PayPal vs. Bluevine: Which small business lender is right for you?

Both PayPal and Bluevine offer short-term loans that can cover small expenses up to $250,000. They work with businesses that may not traditionally get accepted by banks and credit unions. For example, PayPal’s business loans work well for bad credit borrowers, while Bluevine accepts small-business owners with fair credit.

Yet their business loan options are limited, which could lead you to continue your search for the right business loan if they don’t match your needs. Let’s dive into the features and pros and cons of PayPal versus Bluevine business loans.

PayPal vs. Bluevine at a glance

Both online lenders offer loans with unique features designed for business owners with fair or bad credit. Given the low loan amounts, business owners can easily use loans from either lender as working capital to cover day-to-day expenses.

But PayPal’s business loans accept much lower revenue than Bluevine. Compare the notable differences between these lenders and their loan products:

PayPal business loans

PayPal, the famed payment processor turned online business lender, helps low-revenue businesses get approved for two accessible business loan options. You only need $15,000 to $20,000 in PayPal sales annually for its working capital loan.

This loan acts as a merchant cash advance since you repay from a percentage of your sales. Plus, loan amounts start at $1,000, providing funds for even small expenses.

Its short-term loans require at least $33,000 in annual business revenue to qualify. That amount is a far cry from most business loans that need at least $100,000 annually, often more. But its repayment terms top out at one year, compared to other short-term loans which go from six to 24 months.

Pros

• Low revenue required
• No-credit options
• Startup friendly

Cons

• PayPal business account required
• Fixed fees not disclosed
• Low loan sizes

Bluevine business loans

Bluevine offers a business line of credit, letting you borrow funds with a maximum credit limit of $250,000 which is fairly standard. Unlike some lines of credit, it doesn’t charge an origination fee or a prepayment fee for paying off the loan early.

Its minimum personal credit scores are also welcoming of fair credit borrowers. It requires a score of 625 with a six-month repayment term and 650 for a 12-month term.

But Bluevine’s business line of credit is the only loan the lender offers. You also need high revenue to get accepted — $480,000 annually for the six-month line and $960,000 for the 12-month line. These are steep requirements, considering other lenders typically require at least $100,000 to $250,000 in annual revenue.

Pros

• Accepts fair credit
• No origination fees
• 24-hour approvals

Cons

• High revenue required
• High interest rates
• Sole proprietors not accepted

How to choose between PayPal and Bluevine

When choosing between these lenders, both serve businesses with subprime credit and offer loans up to $250,000. But they differ in the types of business loans they offer. PayPal offers a short-term loan and working capital loan that acts like a merchant cash advance. Bluevine focuses on a business line of credit, shining with no origination or prepayment fees.

When it comes to revenue, PayPal business loans are more accessible for businesses. While you need a PayPal business account for either of its loans, it requires as little as $15,000 to $33,300 in annual revenue. By contrast, a Bluevine business line of credit requires a hefty $480,000 to $960,000 per year.

Choose PayPal for a no-credit-check business loan

PayPal’s low to no credit score requirement works well for business owners with bad credit. PayPal doesn’t check your credit at all for its working capital loan, and its short-term loans accept personal credit scores as low as 580.

PayPal is also the way to go if you don’t have much time in business, accepting entrepreneurs in business for as little as nine months. By contrast, Bluevine requires a minimum of two years in business.

Choose Bluevine for flexible business line of credit

Bluevine’s small business loan is the better option if you need a business line of credit that you can draw funds from at any time. Lines of credit work well to use for small expenses as they pop up since most credit lines are revolving, which means you can draw from them repeatedly.

Bluevine offers a standard credit limit of $250,000. Unlike some business loans, it doesn’t charge a prepayment penalty, encouraging you to pay off the loan quickly. But it offers either a six- or 12-month repayment term, shorter than other lines of credit that can reach anywhere from 24 to 60 months.

Bluevine doesn’t work for bad credit like PayPal business loans do, but Bluevine still accepts fair personal credit scores of 625 or 650. That credit requirement is low compared to banks and other traditional lenders, which require a score of 670 or higher to apply for a business loan. Other online lenders accept scores in the 600s.

Alternatives

PayPal and Bluevine are online lenders with specialized business loans, so their loans won’t work for everyone. To find a better fit, you can compare features from other top small business lenders, including their loan sizes, interest rates and repayment terms.

Here’s a look at a few options to consider:

Fundible: High loan sizes and longer terms

Fundible is an online lender willing to work with different credit levels, including bad credit borrowers. Some loans will serve borrowers with credit scores as low as 450. It offers a variety of loans to suit different needs, including a line of credit, term loan, equipment loan and invoice financing.

Its line of credit offers similar interest rates as Bluevine, starting at a 6.00% simple interest rate. But it’s more accessible, requiring only six months in business, a personal credit score of 580 and annual revenue of $200,000. It also offers longer terms from 12 months to 10 years.

Fundible’s term loan offers higher loan amounts up to $1 million and longer terms up to 48 months, according to a spokesperson. It does require a credit score of 650 to qualify.

Business credit cards

Business credit cards can also serve as a short-term loan that you can use for day-to-day expenses. You can use the card for expenses as needed and either pay the minimum payment or pay the balance in full to avoid interest.

For comparison, most business credit cards come with annual percentage rates (APRs) between 18 percent and 30 percent. Depending on your credit score, these rates may actually be lower than you’d get with a short-term business loan.

SBA loans

The Small Business Administration has several loan programs offered through SBA-approved lenders that can help with affordable financing.

The SBA sets long repayment terms up to 10 or 25 years, depending on the type of loan. It also limits the interest rates that lenders can charge from 10.5 percent to 16.25 percent. Most commercial lenders can charge much more in interest rates according to your credit profile.

Here are different SBA loans and the reasons you might choose one of these:

• 7(a) loan. The 7(a) loan is the SBA’s most popular program offered through a variety of SBA-approved banks and lenders. You can get approved for up to $5 million to cover working capital expenses, real estate or refinancing.
• CAPLines. The SBA’s version of lines of credit, CAPLines provide options to finance seasonal business costs or costs of specific work contracts or building projects. It offers loans up to $5 million and terms up to 10 years, rare loan amounts and repayment terms  for lines of credit.
• Microloans. SBA microloans provide loan amounts up to $50,000 that you can use for operational expenses like buying or repairing equipment. Approved lenders aim to support growing businesses in underserved communities, such as minorities or low-income areas.
• Community Advantage. Community Advantage loans are 7(a) loans up to $350,000. It’s provided through mission-based lenders like nonprofits or community development financial institutions (CDFIs) geared to help specific underserved businesses.

Bottom line

PayPal and Bluevine are online lenders with loans that can serve similar purposes, paying for operational expenses. But each lender caters to a different crowd. PayPal works well for low-revenue businesses from all credit levels, offering short-term loans.

Bluevine accepts fair credit from established businesses with fairly high revenue. Its line of credit can cover ongoing expenses as they arise, and the credit can be reused as you pay off a previous loan. Both lenders offer a speedy online application, but you might compare other short-term business lenders if you’re not sure that either of these is right for you.

Frequently asked questions

• What credit score is needed for a PayPal loan?

  PayPal doesn’t have a credit requirement for its working capital loan. You will need a minimum personal credit score of 580 to get approved for its short-term loan.

• Can PayPal working capital be denied?

  Yes, PayPal may deny your working capital loan application if you don’t meet its requirements. PayPal requires that you have an active PayPal business account for at least 90 days. You also need at least $15,000 in minimum PayPal sales with a Business account, or $20,000 in sales with a Premier account.

• Is it hard to get approved with Bluevine?

  Bluevine has lenient credit requirements, accepting fair personal credit scores of 625 or higher. But it’s not easy to build up enough revenue to qualify. Bluevine requires at least $40,000 in monthly revenue, and that’s if you choose a six-month term. You need $80,000 in revenue per month to qualify for its 12-month line of credit.