PayPal LoanBuilder Review: Is it Right for Your Small Business?
LoanBuilder offers short-term small business loans from $5,000 to $500,000. It’s an attractive choice because it doesn’t carry origination or early repayment fees, but the upfront interest fee may be a deal breaker for some.
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What we like:
Great customer service
| APR | Not provided |
| Loan Amounts | $5,000 – $500,000 |
| Term Lengths | 3 – 12 months |
| Origination Fee | None |
If you’re a small business owner looking for a quick short-term business loan, you should consider LoanBuilder in your list of possibilities. LoanBuilder offers funding as fast as the next business day after you’re approved, making it faster than a traditional bank loan, and a good option for business owners who need a fast infusion of cash.
LoanBuilder is a subsidiary of PayPal and a sister business to Swift Financial. Together, the companies offer small business loans to businesses in more than 500 different industries.
This PayPal LoanBuilder review will cover everything you need to know to determine if the lender is right for you.
In this review:
- How to Get a LoanBuilder Loan
- Rates, Fees, & Other Basic Info
- The Benefits of LoanBuilder Loans
- The Downsides of LoanBuilder Loans
Getting a Paypal LoanBuilder Loan
PayPal LoanBuilder offers loan amounts ranging from $5,000 to $500,000, so it covers what most small-business owners will need financially. The application process is quick and it’s not difficult to get approved, but you will be required to meet some basic criteria first.
LoanBuilder Requirements
- Your business must have been operational for at least nine months before your application.
- You must be making at least $42,000 in annual revenue.
- Your business must be based in the U.S.
- You must not have any active bankruptcies. (If you have had a recent bankruptcy, check out small business loans for bad credit.)
- Although LoanBuilder is a PayPal service, you don’t need to have a PayPal account to receive funding.
If you don’t meet one of these requirements, you should look elsewhere for a small business loan. In the meantime, try to increase your credit score by paying your bills on time, checking your credit reports for any errors, and reducing the amount of debt you owe. Those are some of the best things you can do to save yourself money in the future, both personally and through your business.
With LoanBuilder, you’ll apply online, and the process is quick and simple. You can check if your business is eligible without incurring a hard inquiry and hurting your personal credit score—at least in the preliminary stage. You’ll provide some basic personal information such as your name, phone number, the name of your business, and the purpose of your loan.
If you are given the green light by LoanBuilder, you’ll move on to the next phase of the loan application, which will include providing the lender with any documentation it needs to verify your annual revenue and length of time you’ve had your business.
If you are approved, you can receive your money as soon as the next business day.
But when applying for what you need, keep in mind the money will have to be paid off in 13 to 52 weeks, depending on your loan term. If you’re borrowing a large amount of money and your business is relatively new, it might be difficult to predict if that will be enough time for you to come up with the repayment money.
If you have doubts, a business term loan with a longer repayment term may be preferable.
Basic Information: Rates, Terms, Fees, & Limits
What you won’t get with PayPal business loans are hidden fees. There aren’t prepayment fees in case you decide to pay off your loan early, and you won’t have an origination fee either. The only fee you might have is the $20 returned payment fee.
But it may not make sense to pay off the loan early, even if you are able to, because LoanBuilder charges a fixed fee no matter how quickly you pay off the loan—whether it takes you 13 weeks or a full year.
LoanBuilder doesn’t advertise its rates. Since the full interest will be charged no matter how quickly you repay the loan, remember only to borrow what you need.
The Benefits of LoanBuilder Loans
There are several advantages to using LoanBuilder, including:
- You can inquire about a loan without having to submit to a hard credit check. If you decide to move ahead with a loan after that preliminary stage, that’s when the hard inquiry will take place.
- It should only take five to 10 minutes to fill out the application. You can do everything online at any time that is handy for you, or you can call LoanBuilder and have them walk you through the process.
- You don’t need an outstanding credit score to get approved, which may help small business owners who are in the credit building phase.
- You can get your money far faster than you can with a traditional bank loan, which is ideal for businesses looking for a short-term loan.
The Downsides of LoanBuilder Loans
Fixed Fee
The biggest pitfall of using LoanBuilder for a small business loan is that you pay the full interest regardless of when you pay off the loan. That means this might not be the cheapest lender to borrow from, particularly if you plan to pay your loan back before your term is up.
If you do have the money to pay it off early, there is no benefit to doing so, other than perhaps your peace of mind. You might be better off keeping that extra money in an interest-bearing bank account where it can do you some good instead of paying down the whole loan balance early.
Limited Loan Options
Another downside is the fact that LoanBuilder only offers short-term loans. If you need a longer term to pay off your loan, you might want to consider other loan options.
Personal Guarantee
LoanBuilder requires a personal guarantee before issuing their loans. This means that as a business owner, you’re on the hook for the loan amount even if your business goes under. Requiring a personal guarantee isn’t uncommon among business loans, but it is an added restriction.
Ineligible Industries
Finally, not all industries are eligible for LoanBuilder Loans. Here is a list of ineligible industries:
- Agents and managers for artists, athletes, entertainers, and other public figures
- Any businesses in public administration
- Attorneys
- Business and professional associations
- Civic and social organizations
- Collection agencies
- Credit bureaus
- Elementary and secondary schools, and junior colleges
- Environmental, conservation, and wildlife organizations
- Financial services
- Gambling and related businesses
- Grant making foundations
- Gun stores
- Holding companies and management companies (without subsidiaries included)
- Human rights organizations
- Independent artists, writers and performers
- Labor and political organizations
- Manufactured (Mobile) Home Dealers
- New and used automobile, ATV, RV, personal watercraft, boat and motorcycle dealers
- Non-profit organizations
- Religious organizations
- Voluntary health organizations
Bottom Line: Is PayPal LoanBuilder Right for You?
LoanBuilder is a decent option for business owners who need money quickly and don’t want to take time off of work to face the hassles of applying at a traditional bank. But before you submit a full application, you should compare quotes from a few different lenders to find the best rates. LoanBuilder might not offer the most favorable interest rates, and having to pay the full interest amount charged regardless of when you pay off the loan will be a con for some.
