Small businesses, including those running online eBay shops will soon be able to apply to Paypal for finance. This offer of cash support comes at a time when it is more and more difficult to get loans from banks.
Commencing in autumn 2014, anyone with a business account on Paypal has the opportunity of obtaining working capital for a one off fee, against sales they may make in the future. Paypal has not released the amount of the fee to date but stated that small business owners would be able to pay when they get paid, meaning that repayments would be taken from a percentage of daily sales. Paypal will not take any money for repayment on days when no sales are made.
A scheme called “Paypal Working Capital” has been in operation in the US since September 2013 and has been very successful. $140 million (£82 million) has already been advanced to American SMEs (small and medium sized businesses).
No long waiting period for cash
There will be no elongated waiting period for money and the cash could be accessible minutes after the application has been made. Because the cash advances are not loans, credit checks will not be necessary and Paypal will not be charging interest or imposing penalties for late payment.
Paypal is expanding this service to the UK taking into consideration Government concerns that British small and medium sized businesses are struggling due to “long-standing challenges in accessing bank and equity finance”. The managing director of Paypal UK, Cameron McLean, said that small businesses were the lifeblood of the British economy but 7 years after the beginning of the credit crunch, limited funding from banks has forced many of them to survive either on their own capital or retained earnings.
He went on to say “This means that many find it very difficult to finance their present needs or future growth and the problem is acute for smaller, online businesses. PayPal is well placed to make a difference and we’re delighted that our UK customers will be next to benefit from faster, fairer funding.”
Paypal customer service to be improved
The announcement of this new Paypal service coincides with recent adverse publicity relating to its customer service with many account holders complaining about Paypal’s retention of cash for up to 6 months. This policy, often due to “balance, security of fraud concerns” has allegedly almost pushed some small firms out of business. Paypal has promised to improve customer support as a result of customer complaints.
If you have any concerns about how to run an eBay UK shop with or without Paypal financing do give us a call. Expert eBay training can make the difference between success and failure.