International e-commerce business PayPal will offer funding to UK small businesses later this year.
The PayPal Working Capital fund has been designed to offer cash advances as an alternative financing option to traditional bank loans and lending services.
Under the scheme, funding can be in place “in minutes” of an application being made, without the need for credit checks, as existing customer sales histories can be used instead. Repayments on a loan advance would be made through daily PayPal sales.
PayPal, owned by online auction giant eBay, launched the same scheme in North America last September, which it claims has provided $140m in cash advances to SMEs.
Managing director of PayPal UK, Cameron McLean, said: “Small businesses are the lifeblood of the British economy.
“But seven years after the start of the credit crunch, many of them are still struggling to get funding. According to the British government, around a third of SMEs rely on retained earnings or the owner’s own finances rather than bank or equity funding.
“This means that many find it very difficult to finance their present needs or future growth. And the problem is acute for smaller, online businesses. PayPal is well placed to make a difference.”
The PayPal Working Capital fund will initially be made available to selected merchants in autumn 2014, with a wider launch due next year.