PayPal has revealed that they’ve broken the £400 million barrier in lending to British small businesses.
Since the digital payments pioneer launched PayPal Working Capital in 2014, over 22,000 business owners have secured funding across a variety of industries and sectors. This new milestone marks a 116% increase in total cash advances in the last year.
The National Audit Office estimates the current small business funding gap – the difference between the funding required by SMEs and the funding available – could range from £6 billion to £39 billion. In particular, younger, smaller and online businesses with less conventional business models or established sales histories can struggle to fit traditional lending criteria.
New research from PayPal also suggests the challenges around small business funding have been compounded by recent bank branch closures across Great Britain. A third of all PayPal Working Capital cash advances have been provided to small businesses based in areas that have lost 50 or more bank branches in the last four years.
“PayPal made its name pioneering e-commerce, making it possible for businesses to grow their sales and reach millions more customers online. In the years that followed the credit crunch, we saw the impact it was having on our small business customers, many of whom were struggling. We saw an opportunity for us to help and set about making PayPal Working Capital a reality.”
– Mark Brant, Managing Director at PayPal UK
There are a growing number of alternative funding providers for small businesses – some standalone and others tied to payment providers of which PayPal is one. Over the past few years we’ve heard from an increasing number of small businesses who have made use of online funding providers but naturally many prefer to keep their finances private. If you’ve used PayPal Working Capital and are willing to share how it made a difference to your business we’d love to hear from you.
I am now on my second Working Capital loan and it has made so much difference to my business, enabling me to double stock at peak periods. With repayments of 15% of the sales price of each item I sell through Paypal, it is certainly a lot easier to repay than a big lump sum each month from a ‘conventional’ loan and I barely notice the difference. The fixed ‘cost’ of the loan is also reasonable and better than the high interest of many other loans.
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