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PayPal now offers loans to French VSEs and SMEs

Published on May 12, 2022 - 3 mins reading time
SMALL BUSINESSES Companies Loans

PayPal launches PayPal Financement Pro, a credit solution for French VSEs and SMEs. In March, European payments giant Adyen unveiled its financing offer dedicated to small businesses.

PayPal Financement Pro, or income-based financing

Payments players are increasingly competing with the banking sector: just as European payments giant Adyen did a few weeks ago, it's now PayPal's turn to launch a corporate credit solution.

Aimed at French VSEs and SMEs, PayPal Financement Pro is a Revenue-Based Financing (RBF) offer. Already offered by payment players such as Stripe and Square, this financing method enables growing companies to obtain funds very quickly, the amount of which depends on the company's sales.

In concrete terms, a VSE or SME wishing to obtain financing from PayPal must have had a PayPal business account for at least 3 months, and generate at least 12,000 euros in annual sales via the platform.

Refunds are automatically deducted from the company's PayPal revenues, in the form of a 10-30% commission on each sale.

Very small businesses: a promising market for payment players

For French SMEs who are already regular customers of PayPal Financement Pro, the loan amount can be up to 160,000 euros, compared with 130,000 euros for new customers.

For PayPal, as for Adyen and other funders offering Revenue-Based Financing, this solution considerably reduces the cost of risk. In fact, they already have all the data they need - starting with monthly revenues, but also the seasonality of the business - to assess the financial health of the company seeking funding.

The market for loans to very small businesses, hitherto reserved for banks, is particularly promising for payment players. There are 4.1 million very small businesses in France.

" After the health crisis, they are now finding it difficult to buy the products and materials they need to support their growth," says Francis Barel, director of PayPal France, in a statement.

However, according to a YouGov study commissioned by PayPal, 57% of French VSE/SME managers were unable to obtain financing because they couldn't meet bank requirements. The PayPal platform currently has 1 million VSE/SME users, representing 1 in 4 French VSE/SMEs.