David Brackin, managing director of Stuff U Sell, the leading eBay trading assistant in the UK and a regular Tamebay contributor, has applied for a six figure loan through the new Capital for eBay Business Sellers (CEBS) with YouLend. As the CEBS launch is announced today, he reports on his YouLend experience:
The YouLend experience
Cash is the lifeblood of any business. Cheap money (ie low interest rates) since 2008 is the main driver of one of the longest sustained business booms. Whether it is buying stock, paying staff or renting space, it is hard to grow without it. but if you can’t pay the bills because your money is tied up in the business then you risk going bust – and that is the worst time to look for credit. Responsible business owners should always be on the look out for options for funding when it isn’t required so that when need or opportunity arise, they are able to act.
Banks are OK for overdraft and simple loans, but typically they are extremely cautious and apply strict lending limits. They are plodding at best, and as soon as you are looking at sizeable loans, they require weeks of documentation and a filing cabinet of checks. The launch of Bounce Back Loan last year was a direct response to the banks failure to lend Coronavirus Business Interruption Loan Scheme (CBILS) (which used their existing lending criteria) to small businesses. As a result there’s been a whole industry of innovative finance companies emerge to address this need – the very best are using technology to increase the speed and accuracy of decision-making addressing the frustrations and delays.
Iwoca was an early successful entrant which issues term loans (ie fixed monthly payments) when you let them link to your bank account data and upload VAT returns and accounts. Paypal Working Capital was well known by eBay Sellers – with access to the payments information, it already had enough information to make an instant credit offer without further documentation. Instead of a term loan, it charged a fixed “advance” fee and then claimed a percentage of sales revenues until the loan and fee was paid off – taking more in the good times, but scaling back if it was a bad month.
However, with the migration of sellers to eBay Payments, the option to borrow from Paypal has evaporated while the slower payouts and the loss of monthly fee invoicing that comes with eBay Payments has added further pressure to the need for cash. To rectify this situation and to directly introduce cash into the eBay ecosystem to create its own business boom, eBay has introduced the Capital for eBay Sellers programme, which is to have a choice three providers. The first live is YouLend and as I’ve had some stock opportunities recently, I approached them to see how the experience went.
Setting up an account involves all the usual customer checks but was done in a matter of minutes. The registered company was identified quickly. We were asked to link our bank account via Open Banking which allows them to see all our transactions. We have existing loans and were after a six-figure sum so we had to upload some management accounts. A few conversations with their team to confirm details and we had our offer within a couple of days of starting the process, with loan documents signed online and the funds paid straight into our account. Another seller I spoke with was after a smaller amount and got an offer and funding on the same day as applying.
The YouLend loan is a lot like the Paypal loan – an advance is charged and then repayments made weekly based on a percentage of how much they see coming into your bank account. The higher the percentage, the faster you repay and the less the advance fee. If you have substantial revenues from other marketplaces or your own shop then you can ask them to lend (and take) based on those revenues as well. We just took our eBay sales. The back-end portal to see how the loan is progressing is a little clunky at the moment, but YouLend say they are working to improve this.
So how is the offering overall? The loan isn’t cheap – it is hard to compare advance fee based loan with fixed term loans, but we expect this to cost around 40% APR, while lenders like iwoca are more like 30% and Paypal Working Capital more like 10% in our experience. But I consider these loans on much more than simple cost – the availability of a serious level of funds, ease of working and flexiblility of repayments are all just as important as the exact percentage cost. On this basis, I’d conclude this is a solid addition to the ecosystem, and fulfils a much needed role in the world of eBay Payments.
I’d advise giving it a look and be interested to hear the the YouLend experience of other sellers.
Update June 2021
I wanted to update this article as we had another opportunity and went back to YouLend for a further loan. Again a significant sum but this time with a forecast APR of 23% – much less than before and able to fund this without needing the other loan fully paid off first (a significant advantage over PayPal Working Capital). The same level of flexibility and excellent communication.
5 Responses
40% apr with interest rates at hmmm 0.1%, wow, no thanks.
Borrow money from eBay to sell on eBay… what could go wrong… and the 40% is rather shocking. we had few “quick” loans from PP at average of 9-11%. I would never agree to anything more than 15%, especially now where interest rates are almost hitting the negative points.. Rishi is going to print a lot of money for all these Bounce Back loans.
way too expensive, when amazon lend at 8% APR and Paypal less than 10%. Ebay need to find another partner with better rates.
And I have a great used car to sell you! Only 40%APR!!!!! And when you sell your items we will take another 12.5%, oh and by the way, we will take 12.5% of the shipping cost on that item too! What a deal…. and then the government takes their bite in taxes or VAT. I think I will just move to China, as Ebay wants to peddle their junk across the world -with “free” shipping, and no environmental concern .
I’m not sure I’d fixate on the cost differentials — while 40% sounds high that’s a 10k fee on 100k paid down over 6 months. The question you need to assess is whether you can make 10k margin out of 100k in 6 months — or more importantly if you can turn that volume of stock that fast.
Sure cheaper is nicer and great if the rate drop over time to 5k for 100k or even 2k for 100k — our PPWC rates fell rapidly over the time we used them — but you need to prove yourself to a lender to get rates like that, and no matter what Andrew Bailey says, I don’t think any of us are likely to get an unsecured business loan at base-rates!