Small Business Loan Challenges
Small business owners have it tough these days with traditional loans and banks well out of reach. There are a number of advance loans and micro-loans out there, but many are afraid of hidden language, penalties, and requirements.
Comparing Advance Funds Network and PayPal Working Capital
Two of the more well-known options are Advance Funds Network (AFN) and PayPal Working Capital. Both are recognized in the United States, Canada, and England and have received positive media coverage regarding their products.
Experience in the Loan Business
First, look at how long both have been in the advance loan business. AFN has been working with loans since 2007, while PayPal just launched its working capital product in the United States.
Since AFN has been around for a while, it has numerous reviews about its product and service. The Better Business Bureau gave it an “A” rating, and TopCreditCardProcessors.com awarded AFN with “Best Processor Winner” this past July. PayPal’s product hasn’t been tested enough to have any accolades.
Loan Product Variety
Each offers slightly different products, with AFN providing more variety. AFN products include:
- Unsecured lines of credit
- Merchant cash advances
- Bad credit business loans
PayPal, on the other hand, offers only merchant cash advances.
Loan Repayment Options
The repayment structures also differ. AFN has two options for repayment, giving small business owners more control:
- Repayment Based on Sales Receipts – The business owner and AFN agree on an amount to be repaid out of sales receipts. This option is great because it is based on sales alone and taken directly from sales, so there are no fixed due dates.
- Fixed Loan Repayment Schedule – This option is suitable for businesses with steady revenue streams, providing a specific repayment date for better budgeting.
With PayPal Working Capital, the only option available is repayment from sales receipts through their merchant services. Additionally, the first repayment is due within three days of receiving the money, leaving little time for business owners to recoup sales before making a payment.
With AFN, customer service representatives work with you to determine the repayment start date, providing greater flexibility.
Customer Service Comparison
Another key difference is in customer service. AFN assigns dedicated loan representatives to applications, ensuring that business owners speak to the same person each time. This personalized service fosters familiarity and efficiency.
At PayPal, customer service is less personalized. Callers are connected to whoever answers the phone, often requiring them to repeat their information multiple times.
Funding Amounts and Approval Criteria
AFN offers larger advances, up to $500,000, whereas PayPal Working Capital bases funding solely on the volume of transactions processed through their merchant services, resulting in smaller loans.
AFN considers a broader range of financial factors, including merchant accounts combined with gross sales across all revenue streams. In contrast, PayPal requires a business to have a history with PayPal merchant services to qualify.
Credit and Approval Process
One major advantage of AFN is its flexibility in approving applicants with bad or no credit. In fact, 85% of applicants are approved. Approval can occur within hours or a couple of days, depending on the loan type. Once approved, small business owners receive their funds within 24 hours after signing the paperwork. Most loans are completed with money in the account in less than a week.
Conclusion: Choosing the Right Option
For business owners seeking serious capital to move their businesses forward, Advance Funds Network provides the most flexibility, larger loan amounts, and better customer service, making it the more effective choice in achieving business goals.
