PayPal Serves Up New Small Business Financing Available In Canada

For the first time in Canada, PayPal announces the PayPal Business Loan, enabling small business owners to easily access loans between $5,000 and $100,000 at competitive prices.

In time for Small Business Week, and ahead of the busy holiday shopping period, select PayPal merchants across Canada[i] are being invited to apply for a PayPal Business Loan. To apply, business owners just need to fill out a simple online form. Applicants will know if they are approved in minutes, and if approved, funds will be transferred to the applicant’s business bank account within one to two business days,[ii] allowing merchants to quickly use funds to buy inventory, invest in equipment, expand products or locations, manage cash flow, or anything else their business needs.

A lack of credit history, high barriers to borrowing from traditional lenders, and long wait times to receive funds have long been three challenges small businesses face when attempting to secure capital through traditional loans. Nearly one in five entrepreneurs say getting the financing they need from a traditional financial institution is challenging.[iii]

A 2018 study found that Canadians have a real need for quicker and better financing solutions. The study found alternative loans have steadily grown to 24 per cent in 2018 – up from just under four per cent in 2013. At the same time, the alternative lending market in Canada grew by 159 per cent between 2016 and 2017.[iv]

PayPal Business Loan borrowers have shared feedback that the process entailed much less hassle and stress compared to a traditional bank loan. They also said they appreciated knowing the total cost of the loan in advance. Before accepting the loan, a merchant is informed of the fixed fee. There are no origination fees, late payment fees, early repayment fees, application fees, or any other hidden fees. The loan applicant can request their loan amount ($5,000 – $100,000) and term (13-52 weeks). Weekly payments are subsequently withdrawn from their business’ bank account. Borrowers have said the automatic weekly repayment plan is simple and predictable.

Since launching business financing solutions almost six years ago, PayPal has provided more than $10 billion in funding to nearly a quarter of a million business owners around the world. Merchants who have taken a PayPal Business Loan in the U.S. and grew experienced an average growth of 21 per cent and 88 per cent of those businesses reported seeing a revenue boost in the first three months after accepting the loan[v]. Most common uses of the loans include managing cash-flow (44%), purchasing inventory (37%) and investing in marketing (31%).[vi]

In Canada, the PayPal Business Loan is currently limited to select PayPal merchants who have been invited to apply. The company expects the program to be more widely available to Canadian PayPal business account holders in 2020. Beyond Canada, PayPal financing products are available in the US, UK, Australia, Germany, and in Mexico (with partner Konfio).

[i] The PayPal Business Loan solution is not currently available in the provinces of Quebec and Saskatchewan and the territories of Yukon and Nunavut.

[ii] PayPal Canada Co. will transfer funds to your business bank account as fast as the next business day and typically within 1-2 business days following loan approval, if approved before 3:30 p.m. Eastern Time (excluding bank holidays).

[iii] The Government of Canada, ‘More Help for Entrepreneurs’, 2019

[iv] IBIS World, BDC, Cambridge Centre for Alternative Finance and the Ivey Business School at Western University

[v] PayPal Business Loan Impact Survey, Q2 2018

[vi] PayPal Business Loan Impact Survey, Q2 2018

 

 

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