From the top · 8 February 2016

Flexible Working Capital service key to PayPal’s successful offering

Paypal has so far provided over $1bn in working capital to UK startups
Paypal has so far provided over $1bn in working capital to startups

Last year, Business Advice named PayPal’s CEO for Europe, Rupert Keeley, as one of its 30 key small business decision makers. Following Keeley’s inclusion amongst our list of high-profile names, Business Advice spoke with PayPal small and medium business director for the UK and Ireland, Nicola Longfield, to take a closer look at the platform’s plans to continue revving up the nation’s small businesses.

Recognising the growing reticence of traditional lenders to finance small business during the worst of the recession, October 2014 saw PayPal decide to start advancing cash to UK small enterprises via its Working Capital fund. The company has now provided over $1bn in startup capital to more than 60,000 UK, US and Australian entrepreneurs, making the online payment operator one of the UK’s largest alternative small business financiers.

A ten year PayPal veteran, Longfield ensures that the company champions startups and entrepreneurs, not only by offering the Working Capital fund but also a range of payment services including contactless payment on the move, invoicing and gateway products for accepting both PayPal, credit cards and alternative methods.

Efficiency and transparency continues to be at the heart of the operator’s strategy in 2016 according to Longfield, as PayPal offer small businesses flexible solutions designed to save time and limit costs.

“Working Capital is all about using company data to make access to funding easier,” she explained. “Traditional lending options have requirements that are too rigid for the needs of small firms. With our fund, businesses choose daily repayment rates based on agreed proportions of sales. If clients don’t make any PayPal sales, they don’t have to repay anything.”

“There’s just one up front fee and no repayment penalties,” added Longfield. “The fund is good for the ebb and flow of small business sales. PayPal can make an instant decision on whether to advance capital so firms don’t have to waste time proving their business model. If a company needs to buy equipment, say, that fast decision means funds can be in company accounts that same day.”

Nicola Longfield
Nicola Longfield

Business owners apply for funding online, taking just a few minutes, and chose the amount they wish to borrow. Advances range from anywhere between £1,000 and £60,000. “The Working Capital fund began with a £20,000 cash limit,” explained Longfield. “We quickly raised that to £50,000, then £60,000 because we recognised that businesses needed it.”

PayPal will continue to help business owners in this way, adapting products to fit the needs of customers and offering tailored solutions. “We make sure we are at the forefront of innovation,” Longfield said. “Small businesses are not yet entirely aware of what we do – we want owners to understand that when we partner with them, our range of solutions can be taken individually or together. PayPal is more than just a payment button on a website.”

One of the areas PayPal is creating disruptive new products is in cross-border trade: making it easier for UK small firms to access international markets. PayPal Passport is a newly-launched website offering small businesses advice on everything from shipping terms to customs and excise duties to translating company websites. China Connect is a new platform making the Chinese market more visible for startups that lack the expertise to enter China alone.

PayPal has also developed an invoicing product. Recognising late payments as one of the most important issues holding back small business growth, the platform now offers cash advances against invoices, covering the gap between when customers issue an invoice and when payment is received.

For Longfield, 2016 will be defined by more of the same, with an ever-growing number of small businesses using PayPal for working capital as well as accessing payments.

Awareness of the tailored solutions PayPal offers customers will be the cornerstone of Longfield’s strategy, as will staying on top of innovations in financial technology (fintech). “Small businesses form such a large part of PayPal’s customer base that we can’t afford to ignore them,” she added. “As long as businesses understand what we offer, we can continue what we’ve already achieved.”

Providing important services underpinned by strategic injections of finance, PayPal, like fellow corporate behemoths Google and Facebook, looks set to remain part of the UK’s small business fabric for the foreseeable future.

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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