PayPal has launched Working Capital, a new loan product designed to help Aussie small to medium sized businesses (SMBs) grow by giving them access to funds via their PayPal accounts.

Kareem Al-Bassam, PayPal director of customer experience and solutions, says PayPal chose Australia as one of the first markets after the US to launch Working Capital due to SMB demand for a wider choice of financing options to help them grow their businesses.

“Working Capital is ideal for SMB owners who need fast, simple, and flexible solutions to fund activities, like staffing up ahead of seasonal demand, or buying additional inventory to meet orders.

“We’re using data and technology to provide a tailored credit solution that meets the needs of small businesses today. The capital is granted to eligible PayPal merchants in minutes, and merchants only make repayments when they get paid.”

PayPal Working Capital will be introduced to a limited number of PayPal merchant partners between now and the end of the year, followed by a broader rollout in 2015.

PayPal merchants who have had an account for at least 12 months can log onto PayPal and determine if they are eligible for a loan.

The merchant chooses how much they wish to borrow, up to eight per cent of their annual PayPal sales, and what percentage of each PayPal facilitated transaction will be allocated to repay the loan. The amount borrowed is deposited into the merchant’s PayPal account, enabling them to advance their business.

Borrowers pay one fee, which is decided upfront and based on the amount borrowed. There are no additional charges, and no penalties for late payment or early settlement of the full loan. The borrowed amount is repaid automatically by PayPal debiting the selected repayment percentage from PayPal transactions.

Al-Bassam says PayPal’s technology platform and its merchant relationships generate rich data that can be analysed in real time to grant loan applications, making Working Capital an ideal solution for SMBs needing to respond quickly to changes in their markets.

“PayPal’s investment in Working Capital is another demonstration of our commitment to support and encourage Australian SMBs, which make such an essential contribution to the Australian economy, by providing them with innovative solutions and technology to expand their businesses.”