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Posted: 6:00 a.m. Friday, Oct. 4, 2013

Money to grow your online business

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By Clark Howard

ClarkHoward.com


Are you an existing online business looking for money to grow? PayPal may have a solution for you.

The e-commerce business is now offering a financing option for its business customers called PayPal Working Capital.

There is no credit check done of you or your business. PayPal is instead making lending decisions using a proprietary algorithm based on the historical value of your eBay sales and PayPal transactions. So if you have a good revenue stream, they lend you money against future revenue that comes in on PayPal.

As PayPal transactions clear, they siphon off a portion for loan payments. It's a low risk loan for them because you have a history and they assume you won't disappear as a seller.

Your maximum loan amount can be 8% of your total sales volume, up to $20,000 annually. The repayment is done as a deduction of anywhere from 10% to 30% of each future sale.

This is a clever path of alternative borrowing, and there's more and more of this going on. I've talked in the past about Kabbage.com as another option. Amazon actually beat PayPal to the punch doing this kid of lending in an effort to grow Amazon Marketplace to compete with eBay.

So if borrowing from a bank is not an option, the money you need can still be found other ways.

For further reading:

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