PayPal doesn't offer traditional loans for personal use like banks or credit unions do. Instead, PayPal focuses on offering financing for your purchases through PayPal Pay Later (Pay in 4 and Pay Monthly) and through the PayPal Credit Card.
On the other hand, things shift to a different angle if you run a business, as PayPal offers business loans (Working Capital and LoanBuilder) to help eligible business owners scale up their businesses.
- PayPal doesn't offer loans for personal use, unlike banks or competing companies like Cash App.
- PayPal Pay Later lets you split eligible purchases into different interest-free payments (usually 4 payments for Pay in 4 and 3, 6, 12, or 24 monthly payments for Pay Monthly).
- PayPal Credit only works for purchases of at least $145 or more, and there's no impact to your credit score if declined for PayPal Credit.
- Working Capital is repaid through a percentage of your future PayPal sales, while LoanBuilder is repaid on a fixed-term schedule, usually between 17 and 52 weeks.
- LoanBuilder does not require a business account, and while first-time borrowers get between $5,000 and $200,000, repeat borrowers get up to $300,000.
How to Borrow Money From PayPal
If we are to compile all the ways to borrow money from PayPal, I can say that we have four of them (two for personal users and two for business owners).
So choose the method that corresponds with your account type so you won't be wasting precious time.
1. Through PayPal Pay Later
Have you ever purchased something from any store and paid over different instalments? It's pretty cool because it lets you actually get something that you can't really afford at that moment.
PayPal Pay Later has been a big modern push in the way we shop, as it lets you split the cost of your purchases either in four interest-free payments (through Pay in 4) or over 3, 6, 12, or 24 monthly payments. In fact, statistics and data from other consumers surveyed by the Wall Street Journal have proven that PayPal Pay in 4 is the best overall buy now, pay later app, and this isn't just for nothing.
We can't deny that PayPal is one of the most adopted payment methods at most online stores, and you'll basically find Pay Later options featured on eligible stores and purchases. I've used and shown how I used Pay in 4 to purchase my son's iPad Air 2 Pro, and it was a really great experience as I was able to split the total cost into four interest-free payments.
Pay Monthly works the same as Pay in 4, with the only difference that the cost of purchases paid through this one is split over 3, 6, 12, or 24 monthly payments.
What I think you'll find really interesting about using Pay Later is that you won't have to go through a hard credit check to get approved. So even if you have a poor credit history, you still stand a chance to get approved for purchase financing.
2. Use PayPal Credit
PayPal Credit is a digital reusable credit line that comes with the PayPal Credit Card. Unlike Pay Later, which features automatically on eligible purchases, you'll need to apply for the PayPal Credit Card before you can use your credit line for purchases of at least $149 anywhere PayPal or Mastercard is accepted.
Applying for this card usually involves a credit check, but the good thing is the decision wouldn't have any impact on your credit score even if your application gets declined.
What I love about this PayPal Credit is that it has an exceptional feature that most traditional credit cards don't: there's no interest for all your payments made in 6 months. And usually, the more you use your card and make on-time payments, the more you increase your credit limit.
So if you have a good credit score and believe you can reach the purchase limit, then I'd recommend you apply for the PayPal Credit Card.
3. Apply for PayPal Working Capital
The PayPal Working Capital is a fixed business loan that's repaid through your future PayPal sales, and as its name suggests, its main purpose is to support businesses who need capital to run their business.
Here's how it typically works:
- When you apply and get approved, you'll have to choose your loan amount.
- After choosing your amount, you'll have to choose the percentage that you want to go toward the loan repayment from your future sales.
- Finally, you'll just have to accept the loan terms (after carefully reading them) to receive your working capital loan.
When you get your working capital, you need to know that a minimum amount is required to be paid every 90 days regardless of whether you've made a sale within this period. If you have the full loan amount you got from PayPal, you can easily repay the full loan amount to lift the burden off your sleeves and there's no early repayment fee if that comes to your mind.
Talking of fees, Working Capital is just out to aid you with capital and does not charge any fee after you've gotten a loan. This means no periodic interest charges, late fees, pre-payment fees, penalty fees, or any other fees. In other words, you are free of any costs.
4. Apply for LoanBuilder
If you are looking for a fixed small business loan that gets even better over time as you make on-time repayments, LoanBuilder is what you need.
Working Capital makes it sound more like "for PayPal business accounts only" loans, but with LoanBuilder, you do not need a business account to qualify for or even apply for it.
However, LoanBuilder is an invitation-to-apply program, and there's a fixed one-time application fee that you'll need to pay when applying, which will be the only fee you'll be paying; there's no late fee, processing fee, or early repayment fee.
You can easily check your eligibility for LoanBuilder, and if you are eligible, you'll receive an invitation to apply which, when approved, will let you borrow between $5,000 and $200,000 as a first-time borrower. The more you borrow, the more you'll stand a chance of getting a higher limit or even reaching the $300,000 maximum loan cap for repeat borrowers.
LoanBuilder lender is WebBank and not PayPal, so you'll need to know that accepting the terms for LoanBuilder through PayPal is accepting WebBank's terms for a loan.
Oh, and just as with the other loan options on this list, LoanBuilder does not impact your credit score when you apply. So feel free to apply if you are confident enough that you meet the requirements.
Which Loan Option is Best for Me?
The loan option that's ideal for you depends on your actual need for the loan. If you are in need of a loan to purchase an item or something you can't presently afford, then going in for PayPal Pay Later and PayPal Credit is what you should consider.
If, on the other hand, you need financing for your business either through your personal account or business account, then Working Capital (best for small businesses with PayPal business accounts) and LoanBuilder (best for any business regardless of the account type) are what you need to go in for.
Frequently Asked Questions
Is it possible to borrow money through PayPal?
From the comfort of your own home, you can calculate the amount of your loan. You can take out a loan of up to 25% of your previous year's PayPal sales. Furthermore, there are no early repayment penalties if you pay off the loan in full. This can be done with your PayPal balance or a verified bank account.
What is the maximum amount you may borrow from PayPal?
With a maximum borrowing amount of $125,000 for the first two loans and up to $200,000 for subsequent loans, PayPal Working Capital can support up to 35% of your annual PayPal revenues.
What is the procedure for obtaining a PayPal cash advance?
You can use your PayPal Extras card as a funding source if you want to send money through PayPal. You can get a cash advance on your Extras card by calling the number on the back of your card and receiving a PIN for ATM withdrawals.
How do I get a PayPal overdraft?
PayPal does not currently offer an overdraft feature. However, it does provide Paypal Credit, which works similarly to a credit card.
Is it possible to overdraft a PayPal cash card?
Overdrafting is not possible with a PayPal prepaid card. However, the card has a buy cushion program that allows for up to $10 in overdraft purchases at the discretion of the bank.
Final Thoughts
PayPal doesn't offer traditional loans for personal use and even if they do, it's only indirectly through LoanBuilder that's offered by WebBank.
You can always get payment financing through PayPal's Pay Later and Credit loan options, and if you need something to start a business with, you should consider applying for Working Capital or LoanBuilder. None of these loans will have an impact on your credit score when you apply.
This guide compiles everything you need to know about these different loan options before you apply for them. While these loans won't charge you fees, you should always go through their terms to know how they expect you to repay your loan.
