7 Best Alternatives When Your PayPal Working Capital Loan Is Declined

Pros

Multiple funding types available
High borrowing amounts
Low credit score requirements for some products

Cons

Rates can be expensive
Funds can take a while to disburse
The application process can be slow

Why We Chose Lendio As The Best PayPal Working Capital Alternative For Most Businesses

As one of our favorite alternatives to PayPal Working Capital, Lendio is a business financing aggregator — it matches small businesses to lenders. This is Lendio’s main draw: You don’t have to spend hours searching for individual loans and can more quickly find a business loan tailored to your particular business. Borrower requirements vary by lender, and the service is completely free to use.

Lendio’s main advantage over PayPal Working Capital is that Lendio offers lines of credit, SBA loans, both short- and longer-term loans, etc., while PayPal Working Capital only offers short-term loans. Lendio also offers higher borrowing amounts to qualifying businesses. Plus, due to the range of offers you may get, established businesses with good credit can potentially get lower rates with Lendio than with PayPal Working Capital.

Lendio Services

Lendio offers the following types of business funding:

Short-term loans up to $500,000
Term loans up to $2 million
Lines of credit up to $500,000
Merchant cash advances up to $200,000
Equipment financing up to $500,000
SBA loans up to $5 million

Lendio Rates & Fees

Lendio’s rates and fees vary depending on the lender and loan type you’re matched with. Get an SBA loan through Lendio, and your Lendio’s options range from low-interest SBA loans to high-interest MCAs for borrowers with bad credit.

Lendio Eligibility Requirements

Lendio’s partner lenders all have their own eligibility requirements that must be met. However, Lendio does recommend that loan applicants have a credit score of at least 550 to qualify.

As is the norm with business loans, the more revenue + time in business you have and the higher your FICO score, the more likely it is that you’ll qualify for favorable rates and terms.

Get Started With Lendio

2. BusinessLoans.com: Best PayPal Working Capital Alternative For Bad Credit Borrowers

BusinessLoans.com

Get Started With BusinessLoans.com

Pros

Funding up to $3 milion
No minimum credit score required
Quick & easy application process

Cons

Nontransparent fees & rates
Funding can take a while to disburse

Why We Chose BusinessLoans.com As The Best PayPal Working Capital Alternative For Bad Credit Borrowers

BusinessLoans.com is a business loan marketplace that matches applicants to the loan products they seek — and which they will qualify for. We chose BusinessLoans.com as one of our preferred PayPal Working Capital alternatives due to its willingness to work with borrowers with bad credit. If you’re struggling to find business funding due to a low FICO score and/or a short time in operation, BusinessLoans.com will still try to find the best funding option for your business.

BusinessLoans.com Services

BusinessLoans.com matches applicants to the following loan types:

Short-term loans
Term loans
Lines of credit
Merchant cash advances

BusinessLoans.com Rates & Fees

Your rates and fees will depend on the specific lender and loan product you’re matched with. However, on the whole, BusinessLoans.com’s lending amounts range from $5,000 to $3 million, its shorter-term loans have term lengths of 3-24 months, and its longer-term loans have term lengths from 2-5 years.

BusinessLoans.com Eligibility Requirements

Though BusinessLoans.com doesn’t specify a minimum credit score, the company does recommend that applicants have at least 6 months of business history and at least $100,000 in annual business revenue. However, even if you fall short of these guidelines, BusinessLoans.com will try to match you with a lending product that can accommodate your business.

3. OnDeck: Best PayPal Working Capital Alternative For Fast Funding

OnDeck

Pros

Borrower qualifications are lower than with banks
Multiple types of financing are available
The application process is fast and easy

Cons

Financing isn’t available in some states
Rates can be expensive

Why We Chose OnDeck As The Best PayPal Working Capital Alternative For Fast Funding

OnDeck may be the most well-known PayPal alternative in the lending industry, and for good reason. Although its fees can be on the high side, and you need at least fair credit to qualify, OnDeck may be a better choice than PayPal Working Capital for established businesses that need capital quickly. Its application process is fast and easy, and once you accept your loan, you may get funding as quickly as the same business day.

OnDeck is similar to PayPal Working Capital when it comes to term length (up to 18 months for both) and speedy time to funding (same-day funding available from both). OnDeck loans may come with a lower borrowing rate, though, depending on your business’s credentials.

OnDeck Services

OnDeck offers the following loan types.

Term loans up to $250,000 with repayment terms of up to 24 months
Lines of credit up to $100,000 with repayment terms of 12 months

OnDeck Rates & Fees

OnDeck’s term loans have APRs that range from 29.9% to 97.3%, with the average APR being 62.1%. An origination fee of up to 5% may apply.

For OnDeck’s lines of credit, APRs range from 29.9% to 65.9%, with the average borrower paying about 48.9%. There are no origination fees, but most borrowers will pay a $20 monthly maintenance fee.

OnDeck Eligibility Requirements

To qualify for an OnDeck term loan or line of credit, you must meet these requirements:

Time in business: 1 year
Business revenue: $100,000/year
Credit score: 625

Get Started With OnDeck

4. Fora Financial: Best PayPal Alternative For Merchant Cash Advances

Fora Financial

Get Started With Fora Financial

Pros

Applicants with bad credit accepted
Discounts for repaying early
Fast and easy application process

Cons

Rates can be expensive
Some additional fees charged
Repayments are required frequently

Why We Chose Fora Financial As The Best PayPal Working Capital Alternative For Merchant Cash Advances

Fora Financial is a PayPal Working Capital alternative suited for quick business financing. This online lender accepts applicants with credit scores as low as 500, making it suitable for business owners with bad credit who have had difficulty finding funding elsewhere. And unlike PayPal Working Capital, you can apply for either a merchant cash advance (repaid via automatic daily repayments, very similar to PayPal Working Capital) or a short-term loan with Fora Financial.

Fora Financial Services

Fora Financial offers the following:

Merchant cash advances up to $1.5 million
Short-term loans up to $1.5 million with terms up to 15 months

Fora Financial Rates & Fees

With Fora Financial’s loans, you’ll pay a borrowing fee of 10-30% of the borrowing amount and an origination fee of 1-4% of the borrowing amount.

Fora Financial Eligibility Requirements

For both merchant cash advances and term loans, Fora Financial requires at least 6 months in business and a credit score of at least 500. As for business revenue requirements:

Merchant cash advances: $5,000+ in monthly credit/debit card sales
Term loans: $12,000+ in monthly gross sales and a monthly average bank account balance over $1,000

Also, there is no maturity date on merchant cash advances — the term ends whenever your advance is repaid from your daily sales.

5. SmartBiz: Best For Long-Term Loans

SmartBiz

Get Started With SmartBiz

Pros

Rates tend to be inexpensive
No prepayment penalties
Website advertising is clear and informative
Customer service is helpful

Cons

The application process can be slow
Some additional fees are charged

Why We Chose SmartBiz As The Best PayPal Working Capital Alternative For Long-Term Loans

PayPal competitor SmartBiz is in the business of simplifying SBA loans by matching eligible applicants with the right lenders. Loans procured through SmartBiz can be used for working capital, debt refinancing, or commercial real estate. While harder to qualify for (only established businesses need apply), SmartBiz is a great option for established businesses looking for low-cost SBA(7) loans or even commercial real estate loans.

In addition to SBA loans, SmartBiz offers other business funding types, all of which can be applied for with just one single application.

SmartBiz Services

SmartBiz offers the following types of business funding:

SBA loans up to $350,000
Term loans up to $500,000
Lines of credit up to $150,000
Custom financing up to $500,000
ERC refunds

SmartBiz Rates & Fees

Interest rates for SBA loans range from 10.5% to 11.5%
Term loans have interest rates starting at 8.99%
Custom financing rates start at 6.99%

SmartBiz Eligibility Requirements

SmartBiz requires loan applicants to have 2+ years of business history. SmartBiz also requires SBA loan applicants to have a credit score of 650 and term loan applicants to have a score of 660.

6. Fundbox: Best PayPal Working Capital Alternative For Startup Financing

Fundbox

Pros

Low credit score requirements
Funds are disbursed quickly
Discounts for repaying early

Cons

Rates can be expensive
No long-term financing options

Why We Chose Fundbox As The Best PayPal Working Capital Alternative For Startup Financing

We put Fundbox on our list of PayPal Working Capital competitors due to its easy-to-meet borrower requirements, simple application process, and good customer support. Even if you have a very small fledgling business, you may still qualify for a Fundbox loan, as the company offers similar funding amounts as PayPal Working Capital and has similarly relaxed borrower requirements.

Fundbox Services

Fundbox offers business lines of credit up to $150,000.

Fundbox Rates & Fees

Fundbox’s rates start at 4.66% for lines of credit with 12-week repayment terms. If you get a LOC with a 24-week repayment term, rates start at 8.99%. Weekly repayments are required.

Fundbox Eligibility Requirements

Fundbox states that qualifying applicants will “ideally” have 6+ months of business history, suggesting some degree of flexibility on the matter. Fundbox also likes to see $100,000+ in annual revenue and a credit score of 600+.

Get Started With Fundbox

7. LoanBuilder: Best For Short-Term Loans

LoanBuilder

Get Started With LoanBuilder

Pros

Lower borrower qualifications than bank loans
No extra fees
Fast, easy application process

Cons

No long-term financing options
A blanket lien is required

Why We Chose LoanBuilder As The Best PayPal Working Capital Alternative For Short-term Loans

LoanBuilder is another PayPal loan service, but unlike PayPal Working Capital, it is available for PayPal business account users and non-users alike.

Known for low borrower requirements, quick eligibility checks, and no origination fees, LoanBuilder is a great option for businesses looking for short-term loans. It’s definitely worth applying with LoanBuilder if you were rejected for a PayPal Working Capital loan, as some businesses may find it easier to get a LoanBuilder loan.

LoanBuilder Services

LoanBuilder offers short-term loans of $5,000 to $500,000 — twice the maximum amount of a PayPal Working Capital loan. LoanBuilder loans are repaid over 13 to 52 weeks.

LoanBuilder Rates & Fees

LoanBuilder’s loans do not feature a traditional interest rate. You’ll instead be charged a one-time fee of 2.9-18.72% of the borrowing amount.

LoanBuilder Eligibility Requirements

Your business will need to meet the following requirements to get a LoanBuilder loan:

Time in business: 9 months
Business revenue: $42,000/year
Credit score: 620

Reasons Why Your PayPal Working Capital Loan Was Declined

Your PayPal Working Capital loan can be declined for a number of reasons. When PayPal declines your application, it will send you a letter explaining why you were rejected. This letter usually includes an error code, but from what we’ve gathered, the company isn’t very clear about the exact reason it rejects applicants. According to PayPal Working Capital applicants, some of the most common problems appear to be:

Trouble verifying information
Abnormal sales
Sale holds or a pending balance on your account
Applying too soon after paying off another loan
Being in a high-risk industry

However, other factors can affect loan approval — being unrealistic about the amount you ask to borrow, for example. When applying for a loan, always make sure your borrowing amount is reasonable and show potential lenders exactly how you plan on using the new funds.

Also, don’t forget to complete your application and provide the proper documentation.

PayPal Working Capital Error Codes

Here are the meanings of some common PayPal Working Capital error codes:

Identification Error: The system could not verify your information
Error Code 650: Sales volume fluctuations
Error Code 646: Abnormal sales
Error Code 641: Sales holds or a pending balance on your account

If you get one of these error codes when you apply, you can always attempt to rectify the situation. However, judging by the comments posted by rejected PayPal loan applicants, your efforts may not meet with success.

Can I Reapply For The PayPal Working Capital Loan?

You can absolutely reapply for a PayPal Working Capital loan, and it will not affect your credit score. Of course, there’s no guarantee that you’ll eventually be successful if you just keep applying, so at a certain point, it makes sense to start considering alternative funding plans.

PayPal Working Capital Algorithm

How does the PayPal Working Capital algorithm work?

The PayPal Working Capital algorithm verifies your identity and your PayPal account history — this includes your PayPal sales, whether your account has any fund holds or pending balance, and how long your account has been active. It also checks the status of any previous or existing PayPal Working Capital loans issued to you. The algorithm does not check your credit.

Why aren't I eligible for a PayPal Working Capital Loan?

To be eligible for a PayPal Working Capital loan, you need to satisfy the following minimum qualifications: have a PayPal Premier or Business account that’s at least three months old, and process annual sales of $15K/year with a Business PayPal account or $20K/year if you have a Premier PayPal account. Also, you must pay off any existing PayPal Working Capital loans to apply for a new one.

How many times can you apply for PayPal Working Capital?

There is no stated limit on the number of times you can apply for PayPal Working Capital. Applying once or multiple times will not affect your credit score. Just keep in mind that if you currently have a PayPal Working Capital loan, you cannot apply for another one until you’ve paid off the first one.

How is PayPal Working Capital calculated?

PayPal Working Capital loan eligibility is calculated primarily on your PayPal sales history and the status of any PayPal Working Capital loans you’ve taken out previously. If you’re eligible, your loan amount is calculated based on your sales and the number of past loans. PayPal will loan you a maximum of 35% of your annual PayPal sales, capped at $125K for your first two loans, and $200K for loans after that.

How much can I get from a PayPal Working Capital loan?

With PayPal Working Capital, you can borrow 35% of your annual PayPal sales up to a maximum of $125,000 for your first two loans and $200,000 for any subsequent loans.

Why did I get denied for PayPal Working Capital?

You can get denied for a PayPal Working Capital loan for any number of reasons, including:

PayPal can’t verify your information
Your sales appear abnormal/infrequent
Your account has a sale hold or a pending balance
You applied too soon after paying off another Working Capital loan
Your business is considered high-risk

Does PayPal Working Capital affect my credit score?

No. When you apply for a PayPal Working Capital loan, PayPal doesn’t run a credit check on you. Instead, PayPal bases its decision on your PayPal account history. Additionally, if you get a Working Capital loan, PayPal doesn’t report your payments to the personal or business credit bureaus, so you can’t build up your credit by repaying your loan.

How To Find Alternative Funding After Having Your PayPal Working Capital Loan Declined

When you get declined for the loan you want, it can feel like a huge setback, to put it mildly. The good news is that there are practical steps you can take to qualify for a different, if not even better, loan. If your application for PayPal Working Capital was declined, try these next steps to get your business the funding you need fast.

Ask Yourself Why You Chose PayPal Working Capital

The first step in your search for a PayPal Working Capital loan alternative is to ask yourself: Why did I apply for a PayPal Working Capital loan in the first place? What aspects of the loan drew me to PayPal Working Capital?

If you chose PayPal Working Capital because it was convenient, look for a loan with an easy application process and quick funding time, such as OnDeck. Did you appreciate the low borrower requirements and the lack of a credit check? You might want to look into the best small business loans with no credit check instead.

By identifying what you liked about PayPal’s Working Capital loan product, you can try to find a lender that offers similar, if not better, financing options.

Identify Your Business Loan Needs

Go on to identify your business’s needs. Ask yourself these questions:

Why do I need the loan?
How much money do I need to borrow?
Can I afford a small business loan?
What is a realistic repayment period for my business?

Before applying for any business loan, you should have a firm grasp of why you need the loan, how much you need to borrow, and what payment terms you can afford. A clear understanding of your business’s needs can help you narrow down your search to find the perfect lender with the best offerings and borrowing requirements. You should also try to understand the debt service coverage ratio to learn how to calculate the max monthly payment you can afford for a loan.

Choose The Right Type Of Business Financing

Choosing the right lender for your business also means choosing the right type of loan. Not all loans are created equal, and not all small businesses are borrowing money for the same reasons. Some businesses may be looking to purchase inventory, while others might need to upgrade their equipment or require a cash flow solution. Some have good cash flow but need extra funds for a new project or building.

Here is a breakdown of the most common types of small business loans and when to use them:

Short-Term Loans: A short-term loan is a sum of money that the borrower pays back in frequent, regular installments over a short time frame. The unique thing about short-term loans is that there’s no interest rate. Instead, this type of loan has a factor rate — a multiplier used to calculate a fixed fee that gets added to your loan. Short-term loans are relatively low-risk, making them a suitable choice for many businesses in need of fast funding and ideal for short-term business needs, such as working capital, payroll, inventory, etc.
Installment Loans: Installment loans, also called term loans, are loans where the borrower receives a lump sum of money that they pay back in regular installments (plus interest). Installment loans are ideal for established businesses looking for a more extended repayment period.
Lines Of Credit: When you get approved for a line of credit, a lender gives you access to a credit line with a certain amount of money that you can draw from at any time. Any draws made on a line of credit are repaid in regular installments. A line of credit is ideal for businesses in need of cash flow solutions or that are looking for a cash cushion to cover unexpected expenses and emergencies.
Invoice Financing: There are two main types of invoice financing: selling your invoices (invoice factoring) or using your invoices as collateral for securing a loan (called invoice financing). Invoice factoring and invoice financing are ideal for businesses that struggle with cash flow due to slow-paying customers.
Merchant Cash Advances: When you get approved for a merchant cash advance, a cash advance company purchases the business’s future revenue at a discount in exchange for immediate cash. Merchant cash advances are ideal for short-term business needs, such as working capital, payroll, inventory, etc.
SBA Loans: SBA loans are loans granted by the Small Business Administration and its partners. While these loans are harder to qualify for, they usually have low costs and are ideal for nearly any business need.

Now that you have a basic understanding of the options available, we can move on to the fun part — finding the perfect loan for your business!

Final Thoughts: Alternatives To PayPal Working Capital If Declined

PayPal Working Capital is the most convenient form of financing available to sellers who use PayPal. However, if you need other options, the seven lenders above are your next best bet. More broadly, you may want to look into the best small business loans overall as well.

For more information to assist your comparison shopping journey, read our small business loan comparison or check out our full list of small business loan reviews.

FAQs: PayPal Working Capital

How does the PayPal Working Capital algorithm work?

Why aren't I eligible for a PayPal Working Capital Loan?

How many times can you apply for PayPal Working Capital?

How is PayPal Working Capital calculated?

How much can I get from a PayPal Working Capital loan?

With PayPal Working Capital, you can borrow 35% of your annual PayPal sales up to a maximum of $125,000 for your first two loans and $200,000 for any subsequent loans.

Why did I get denied for PayPal Working Capital?

You can get denied for a PayPal Working Capital loan for any number of reasons, including:

PayPal can’t verify your information
Your sales appear abnormal/infrequent
Your account has a sale hold or a pending balance
You applied too soon after paying off another Working Capital loan
Your business is considered high-risk

Does PayPal Working Capital affect my credit score?

In Summary: Best 7 PayPal Working Capital Alternatives In 2023

Lendio:
- Term loans, short-term loans, SBA loans, MCAs, LOCs, & equipment financing
- FICO: 550+ (recommended)
- APR: Varies by lender
BusinessLoans.com:
- Term loans, STLs, LOCs, & MCAs
- FICO: No minimum
- APR: Varies by lender
OnDeck:
- Term loans & lines of credit
- FICO: 625+
- APR: 29.9%+
Fora Financial:
- Short-term loans & MCAs
- FICO: 500+
- Fees: 10%+ of borrowing amount + a 1-4% origination fee
SmartBiz:
- SBA loans, term loans, LOCs, & ERC refunds
- FICO: 650+ for SBA loans
- APR: 6.99%+
Fundbox:
- Lines of credit
- FICO: 600+
- APR: 4.66%+
LoanBuilder:
- Short-term loans
- FICO: 620+
- Fees: 2.9%+ of the borrowing amount

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Jason Vissers

Expert Analyst & Reviewer at Merchant Maverick

Jason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University and currently lives in Philadelphia, Pennsylvania.

@jvizz_mm

View Jason Vissers's professional experience on LinkedIn.

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1. Lendio

❮ ❯

Term loans, short-term loans, SBA loans, MCAs, LOCs, & equipment financing
FICO: 550+ (recommended)
APR: Varies by lender

2. BusinessLoans.com

❮ ❯

Term loans, STLs, LOCs, & MCAs
FICO: No minimum
APR: Varies by lender

3. OnDeck

❮ ❯

Term loans & lines of credit
FICO: 625+
APR: 29.9%+

4. Fora Financial

❮ ❯

Short-term loans & MCAs
FICO: 500+
Fees: 10%+ of borrowing amount + a 1-4% origination fee

5. SmartBiz

❮ ❯

SBA loans, term loans, LOCs, & ERC refunds
FICO: 650+ for SBA loans
APR: 6.99%+

6. Fundbox

❮ ❯

Lines of credit
FICO: 600+
APR: 4.66%+

7. LoanBuilder

❮ ❯

Short-term loans
FICO: 620+
Fees: 2.9%+ of the borrowing amount