A guide to PayPal Working Capital

This article looks at PayPal Working Capital - covering the basics of how it works, the terms and rates, and what alternatives are available.

30 June 2022

What is Paypal Working Capital?

PayPal Working Capital is a type of alternative business funding offered by PayPal. It provides businesses with quick access to capital that they can repay as the business earns money.

With PayPal Working Capital, the maximum amount of money that you’re eligible to borrow is based on your PayPal sales volume and account history. This means that it’s a product that is suited to businesses that have historically used PayPal to collect payments from customers.

Try out an iwoca Revenue Based Loan to pay back a percentage of your monthly sales – we'll consider all of your revenue streams and you aren’t restricted to sales from only one platform.

This type of business finance is considered to be flexible since the borrower can decide on repayment terms. For example, a business could choose to repay 25% of all sales until they’ve repaid the funds in full (with terms subject to each application). Businesses can also make extra repayments or pay off their whole balance without worrying about additional charges.

Paypal automatically collects repayments based on the sales performance in your PayPal account. So, if your business has a slow month due to seasonality, supply-chain issues, or something else, then you won’t have to repay as much money.

Let’s look at an example: if the repayment rate is 25% and a business earns £10,000 in PayPal sales then they will pay back £2,500 in this given month. If sales drop to £8,000 in month two then the repayment would also fall to £2,000.

What are the terms of Paypal Working Capital?

There are several requirements that you’ll need to meet when applying for PayPal Working Capital. Here are some of the main ones:

  • you must have had a PayPal Business account for a minimum of 3 months
  • you must be registered in the UK
  • your business will need to process at least £9,000 annually in PayPal sales to be eligible
  • you must have repaid any previous cash advances taken via PayPal

Paypal does not add interest to the repayments. Instead, they charge one fixed fee with no early repayment charges. You’ll pay via a percentage of your PayPal sales until the total amount has been paid back - with the option to pay more if your net cash flow is looking healthy.

PayPal Working Capital rates

The PayPal Working Capital rates vary depending on the size of the loan and your business's Paypal sales and account history. It will also depend on the repayment percentage selected. You will know exactly how much you are paying from the start because the rate is fixed.

How to apply for PayPal Working Capital

To apply for PayPal Working Capital, you’ll need to be a business owner with a PayPal account. You can then go to the PayPal website and complete an application. The whole process should take around five minutes, and you’ll know if PayPal has approved you for the finance within seconds.


Do I need a PayPal account to apply for this loan? Yes, you will need to be a business owner with a PayPal account to apply. You will also need to process yearly PayPal sales of at least £9,000.

How long does it take to get the funds once approved? PayPal will transfer the funds to your account within minutes of approval.

What fees are associated with this loan? You’ll pay a fixed fee to PayPal Working Capital, which they’ll explain to you before you complete your application. You’ll need to repay with a percentage of your PayPal sales each month. This repayment amount varies depending on the size of the loan and your business's credit score.

Can I use the funds for any purpose? No, you can only use the funds for business purposes. This could include inventory, marketing, or expanding your business.

When do automatic repayments begin? Payments will start 72 hours after you receive your loan.

iwoca as an alternative to Paypal working capital

PayPal Working Capital is only suitable for businesses that have a history of trading on their website. So, if you’re an established business but haven’t processed over £9,000 in PayPal sales annually then you won’t be eligible for this type of working capital loan.

As repayments are influenced by the number of sales made directly on the platform, you’d also need to carefully consider future sales and the impact these would have on your repayment plans.

Our Revenue Based Loan is an alternative to PayPal Working Capital that allows you to make repayments as a percentage of monthly sales with no interest. Businesses that have been trading for over three months and are generating £1,000+ monthly sales combined through card and online payments are eligible.

Some revenue-based loans will only base the borrower’s loan amount and repayments on the patterns of one revenue stream, but we’ll consider the multiple revenue streams a business may have. This is because we use open banking technology to assess your business’ bank transaction data (where other revenue-based loan lenders work with the business’ card payment processing company and look just at your card transactions to ascertain revenue cycles).

So, you don’t have to worry about all of your sales coming from PayPal payments for example. This will be particularly useful if you sell online, on multiple platforms.

Other types of business funding that may be suited to your business needs include:

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Charlotte is a Senior PR & Communications specialist at iwoca. She's been sharing news and insights about the finance industry for over three years.

Article updated on: 30 June 2022

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