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This year, Shay simply stopped making loan payments

This year, Shay simply stopped making loan payments

That loan led to more loans, a dozen of them, until she was funneling most of her income into interest payments

Mary Shay, 65, took out her first installment loan 10 winters ago when she couldn’t afford firewood for the two-room home she shares with her sister on the Navajo reservation 10 miles from Gallup.

“I thought they’d arrest me,” said Shay, who says the lenders started calling her at work, first at the hotel where she cleaned rooms and later at the Catholic Charities run thrift store where she works now. Shay can’t count the number of cold nights she passed without firewood, which she couldn’t afford due to interest payments.

Because she earns so little, it’s likely that if her lenders took her to court, the amount they would be able to garnish from her paycheck would be hundreds less than she had been paying in interest.

Tammy Lee, a 21-year-old Navajo woman, says taking out a small-dollar loan was the worst decision she ever made

Jean Philips, an attorney at New Mexico Legal Aid in Gallup, says the consequences of small-dollar lending reaches far beyond debt and can deeply impact a borrower’s life. Her clients regularly lose their cars and mobile homes to repossession. “I’ve had clients who’ve gone hungry because they are paying back their loans,” she said. (suite…)

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Since then, PayPal has grown substantially, and now offers short-term loans to its customers

Since then, PayPal has grown substantially, and now offers short-term loans to its customers

By having a higher repayment percentage, the cost of the fixed fee will be lowered, and vice versa. It is, however, also worth noting that with PayPal Working Capital you will not be able to sell future receivables, as you can with other funding options like a merchant cash advance.

Who Funds PayPal Working Capital?

Back in 1999, PayPal was first developed and instigated as a money transfer service, funded by John Malloy of BlueRun Ventures.

How Is PayPal Working Capital Calculated?

PayPal Working Capital is calculated based on your PayPal sales history and volumes, your previous account history, and if you have taken out a PayPal Working Capital loan previously. These factors are what determines the maximum cash advance you’re able to have.

Merchant Cash Advance

Whilst PayPal Working Capital operates similarly to a merchant cash advance, particularly in the way in which you repay it, it does in fact differ from a merchant cash advance and is instead simply a short-term business loan. With a merchant cash advance you can sell on future receivables, but with working capital this is not an option.

Furthermore, whilst online PayPal Working Capital reviews are generally positive, some who have used PayPal Working Capital have complained about a range of different problems, including a lack of reliability, problems with approval, and even PayPal Working Capital being difficult to apply for initially.

It is also worth taking note that with PayPal Working Capital, there is no advantage to making early repayments, which some online reviewers have also taken time to criticise. (suite…)

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