PayPal toy with being a payday loan company?
PayPal - a company that people don't exactly trust or like - have announced that they are going to start offering cash advances to small businesses in the UK. If you can't get a loan, then PayPal want to 'help'.
Of course, everyone's problems with PayPal are well documented, but so too is the general irritation with loan companies and banks. It is basically getting a consumer to pick which illness they'd like.
The PayPal Working Capital fund will launch in the UK later in the year, but has been giving out loans in the USA since last September. And people are taking them up on the offer. Thus far, they've made £82m worth of advances to American firms.
They say they will provide "funding in minutes" after approvals and all that... but no credit check. A one-off fee is required on the advance (like interest) and the fee you can receive is based entirely on sales history from the PayPal account, the amount of money being advanced and the schedule of repayment.
Businesses will pay back what they owe with a share of sales made using PayPal, so if you don't sell anything on a given day, PayPal get nothing.
In America, there's been glitches - a number of customers have noted that unauthorised payments have been taken out of their PayPal account as repayments, with PayPal clearing business accounts without much fanfare or explanation.
Would you trust PayPal to sort you out with a loan? Or are they no better or worse than any other loan company?