. In fact, paying off your balances on time will likely make you eligible more financing with even better terms that could reach your bank account even faster than the first.

PayPal tends to reject borrowers for second loans, despite their impeccable record of repayments. We take the opposite approach at United Capital Source by quickly approving second rounds of funding for clients who have already proven their ability to responsibly carry out investments while paying off debt without trouble. A great deal of our clients currently take out working capital on a cyclical basis, growing their businesses even further every year. Our business funding programs are customized so that by the time they are paid off, you will have plenty of working capital available and be prepared for future bumps in the road.

Welcome To Alternative Business Financing!

Whether you take out working capital multiple times or just one, your relationship with United Capital Source does not end once the debt is paid back in full. Beginning from the day your application is approved, the advice and knowledge of our business funding experts will always be just one phone call or email away. We will answer any question you have in regards to budgeting, investments, or paying off any sort of debt you might accrue. You might think that an automated system is the easiest route to take when it comes to expansion but, as our clients can attest, there is no ally as valuable as someone who has helped countless people in the exact same situation as you.

So if your application for PayPal working capital was declined, we strongly suggest you contact United Capital Source. There’s no reason a successful, hard-working business owner should be denied the means to widen the reach of your amazing products or services!


We will help you grow
your small business.

Get Started

Leave a Reply