David Brackin of Stuff U Sell is a regular contributor to Tamebay. Here he tells of his recent experience with small business finance companies:
I tried iwoca last year and wrote up the experience on Tamebay. I was amazed at how fast and easy the process was compared with our High Street Bank. Since then, the industry for providing working capital to ecommerce sellers has burgeoned. The basic idea is that by giving them access to your online selling history, they can make a much better decision than your bank manager.
I was recently called by PayPal to ask if I was interested in their service, ‘PayPal Working Capital’, and faced with a stock purchasing opportunity, I thought I’d give them a whirl today.
The site is well-designed and the idea is that you are charged a single fee added to your loan and you choose what percentage of your future paypal receipts to use to pay it back. The smaller the percentage, the longer it takes and the higher the fee. It’s hard to calculate it as an APR as the term depends on your future sales, but it’s not cheap money – none of these working capital loans is. However, the nice feature is that – since it’s a percentage of sales – you only pay when you can afford it. If the stock sells slower than you thought, they aren’t making things worse.
Nice idea, then, but how is it in practice? Sadly I can’t tell you. When I tried the application, I immediately was hit with technical errors.
There’s an 0800 number on the site to call if you’re a new customer wanting help with the site. Unfortunately that isn’t answered either. After over 20 mins on hold, I decided to call it a day.
Paypal Working Capital is a nice idea in principle, but like all good ideas it will succeed on how well it is executed. The loans are not cheap, and the least you can expect is the provider to be attentive. By contrast I called iwoca last night at 6.30pm and the phone was picked up straight away by a named contact who knew my account and was happy to chat through the facility. This is still the level of service to beat in this industry.
13/4/17 Updated to add:
Paypal called to confirm that they were having unusually long wait times when we called and that the standard wait on this number is around 2 minutes, and indeed this morning the number was answered in 30 seconds. Furthermore, if you have any enhanced support on your account then they are also able to help with Working Capital enquiries. They also told us that currently the service is limited to £60k but should be increased later on in the year to £100k. The technical problems using the website persist and they are having their team look into the issue.