PayPal Outreach Business Consultant

[Tag123]

I have been getting phone calls and emails from a gentleman who it trying to get me to take a Working Capitol loan from PayPal. I finally called him back because I figured he, being a sales guy, wouldn't stop calling. Anyway, it was just that. He is trying to sell me on taking one of their loans. Since my account is legit I am actually considering it but I am afraid that this will cause them to look deeper into what I am processing through my account and I don't want them to do that. So just a heads up for those with Business Accounts. It seems that they are really pushing these loans lately but I don't think that unless you sign up that there is anything to worry about. The fact that they want to give you a loan probably means that they value your business with them.

[jeffweico]

PayPal working capital is not a BAD deal, when you compare it with the other small business loans out there, but I would caution everyone to be VERY CAREFUL with these loans. Yes, they are easy to get, but REPAYMENT may not work out the way you think it will.

Once you take the loan, you agree to repay it with PayPal taking a certain percentage of your sales each day. Let's say for this example, you choose the 10% option. What trips people up, is they tend to think of this as 10% of their PROFITS, but it is actually 10% of the GROSS.

Let's say you sell an item for $10. The item costs you $2.50. Shipping is another $2.20. Then, you have eBay and PayPal fees of about $1.30 (the eBay fee varies depending on what you sell). So, it costs you $6 to get the item out the door, leaving you a $4 profit, which means your profit margin is 40%.

Your loan repayment is $1, so your profit drops to $3. In other words, you are sacrificing 25% of your profits to pay back the loan, NOT 10%. Your profit margin is now 30%.

The only way taking this loan makes sense is if you are using it to buy inventory that will increase your sales. This is not a loan that you want to take to pay your bills, or take a vacation, etc.

Having said that, most loans available to small business carry much higher interest rates than PayPal working Capital, so it CAN be a decent option, especially if you are using it to make a deal that you otherwise would not be able to make. My point is, be sure to consider everything CAREFULLY before saying YES.

[Haidukken]

Originally Posted by jeffweico

gold

Myman, every single time you post, I just stand up and do a slowclap. Just keep doing what you do, please, I enjoy your posts immensely.

If any newbies out there want to understand how business, world, PP and eBay work. Just read every single Jeff post and I'm pretty sure you will be a better human being for it.

[unkown5454]

You do not want loans that immediately deduct a percentage of all of your sales. Low risk for PP, super high risk for you. It's an easy way to watch your business collapse in on itself unless you are sure you will have high profit margins and not be affected.

[Tag123]

Thanks for the good information guys!!

[Callidus]

...and to reiterate, don't even try taking this on stealth accounts.