Paypal working capital loan deal

jt88

I would like to know what you guys think of this new paypal working capital loan deal. Do you guys think it is a good deal? Why do you think it is a good deal or why not? From the first look I kind of think it is a good deal but I would like to see what other members think. Thanks.

https://www.paypal.com/webapps/workingcapital/

TopographicOceans

What they are calling "loan fees" are just the cost of money, which is in effect interest even though they don't call it that.

Using their example of a $445 fee for an $8,000 loan.
What I don't see is the term length, which makes a difference on what the cost of the money is.
But say it takes you 1 year to repay it, that is 10% annual interest. Better than a cash advance on a credit card, but still rather high in my opinion.

And their "fee" is based on your sales and % applied towards the loan and what you keep, so it is going to vary individually.

You would have to get a specific quote to find out your "fee" and then calculate it over the time period it takes to repay it to figure out the interest rate.

jt88

I think there is no time limit until you pay off the loan but there is a minimum payment every 90 days. I think you need to pay 10% every 90 days. Use their example: 8K plus 294 fee for 30% repay. If you make 1K sale a month it will take about 25 or 26 months to pay in full and your cost is only 294. I think that's pretty good.

derryb

good deal for the bullion pre-sellers who always end up over extended.

jt88

Sorry, I was wrong if you only make 1K sale a month you can't borrow 8K plus fee. Their example is 100K a year sale so is about 8K a month sale 30% of 8K is 2400 a month repayment. it only takes about 4 months to repay it. So 4 months for 8K with fee 294, it doesn't sound that great.

LanceNewmanOCC

.

try a small amount short term to see how the fees work.



imo, it is probably best for a short-term use, like if you get a big deal or find something with a major upside that is normally out of ones budget.



it probably cant compare to a l.o.c. with a manageable interest rate, or other standard bank financing/personal loan, mortgage refi., second mort., etc.



the payback from what i saw is much more aggressive, which is fine, if you prepare in advance for it.



this is all based on the kabbage model. the pp working capital may be different.

.

TopographicOceans

They have a lot of variables to calculate what their "fee" is.

Under Federal Law, a lender has to disclose their interest rate.
I assume if you apply they would have to furnish this disclosure before you agreed (unless a PayPal lawyer weasel figured away around the law by calling it a "fee")

If you are interested I'd call PayPal and ask what the interest rate would be for your specific situation - how much you borrow plus the fee over the term.

The $8k with $445 fee over 12 months is 10%
Depending on the variables the vig might range from 5% on a short term loan to 20% or more?. I have no idea, but I know PP is going to get a good return on the loan.