Paypal today announced a new loan program for small businesses that provides simpler and quicker access to capital as well as fixed and predictable costs and repayment schedule that is not tied to a fixed date. The program, while limited at first, is a radical approach to small business financing and one that could shake up the market for small business lending.
Currently most very small businesses (3 or fewer employees) actually get most of their financing either in the form of self-financing or from friends and family or via a line of credit that is tied to their personal credit. Business loans from banks and cash lenders make up a much smaller percentage. You can get some idea of the small business lending landscape in this infographic.
In addition, small business lending has been on a downturn since the economic crash and only this year has shown any signs of reviving. This is particularly true for online businesses where there are no physical assets against which to secure a loan.Read More »from Paypal Launches Breakthrough Small Business Loan Program – Working Capital