Working Capital
Editorial Team
At Working Capital, we believe access to funding should be simple, transparent, and designed around your business not the other way around. We’re committed to helping entrepreneurs make smart financial decisions with tools, guidance, and lending partners they can trust.
For small business owners, the right financing can depend on how you get paid, how quickly you need funds, and how comfortable you are with tying repayment to future sales. PayPal and Shopify both bring financing directly into the platforms that many merchants already use to run their businesses, making access to capital more convenient than using a traditional bank loan.
That convenience they share, however, does not mean the two platforms offer the same experience. Each takes a different approach to short-term loans for businesses, from how businesses qualify and receive funds to how they repay what they borrow. The differences become especially important when a business has fluctuating revenue, needs more capital, or wants additional financing options.
For merchants already using one of these platforms, financing can become an extension of the tools they rely on every day. That can make access to capital faster and simpler, but it also means the financing is closely tied to each platform’s ecosystem. It’s important to understand these differences when deciding how to manage cash flow or invest in growth.
The PayPal Business Loan is a short-term installment loan that gives eligible businesses access to a lump sum upfront and a predictable repayment schedule. Businesses can borrow between $5,000 and $200,000, while repeat borrowers may qualify for up to $300,000. Borrowers make the same weekly payment throughout the loan term, making the payment amount easier to plan for regardless of changes in revenue.3
To qualify, a business must have a PayPal Business account, at least nine months of operating history, and a minimum of $33,300 in annual revenue. Loan terms start at 17 weeks, or roughly four months, but may be as long as one year. Payments are withdrawn from the borrower’s bank account each week.3 This fixed schedule can be useful for businesses that prefer to know exactly how much will leave their account and when.
PayPal’s Business Loan uses a fixed-fee model. The total borrowing cost is disclosed with the offer, and the amount owed does not change even if the loan is repaid more before the end of the term. PayPal does not charge fees for prepayment, meaning borrowers can pay off the loan early without an additional penalty, although doing so does not reduce the fixed fee.3
The application process for a Business Loan differs in one important way. Once a borrower accepts a loan offer, PayPal’s lending partner, WebBank, does perform a credit check.3
PayPal offers Business Loans to businesses across various industries, although the program is currently unavailable to businesses located in North Dakota and South Dakota.3
Overall, the Business Loan offers a different approach to working capital than PayPal’s sales-based advance. Working Capital adjusts repayment with sales, while the Business Loan provides a fixed weekly obligation for businesses that value predictable payments.
Shopify Capital offers business term loans to eligible merchants in markets that include Australia, United States, Canada, and Germany. However, Shopify does not use a standard loan application. Shopify bases a merchant’s eligibility and the loan amount on the merchant’s business activity, including sales, transactions, orders, and overall account performance.9
Merchants who qualify receive financing offers through Shopify Admin. Each offer is tailored to the individual business, with the proposed funding amount and repayment terms. Once the offer is accepted and approved, Shopify sends the funds to the merchant’s linked business bank account.9
Although Shopify characterizes the product as a business loan, its repayment method differs from a conventional installment loan. Payments are tied to Shopify sales, with a set portion of daily revenue automatically collected and applied to the balance. This allows the payment amount to change alongside the business’s sales activity. Stronger sales result in larger payments, while slower periods lead to smaller deductions. Shopify also requires borrowers to meet minimum repayment amounts during the initial term of the loan and limits the repayment period to 18 months.8
Shopify offers two ways to calculate the financing cost. With the fixed-fee option, the total amount to be repaid is established at the beginning and does not change if the loan is paid off early. The monthly-fee option only continues to generate fees while a balance remains. Paying the loan off sooner can reduce the total cost.8
For U.S. businesses, Shopify Capital can be an option for short-term financing needs. Businesses looking for funding beyond short-term working capital may need to consider other financing options.
PayPal Working Capital is a merchant cash advance available to businesses that process payments through PayPal. Eligible businesses can receive between $1,000 and $250,000, with repeat borrowers potentially qualifying for up to $400,000. After approval, funds may be deposited directly into the merchant’s PayPal account within minutes, giving businesses quick access to working capital when they need it.2
Instead of making a fixed payment on a set schedule, repayment fluctuates as a percentage of daily PayPal sales. Payments rise and fall with revenue, with no payment collected on days when there are no sales. Although there is no fixed repayment term, business owners are expected to repay a set portion of the remaining balance every 90 days (typically 5-10%).4
PayPal uses a fixed-fee pricing structure, with the total cost disclosed with the offer. The fee remains the same regardless of how quickly repayment happens. The total amount owed does not decrease, even with early repayment. There are no interest charges, late fees, or prepayment penalties.2
Approval with this merchant cash advance lender is based primarily on a business’s PayPal activity rather than a traditional lending process. PayPal generally requires an established Business or Premier account, with at least three months of account history and annual PayPal sales of $15,000 or more for Business accounts or $20,000 or more for Premier accounts.2 The application does not require a personal credit check.
To qualify, businesses must already process sales through the PayPal platform. Merchants operating in North Dakota and South Dakota are currently ineligible for financing.4
For businesses with short-term working capital needs, PayPal’s combination of rapid funding and sales-based repayment can make the program convenient. However, the $400,000 ceiling may not be enough for businesses with larger financing needs, making the funding limit an important consideration when comparing PayPal with other small-business financing options.
Shopify Capital provides financing to eligible merchants based on their activity and performance on the Shopify platform. In markets where Shopify offers its merchant cash advance (MCA), including the U.K., Ireland, the Netherlands, and Spain.
Shopify reviews information about the merchant’s business and platform activity to determine eligibility. Funding offers are presented to eligible merchants within the Shopify admin. However, there is no option to apply for financing when a need arises.9
The amount offered varies by merchant. Shopify considers factors such as transaction activity, sales performance, transaction activity, customer interactions, disputes, and the merchant’s history on the platform when evaluating financing opportunities. After accepting an MCA offer and completing the required approval steps, merchants may receive the funds in a designated bank.12
Instead of following a fixed payment schedule, merchant payments adjust with sales. Shopify takes an agreed percentage of daily revenue until the full amount owed has been repaid. As a result, the payments can rise or fall as the merchant’s sales change. The MCA has a fixed-fee structure, with the total cost established upfront rather than charging interest.12
Unlike traditional financing that may focus heavily on personal credit, Shopify evaluates business and platform activity when determining eligibility for its fast MCA business loans. This approach may open up financing opportunities to merchants with strong Shopify performance and sales activity who may not have a stellar credit score.
PayPal does not offer a business credit card, but businesses with a PayPal account can apply for the PayPal Business Debit Mastercard. The card allows businesses to use funds held in their PayPal account online or in stores where Mastercard is accepted.1 Once approved, a digital version of the card can be available within minutes.5
The card also includes several features designed for business spending. Eligible purchases earn unlimited 1% cashback, and businesses can request up to four additional cards for employees. The card works with Apple Pay and Google Pay, can be used for recurring payments, and allows businesses to withdraw cash at participating ATMs.5
Businesses can manage the card through PayPal, including setting spending limits and freezing or unfreezing cards. Funds received through PayPal can also be used once they are available in the account, without first moving the money to another account. This can make the card useful for businesses that already use PayPal to receive and manage payments.
The important distinction here is that the Business Debit Mastercard provides access to funds already available through PayPal rather than offering credit to make purchases. Businesses seeking a traditional business credit card would need to use a separate card issuer.
Shopify Credit is a pay-in-full Visa business card available to eligible Shopify merchants. Approved applicants can receive a decision within minutes and, if approved, access a virtual card right away. The card has no annual fee, foreign transaction fee, card replacement fee, or fee for additional cards.10
The business credit card for small businesses offers cashback rewards on eligible business purchases. Merchants earn 3% on up to $250,000 in annual spending in a merchant’s top spending category, such as marketing, fulfillment, or wholesale, and 1% on eligible purchases in the other two categories. Once spending in the top category exceeds $250,000 for the year, those purchases earn 1% instead.10
Shopify Credit also gives merchants two ways to pay. The default option is to pay the full statement balance from a linked bank account within the first month, avoiding fees. Merchants can instead choose to make payments from daily sales and take up to 10 months to clear the balance, but this option carries a fee.10
One important consideration for businesses comparing Shopify’s financing products is the relationship between Shopify Credit and Shopify Capital. Merchants who currently have Shopify Capital funding, or who have started the Capital application process, are not eligible to apply for Shopify Credit at that time.10 This makes the availability of the card an important consideration when choosing between Shopify’s financing options.
PayPal does not offer a dedicated business banking account in the U.S. Its business financial products include a PayPal Business account, business financing, and the PayPal Business Debit Mastercard. The Business Debit Mastercard provides several tools for managing business spending, allowing available money to be spent without first transferring it to another account.
The PayPal Business account and debit card give merchants a way to manage and spend funds within the PayPal platform, while its financing products provide access to additional capital. However, businesses looking for a dedicated business banking account with broader cash management features would need to consider other options.
Shopify Balance is a financial account built for eligible U.S. merchants who use Shopify Payments. It allows businesses to receive, hold, spend, and transfer funds within Shopify. There are no monthly or annual account fees, no minimum balance requirement, and no fees for same-day ACH transfers.11
The account includes up to six dedicated accounts that merchants can use to organize money for different business needs, along with automatic transfer rules and financial reporting tools. Shopify also provides faster access to store payouts, with most merchants on Basic, Shopify, and Advanced plans receiving funds within one to three business days.11
Balance includes a Visa card that earns 2% cashback on eligible business purchases, up to $2,000 per year. Funds are eligible for pass-through FDIC insurance up to $250,000 when applicable requirements are met.11
One important distinction is that Shopify Balance is a financial account, not a bank account. Shopify partners with Stripe for money transmission and account services, while funds are held at Fifth Third Bank, N.A., Member FDIC.11
Choosing business financing is ultimately about finding an option that fits the way a company operates. PayPal and Shopify each build their financial products around the activity already taking place on their platforms, giving merchants access to funding and other financial tools within an ecosystem they already use.
For business owners, financing structure, repayment expectations, fees, and access to other financial products can all affect how well a lender and their product fit the company’s needs. As those needs change, understanding how each platform approaches business financing can help owners make informed decisions about the role these products play in managing cash flow and supporting growth.
The better you understand what each platform offers, the easier it is to recognize which options make sense for your circumstances today and which may continue to fit as those circumstances change.
2https://www.paypal.com/us/business/financial-services/working-capital-loan
3https://www.paypal.com/us/business/financial-services/small-business-loan
4https://www.paypal.com/workingcapital/faq
5https://www.paypal.com/us/business/financial-services/debit-card
6https://www.shopify.com/capital’
7https://www.shopify.com/news/capital
8https://help.shopify.com/en/manual/finance/shopify-capital/united-states
10https://www.shopify.com/credit
11https://www.shopify.com/balance
12https://help.shopify.com/en/manual/finance/shopify-capital/united-kingdom
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