PayPal to Provide UK Small Businesses with Cash Advances

Last week PayPal announced it would provide cash advances for UK small businesses. At Axis for Business this week, we ask how this could affect you.

Axis for Business Understands the Concerns of Small Businesses

We understand the concerns of small businesses here at Axis for Business. As a low-cost energy and utilities provider, who values long-term relationships with our customers, we are always striving to understand your needs.

This is why we understand the basic day-to-day concerns that come with funding. Ensuring you have the capital to carry out your day-to-day operations smoothly isn’t always easy, especially concerning online payments. This is why we felt we must report this latest development to you on the Axis for Business blog this week.

The PayPal Working Capital Fund

The BBC has reported that PayPal has announced that they are to start advancing cash to small businesses throughout the UK, as of later this year. They have said that they will provide funds based on customer history, which will provide “funding in minutes,” via the PayPal Working Capital Fund.

Specifically, the PayPal Working Capital Fund was designed by the online payments company to be an alternative to traditional bank loans and other lending services. Basically, they advance you the cash and they later recoup the cash. PayPal have gone on record saying that once this service comes into effect in the UK, they’ll only recoup the money when companies sell through PayPal services.

How Has the PayPal Working Capital Fund Fared Stateside?

PayPal has already launched a US version of the fund. They did so last September, and the operation of the US fund gives us some insight into how it may work this side of the pond. Notably, although the E-Bay owned firm declined to reveal the size of its UK fund, in the US it has released $140 million (£82 million) to customers since last September.

However, the fund has faced significant setbacks in the states. Last month, customers complained of unauthorised repayments being taken from their accounts. Since then, PayPal has gone on record, saying the payments were taken in error, and would be credited back to the customers. This suggests it as a one-time incident, and is unlikely to effect UK customers.

How Could This Affect Small Businesses Across the UK?

So how could this affect small businesses in the UK?  Essentially, it will relieve the strain of providing immediate capital to fund day-to-day operations, by literally providing that capital. This is a great development for UK-based small businesses, however it is one that must be handled carefully. It is still money that must be repaid.