As a small business owner, if you’ve ever tried to secure a business loan, you know just how frustrating and difficult the process can be. Traditional lenders rarely want to deal with the risk that comes with loaning to a small business while others will charge you extremely high fees to cover the risk.
Neither option is obviously ideal. While traditional lending may not be an option, there are many services that offer funding for small businesses. Keep reading to learn about 3 options that are available to small business owners.
1. PayPal Working Capital
Do you own a PayPal Business or Premier account? If so, you may be eligible to apply for the PayPal working capital loan. This loan is geared towards small business owners that routinely use PayPal for financial transactions. To be eligible for this loan you must:
Have a Business or Premier account that’s been active for at least 3 months
Make at least $15,000 annually
This loan option is one of the best for small business owners because there is no credit check and funds are dispersed instantly. The application process is entirely online and can be completed in just a few minutes. As long as your business meets the annual income threshold, you can apply and likely get approved for the PayPal Working Capital loan.
PayPal will loan you a percentage of your annual PayPal sales. Borrowers can only take out a loan that is equal to or less than 25% of their total annual sales. The higher your sales, the bigger loan you can take out. Your first loan tops out at $97,000. If you apply for a secondary loan, you can borrow up to $125,000.
Loan terms are around 18 months though term limits are quite fluid. With this loan, daily payments are subtracted from your PayPal funds. Payments, which are generally extremely low, are based off of a percentage of the loan amount and the interest rate you’ve been approved for.
With the PayPal Working Capital loan, you never have to worry about late fees or forgetting to make a payment. PayPal does all of the work for you, assuming that there are funds available in your account.
While the company is best known for its invoice factoring services, BlueVine also offers business lines of credit. This is a valuable option for startups as the minimum time in business to be eligible for this card is six months. As long as your company makes at least $5,000 per month and your personal credit score is above 600, you’ll likely qualify for a BlueVine line of credit. Since this service requires a credit check, be sure that your personal credit profile is in good standing. If your credit score is below 600, pay off debt and make payments on time to give your numbers a boost.
BlueVine offers lines of credit that start at $5,000 and can go all the way up to $100,000. You can expect an interest rate between 0.35% – 1.2% per week and the term length is 6 months. With this line of credit, you will make weekly fixed payments.
Like other online funding services, you submit an application online and loan applications usually take less than 24 hours. This is an ideal option if you need access to funds quickly and don’t want to undergo the often draw own loan process.
Similarly to PayPal’s loan, Kabbage offers a line of credit that business owners can apply for online. In fact, loan applications take just a few minutes and you’re then given instant access to your credit line. While this lending option isn’t ideal for startups, it is available for small business owners who have been in business for at least a year.
Other eligibility requirements include making at least $4,200 each month for the last three months or making $50,000 annually. Loan terms are either 6 or 12 months.
Lines of credit through Kabbage range from $2,000 to $100,000. Interest rates can vary from a reasonable 1.5% all the way up to 12% a month.
While funds can be available quickly through Kabbage, one drawback to be aware of is the potential for high APRs. On the positive side, many small business owners who receive funding through Kabbage are often happy with the monthly payments. Other similar services require daily and weekly payments.
Getting funding as a small business is an uphill battle. While traditional lenders are generally unwilling to loan money to a small company, there are other options to consider so that you get the business capital that you need, so don’t lose hope just yet!