How Data Can Help Ease the Capital Squeeze for Small Businesses

Accessing traditional finance can be challenging for business owners during the best of times, but in a tough economy it can seem nearly impossible. Not only is there the fear of rejection and the resulting impact on credit scores, but also the onerous process of having to explain your business to a stranger through a limited set of figures.

To help improve access to business financing, PayPal Working Capital1 launched in 2013, offering fast, flexible loans, which can be approved in seconds based on an applicant’s PayPal account activity. This year PayPal Working Capital began helping small businesses further increase their borrowing potential with open banking. By opting into open banking, business loan applicants can securely link a business bank account and choose to share their bank account data, providing a fuller picture of their business and enabling more informed lending decisions. For PayPal Working Capital applicants, this can potentially lead to higher loan amounts.

Since mid-February, more than 600 U.S. businesses have received increased PayPal Working Capital loan offers thanks to open banking connections. On average, these offers were 47% higher than they would have otherwise been without open banking connections, lifting average loan sizes for these businesses from approximately $28,000 to $42,000.2

“We’re already seeing 40% of customers add their banking information to PayPal Working Capital loan applications, which is a great start, and we expect that number to continue growing as more customers become aware of the advantages,” said Bernardo Martinez, VP of Microbusiness. “PayPal has a strong foundation of trust and understanding with our customers and this is a natural way to build on those relationships, provide a great service, and enable them to grow.”

Martinez said that maximizing eligible loan amounts can have significant, long-lasting impacts on a business’s trajectory.

“Many businesses use PayPal Working Capital to pay suppliers and build inventory, just to make sure they can keep up with demand, but they also want to invest in the long-term health of the business,” he said. “Timing can be incredibly important, and if a larger loan means you can make improvements this year, instead of putting it off for next year, that could mean 12 months’ worth of new customers acquired through investing in marketing, or 12 months of savings achieved by investing in upgraded equipment.”

Beyond Increased Business Loans

Martinez said the benefits of open banking extend far beyond improving access to finance.

“Small business owners often have their hands full just ensuring smooth operation and customer satisfaction day-to-day, long before they have a chance to consider pouring over data and mapping priorities for the months and years ahead,” he said.

“By facilitating access to financial information, open banking can allow business owners to leverage third-party service providers and software to automate tasks, recognize patterns and anticipate business needs in advance. Vendors with access to open banking information can forecast when a business may need to build inventory, adjust staffing schedules or seek a line of credit.” 

Open banking enables credit providers to have a more complete picture of a business applicant's creditworthiness – potentially breaking down some of the perceived barriers to accessing the capital they need.

How to learn more

Business owners can learn more about how open banking could impact eligible PayPal Working Capital Loan amounts at


1The lender for PayPal Working Capital is WebBank.

2Analysis of internal PayPal data, February 14 through April 25, 2023

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