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.
Square and PayPal are two of the most recognizable payment processing brands in small business, and both have built-in financing programs that extend capital to owners using their platform. On the surface, the two may look similar. Each offers platform-embedded, short-term small business loans designed to be fast and tied to sales history rather than credit scores. However, the two programs differ meaningfully in product structure, eligibility, loan amounts, repayment mechanics, and the requirements businesses must meet to qualify.
Understanding how the two programs compare across the factors that matter most to your small business can help you determine which option may be the better fit.
Offers short-term business loans that feature a revenue-based repayment structure similar to an MCA. Payment amounts increase and decrease with Square sales. Square Credit Card also offered.1
Offers short-term business loans that feature a revenue-based repayment structure similar to an MCA. Payment amounts increase and decrease with Square sales. Square Credit Card also offered.1
Square Loans is the sole lending product offered by Square and is available only by invitation through the Square platform. Square’s internal algorithm evaluates each seller’s processing history, sales volume, and account activity to determine eligibility. Loan offers based on this data appear within the Seller Center dashboard. Merchants cannot submit an application to request funding, and there is no minimum credit score required either. Square does not require a credit check.1
Qualifying businesses can receive short-term working capital loan offers ranging from $100 to $350,000. Square reserves larger offers for Square merchants with high sales volume. Because each loan carries a single fixed borrowing fee, the total repayment amount is set up front and does not change regardless of how quickly the loan is repaid. Paying early does not reduce the fee.1
Square streamlines repayment by deducting payments from daily sales. Payment amounts are revenue-based and flex with sales. This MCA-style repayment can relieve repayment pressure when sales are inconsistent. Square simply collects a percentage of daily credit card sales until the total balance is satisfied.1
These loans don’t follow a traditional fixed-term schedule, but the entire balance must be repaid within 18 months. In addition, borrowers are required to pay down at least 1/18 of the original loan amount every 60 days.1Repayment aligns with sales activity while still requiring steady progress toward full repayment within the set timeframe.
PayPal offers working capital to businesses using its payment processing platform. Businesses can qualify for merchant cash advances ranging from $1,000 to $200,000 the first time they apply. Future advances may reach up to $300,000. Once approved, they may see funds deposited directly within minutes of approval into their PayPal account, making it among the fastest funding experiences available from any MCA direct lender.4
Repayment is automated by PayPal. It deducts a fixed percentage of PayPal sales daily from borrowers’ accounts. This revenue-based repayment allows payments to flex with income, relieving pressure during income slumps. While there is not a defined repayment schedule, borrowers must pay down a set portion of the remaining balance of the advance every 90 days.4
The advance does not accrue interest, but carries a flat fee disclosed to borrowers with their funding offer. PayPal does not charge late fees or prepayment penalties, either.5 So, business owners can pay off debt early without owing more. However, this does not reduce the cost of funding.
PayPal does not perform a credit check on Working Capital borrowers. It simply requires business owners to have either a Business or Premier account through PayPal. Accounts should be at least 90 days old and show $15,000 in annual PayPal sales (Premier account holders should have $20,000 in sales).4
The PayPal Business Loan is a fixed-term loan available to businesses with a PayPal Business account. Unlike PayPal Working Capital, the Business Loan does not require all sales to flow through PayPal. First-time borrowers may qualify for loan amounts from $5,000 to $100,000. Subsequent loans top out at $150,000 for repeat clients. PayPal looks for nine months or more of operating history and $33,300 or more in annual revenue.4
PayPal structures repayment as fixed weekly withdrawals from the business’s bank account over a term of approximately 4–12 months (17–52 weeks). However, there is no option for a longer, multi-year repayment term. Similar to its Working Capital product, the PayPal Business Loan is a no-interest loan. Each loan comes with a fixed fee due upon repayment.4
There are no late fees and no prepayment penalties here, either. PayPal’s lending partner, WebBank, does perform a credit check when owners accept an offer for a term loan for business expenses. However, simply applying for a loan does not trigger a hard credit pull.4
The Square Credit Card is designed for businesses that already use Square to process payments and is available by invitation only. It runs on the American Express network and does not charge annual fees, late fees, or foreign transaction fees. Instead of setting a traditional credit limit, Square determines spending limits based on a seller’s history with the platform, including processing volume and overall account activity.3
Rather than offering typical rewards like cash back or travel perks, the card provides value through credits you can apply toward Square’s payment processing costs. It also integrates directly with Square Checking and the Square Banking dashboard, keeping spending and cash flow in one place.3
Square expects card users to repay the card’s minimum each month. If you miss a minimum monthly payment, Square may step in and automatically deduct a percentage of daily card sales until the minimum payment is satisfied.3
Because it’s closely tied to the Square ecosystem, the credit card works best for businesses that regularly use Square. At the same time, those using other payment processors may find their benefits more limited.
Currently, businesses cannot secure a business credit card through PayPal. Those who want to spend current PayPal funds at stores or pay vendors easily may choose to get a PayPal Business Debit Mastercard. It is only available to PayPal business account holders, but it is a debit card and not a credit product.6
The PayPal debit card links directly to funds in an existing PayPal account but does not extend any credit or borrowing capacity. However, it does offer unlimited 1% cashback on purchases. It is worth noting that the cashback benefit does not apply to ATM transactions or debit card transactions.6 Owners who want a business credit card with more extensive rewards or a credit limit would not find that option through PayPal.
Square Checking is designed as a core component of the Square ecosystem rather than a conventional bank account. Because it connects directly to Square’s payment processing, funds from sales are available in the account immediately after a transaction is processed. Merchants who accept a Square Loan offer benefit from the same speed, with funds deposited instantly rather than on a standard business-day timeline.2
Business owners can manage payments, financing, and day-to-day cash flow all from the Square Dashboard. The account also links to the Square Credit Card and supports a range of spend and transfer options, including a debit card, ACH transfers, bill pay, and even printable checks for vendors who prefer them. Cash deposits are available at participating retail locations, and external funds can be brought in via ACH up to two days early through Square’s direct deposit feature.2
There are no monthly fees, no minimum balance requirements, and no overdraft fees.2 For businesses already running on Square, the account is less a separate financial product and more an extension of the platform they are already using.
While PayPal does not offer a dedicated business checking account, PayPal’s financing is deeply integrated with PayPal’s payment processing. PayPal deposits Working Capital funds directly into the borrower’s PayPal account, and repayment is deducted from PayPal sales, all within the PayPal dashboard.4 This makes the product especially seamless for businesses that process a significant volume of sales through PayPal.
For these businesses, PayPal also offers a Business Debit Mastercard linked to the PayPal balance for everyday spending. Though this is not a credit product, it streamlines outgoing payments from the business’s PayPal account.
The PayPal Business Loan is less ecosystem-dependent, with funds deposited into the business’s external bank account and repayments drawn via ACH. A PayPal account is still required to get a loan, but it is not necessary for repayment.4
Square and PayPal have both built financing programs that feel like a natural extension of the platforms small business owners are already using, and in many ways, they are. But with a deeper dive into how each program actually works, the surface-level similarities give way to meaningful differences.
The most significant structural difference is that PayPal offers two distinct financing products, while Square offers only one. This gives PayPal merchants a choice between a revenue-flexible repayment structure and a fixed-schedule one, a degree of optionality that Square does not provide.
The products from both of these small business working capital loan providers are platform-tied. Square’s financing requires active Square payment processing, and PayPal’s Working Capital requires sales processed through PayPal. PayPal’s Business Loan is slightly more accessible, requiring only a PayPal Business account rather than all sales flowing through PayPal.
For small business owners whose operations are already anchored in one of these platforms, the financing programs they offer can be a convenient and fast way to access capital. The right fit ultimately comes down to which platform your business runs on, how much flexibility you need in repayment, and whether the borrowing limits align with what your business needs.
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