Many people seem to think that if you have a home business you don’t really need a big working capital. But those who do have their own business know that having sufficient capital is essential. You may not have a consistent revenue stream, and that can spell trouble for your business.
The Challenges of Getting Working Capital
But the problem is that for many home business owners, getting a loan from a bank can be a very time-consuming (and oftentimes futile) process. And even if you do get a loan, paying off the loan with fixed monthly payments can be challenging.
That’s why some people turn to using their personal credit cards for capital. But that may not be enough as well, and the interest rates can be astronomical.
But PayPal is offering a new alternative for many home businesses which uses PayPal for its payment solution. Called PayPal Working Capital (or just PayPal Capital for short), its distinctive features are a boon for many struggling home businesses.
Features of PayPal Working Capital
There are quite a few advantages to getting a loan from PayPal:
It’s easier to get a loan approved.
There’s no credit check involved. You only need to be a PayPal customer, and then PayPal allows you to get a loan that’s equivalent to 8% of your annual PayPal sales, with a maximum of $20,000.
The fee for the loan is clearly stated.
Quite a few loans these days come with a lot of hidden fees. You may need to pay a fee for processing the loan, late payments, and sometimes even for terminating the loan early. With PayPal Capital, you know in advance how much you’re going to have to pay in interest.
Your repayment is automatically deducted from your future PayPal sales.
You can choose to pay with 10% of your sales, or opt for 30% of your sales to take advantage of the much lower loan fee. You can even make additional payments or pay the loan balance in advance.
This means that during the off-season when sales are slow, you’re not required to set aside a huge chunk of your revenue to pay them. You don’t even have to pay anything at all if you don’t have any sales for that month.
Uses of the PayPal Loan
So what can you use the money for? There are lots of possibilities:
– You can buy inventory. You can also buy the raw materials you need to manufacture your products. So if you sell your own paintings online, you can use the money to buy your paints, canvasses, and brushes.
– You can buy the necessary items you need when sales are slow. If you don’t sell anything in a month’s time, you may end up not having enough money for your personal expenses and utility bills. The capital you get from PayPal may be sufficient to tide you over.
– You can hire website developers to improve your website, or have professional writers create your your advertising copy. You can’t be expected to do everything yourself, and sometimes it can really help to have a pro take care of some of the work. If you’re a painter, then website design and advertising may not be your forte.
With PayPal Capital, you get the money you need conveniently and quickly.