Application for PayPal Working Capital Declined? Here Are Your Other Choices

Updated on March 8, 2023
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What to Do If You’ve Been Declined for PayPal Working Capital

One unfortunate reality about the business funding process is that nothing is ever guaranteed. Even if you do everything right during the underwriting process, sometimes a business loan just doesn’t come through. This may be the case if your application for PayPal working capital was declined.

But it’s important to remember that being turned down for a loan, even if it did seem like the perfect fit for your business, is not the end of the line. Far from it in fact—there are droves of small business lenders out there hoping to fund your business. And some of them are able to compete with, or even surpass, the attractive working capital offers that PayPal offers.

After your application for PayPal working capital has been denied, your next steps are pretty straightforward and we’ll go over them in this guide to help you feel more confident in your actions and decisions.

Here’s your guide to moving forward after PayPal declined your application for working capital.

How Does PayPal Working Capital Work?

PayPal working capital is a business loan option from PayPal, the widely used electronic payment processing company. It works almost exactly like a merchant cash advance. They’ll extend your business money and then collect your repayments through the transactions that you process with PayPal. With a merchant cash advance, the lender would extend you a loan and then take a percentage of your debit and credit card sales, along with a fee, to repay that loan.

The term “merchant cash advance” can carry with it a negative connotation thanks to the high cost of using one for financing, so that could be why PayPal instead goes by “PayPal working capital.” Unlike typical merchant cash advance products, PayPal working capital offers some pretty affordable rates, with factor rates as low as 1.01—an almost unheard-of rate in the realm of short-term business financing.

Overall, there’s probably a reason you applied for PayPal working capital—it’s an accessible, affordable option for small businesses that need funding quick. But don’t be discouraged—that doesn’t mean it’s the only option.

Your Step-By-Step Guide to Finding Capital

We’ll guide you through finding the perfect backup to PayPal working capital.

Step #1: Regroup and Learn From the Experience

Before you dive back into the business funding application process it can be valuable to think about where your last application went wrong or where you can make improvements.

Now’s a great time to look back at your application for PayPal working capital and think about what you and your business could work on or fix for the next application. Did you provide all of the proper documentation? Were you realistic about your loan amount request? Is your business too young? Consider these factors and more before you proceed.

Step #2: Consider Why You Applied for PayPal Working Capital

Take some time to look back and review before you forge onward to your other business funding options. Determining what most drew you to PayPal working capital in the first place can help you figure out what to prioritize when looking for the next lender to apply to.

PayPal working capital has some distinctive features that probably drew you in the first place and deciding which is most important for you will help you choose where else to apply for funding.

  • No Credit Check

    This is one major draw that PayPal working capital is able to boast because it’s very rare for business lenders to not consider your credit in the underwriting process. Thanks to this unique positioning within the industry, PayPal is able to evaluate your application partially by your PayPal transaction volume rather than your credit history.

    If you’re a business owner who’s thrown everything you have into your business’s success—including your own financial stability and credit history—then this could be a huge game-changer for you. Plus, if you’re worried about a hard credit check dinging your score, this credit-check-free business loan was probably your solution.

    Not to worry—if this was your main reason for applying for PayPal working capital, you will have other no-credit-check funding options to move forward with.

  • Quick Financing

    Did you land on PayPal because you were specifically looking for a working capital source that could get you funded quickly?

    Though having your application for PayPal working capital declined might have slowed down your process, there are plenty of other business lenders that have even quicker turnarounds once you apply.

    If your main objective is to get speedy funding, then the quicker you move forward with another online short-term lender, the better.

  • Automatic Payments

    If you decided to apply for PayPal working capital because it features an automatic, streamlined repayment structure, then you’re in luck. Almost any loan these days—especially if secured through an online lender—will offer an automatic scheduled payment.

    However, if you liked that PayPal deducted your repayments from your transactions before you even saw the money yourself, that’s another story.

    There are still short-term lenders who offer this feature—most merchant cash advances work like this, in fact—however, not all of them are as affordable as PayPal working capital. At the end of the day, if you want to secure a loan with credit card receivables payments, then you might end up really paying for it.

  • No Prepayment Penalty

    Another huge draw that PayPal working capital boasts is no prepayment penalty. So you won’t have to pay a fee if you pay off your loan ahead of schedule.

    Many lenders will attach prepayment penalties to their loans because of the interest they’ll lose out on when you pay off your loans early. However, PayPal won’t punish you for being on top of your finances. But they’re not alone in that either—if you’re specifically searching for a lender who won’t charge you a fee for paying off your business loan early, you’ve still got a lot of lender options out there.

Step #3: Look for Lenders Who Offer What You Need

So, now that you’ve taken a moment to look back at why you applied for PayPal working capital in the first place, it’s time to look forward.

Which lenders offer that one priority feature that you’re looking for?

We’re going to go over all of your alternative options and we’ve arranged each one by the key feature they offer that’s similar to what PayPal can give you.

  • Lenders With No Credit Check

    If the main draw to PayPal was that they don’t check credit during their underwriting process, then consider another lender that won’t make any kind of inquiry, hard or soft, into your credit score.

    Here are some of the funding options you have for lenders that won’t check your credit during their underwriting process:

    • The peer-to-peer online lender Kiva connects businesses with peer lenders. Think Kickstarter but for loans. The best part of this funding option? Their application process involves what they call a “social underwriting” structure, which relies on human interactions, not credit scores, to determine how trustworthy you are as a borrower.
    • Another funding option that won’t check your credit in the underwriting process is Square Capital. You’ve probably seen Square’s main product attached to iPads in stores all over the country. In fact, Square occupies a similar part of the industry as PayPal—they’re a payment processor that offers funding options that are repaid through their payment processing. Just like PayPal, Square will judge your application based on your sales history and, as a result, won’t check your credit score.

    Keep in mind though that a loan offered with “no credit check” is frequently too good to be true, or from a predatory lender. So if PayPal working capital declined your application, don’t just jump to work with any lender offering a loan with “no credit check.” Do your research first and make sure the lender is trustworthy.

  • Lenders That Offer Quick Financing

    If you’re specifically looking for a fast business loan, then you should consider alternatives to PayPal that offer just as speedy—if not speedier—funding.

    • Some lenders, like The Business Backer, can fund applications in under a day. Even better? With this lender, the application and underwriting process will take three days at the very most.
    • Another lender that moves particularly quickly is Bluevine. They guarantee to fund loans within three days, but on average, they will only take 24 hours to fund your application if you qualify.
  • Lenders That Offer Automatic Payments

    If the automatic repayment was a particularly strong draw for you, then consider looking into lenders that offer merchant cash advances (MCAs). Though merchant cash advances tend to be expensive and perhaps not worth their convenience, there are a few lenders that offer relatively affordable MCAs that still give you access to convenient automatic repayments:

    • One option for a merchant cash advance is Rapid Finance (formerly Rapid Advance). Their offers manage to be both convenient and won’t break the bank. For your first MCA through Rapid Finance, you can qualify for an advance of up to 50% of your business’s monthly credit card revenue. After you pay off your first Rapid Finance MCA, then you’ll be eligible for even more funding at even better terms.
    • Another option you have is to work with CAN Capital. They offer a merchant cash advance up to $250,000 and you can get the funds deposited to your account in as little as two days. You’ll make automated flexible daily payments that are a percentage of your receivables.
  • Lenders That Don’t Have a Prepayment Penalty

    Did you apply for PayPal working capital because you wanted to avoid prepayment penalties?

    If so, that’s great news, because there are many business lenders out there that won’t penalize you for paying off your loan early. Here is one of your options:

    • With ForwardLine you can actually be rewarded for paying off your loan ahead of schedule. That’s right—depending on where you are in your loan repayment schedule, ForwardLine might offer you a prepayment discount.
  • A Lender That Offers All of These Perks

    While many lenders offer multiple perks that PayPal working capital offers, there’s one lender in particular called FundBox that offers every single perk that PayPal working capital does.

    Their invoice financing product comes with no credit check, a speedy financing turnaround of about two days, automatic payments, and no prepayment penalty to speak of. Plus, your outstanding invoices will work as forms of collateral. So, if you qualify, you’ll be able to access APRs that are competing with PayPal’s affordable terms.

    That said, this product does come with a very specific use—to advance outstanding invoices for B2B businesses—whereas PayPal’s product puts the decision-making power in your hands. If you’re looking for a working capital loan and nothing else (and you weren’t able to qualify for PayPal’s product), then you might have to sacrifice one of the key features that PayPal working capital boasts in order to find it.

Step #4: Find a Lender Whose Minimum Requirements Fit Your Business

Now that you’ve found the right lender, you want to make sure you’re actually eligible for their products before applying.

Before you decide to move forward with the application process for any lender, be sure to take a look at their minimum requirements and your credentials.

  • FundBox

    In order to be eligible for FundBox’s invoice financing, the only minimum requirement you’ll need to fill is at least three months in business.

    As long as you have at least three months of business history under your belt, you’ve got a shot at securing this premium funding option.

  • ForwardLine

    Next up, in order to be eligible for funding through FowardLine—the lender that offers prepayment discounts—you’ll need to fulfill the following minimum requirements:

    • A personal credit score of at least 600
    • At least 10 years in business for retail, wholesale, and construction businesses. At least three years for any other business
    • At least $150,000 in annual revenue
  • Rapid Finance

    Looking to secure an affordable, convenient MCA through Rapid Finance? Though they offer different tiers of MCAs, to access their standard product, you’ll need to make sure that you have these qualifications covered:

    • A personal credit score of at least 550
    • At least three months in business
    • At least $5,000 in monthly credit card sales
  • Bluevine

    If you’re aiming to get funded quickly, and, as a result, you’ve decided that Bluevine is the lender for you, you’ll need to be sure to ensure that you measure up to their minimum requirements.

    For their line of credit, you’ll need:

    • A personal credit score of at least 625
    • At least 24 months in business
    • At least $40,000 in monthly revenue
  • The Business Backer

    If you decided you’d prefer to access fast funding through The Business Backer’s purchase of receivables, then you’ll need to have the following minimum requirements:

    • A personal credit score of at least 550
    • At least 12 months in business
    • At least $180,000 in annual revenue
  • Square

    Want to get a no-credit-check loan through Square? Though they don’t provide concrete minimum requirements, they do say that they generally look for the following qualities in a borrower:

    • Processing at least $10,000 every year through Square
    • Taken a payment through Square within the past week
  • Kiva

    Want to try and get a no-credit-check loan through Kiva? Because it’s a nonprofit, fundraising-based platform, you won’t have to fulfill any minimum requirements. However, you’ll typically need to be a socially oriented business to qualify for Kiva financing.

Step #5: Apply to Your New Lender

So now that you’ve got all this information in one place, it’s time to see if everything checks out.

If you found a lender that aligns with your eligibility and you think they’re a good match, offering the features you want from a lender under the terms you want, then it’s time to apply. To speed up the process, be sure to gather all the paperwork that the loan application and underwriting processes normally require. Though the necessary paperwork will vary from lender to lender, there are definitely more than a few consistencies between the various lenders’ applications.

Our suggestion? Before the fact, get your hands on the seven most common documents that borrowers need during the business loan application process:

  • Bank statements
  • Balance sheet
  • Profit and loss statements
  • Personal and business tax returns
  • Personal credit score
  • Time in business
  • Use of loan

From there, you’ll just have to see if you do, in fact, qualify—and what terms you qualify for.

Moving Forward After Your Business Was Declined PayPal Working Capital

Moving forward after being declined for business funding can be tough—rejection can fill you with doubt and uncertainty, and sinking time into a fruitless application process certainly isn’t fun either.

But that’s why we’re here. To help keep you on your path toward the best business funding possible.

Though moving forward with another business loan application can seem daunting, it will all be worth it once you’re dedicating your newly acquired business funding to growing your small business.

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Meredith Wood
GM, New Markets at NerdWallet

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a GM at NerdWallet.

Meredith launched the Fundera Ledger in 2014. She has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending and financial management.

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