PayPal Pilot :Merchant Cash Advances

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PayPal is running a small pilot to assess the appetite of business customers for merchant cash advances from a specialist third party company. This program is called PayPal Merchant Cash Advance and qualified retailers can borrow up to £25,000 against future PayPal income.

The working capital will paid as a lump sum directly into the retailers PayPal account and they then pay back the advance back at an agreed rate as they earn from their customers. The automatic pay-back payments are based on an agreed percentage of daily PayPal sales receipts so if you have a good month you’ll pay back more, but if sales drop, for instance if they dip during the Olympics, then you’ll pay back less each day.

I quite like the way this works, it means that once you’ve agreed a pay-back rate (say 12% of PayPal income), then the cash advance will be repaid at that rate as you earn.

The program is being run in conjunction with United Kapital who provide the cash advance funds. Currently it’s an invite only program and is an experiment for PayPal. We’ll let you know if and when we hear that the program is available to all retailers.

10 Responses

  1. I thought that the Paypal Faster Payments service was coming into effect on 12th July (see previous Tamebay article).

    This would have a far larger effect on cash than a £25k short-term loan from United Kapital.

    Does anyone know the rates or terms? How do they compare with the lovely people from iwoca, for example, who have made a real invesment in the seller community.

  2. very interesting, funding at the right price is always welcome,

    downloads to our bank from paypal are now instant, its quite refreshing

  3. We were offered this. It’s basically just a loan and the interest rates were poor. Better off borrowing on a personal credit card or loan and lending the money to your company.

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