How Struggling Small Businesses Can Actually Afford the Holidays

How Struggling Small Businesses Can Actually Afford the Holidays

Between Thanksgiving and Christmas, the average consumer is expected to spend just over $800 on gifts for friends, family, and co-workers, an increase of almost five percent over last year. Retailers start preparing weeks in advance, stocking shelves, ordering shipping supplies, and beefing up online security.

For small businesses, those preparations can be a big challenge. Ordering enough products and supplies to be prepared for the heavy influx of customers requires extra capital. Not only do traditional bank loans require extensive paperwork, they can take weeks. There are other options. For businesses seeking extra funds to stock shelves and hire extra employees this Christmas season, here are some options.

PayPal Working Capital

Over the past year, PayPal has funded more than 20,000 American businesses, offering more than $200 million in loans through PayPal Working Capital (PPWC). Nearly half of the businesses receiving those funds report they are using the money to fund the holiday season. Funds are issued within minutes of approval, and businesses can repay the loan through fixed payments through their PayPal sales. Funding amount is based on the amount of sales you've made through PayPal in the past year, so this is an ideal option for many PayPal merchants. Fee amounts are based on a business’s sales history on PayPal, the approved loan amount, and the daily repayment deduction percentage the business chooses.

Denise Cline of The Minky Boutique recently took out a $20,000 PayPal Working Capital loan (underwritten by their partner WebBank) to help her secure additional fabric inventory for the anticipated holiday boon. All of her products are handmade with minky fabric. Denise is a single mom running a rapidly growing business.

“It’s worked great for me, literally within minutes the money was in my account.” says Denise. “I love the ease of it, that the money is paid back automatically as a percentage of my daily sales and I can just sit back and watch it and not worry about it. I’m able to see my loan processing in the same place as my sales, it’s nice to have everything all in one place.”


Online credit provider Kabbage specializes in credit lines to small business. Once approved, the money is either deposited in your PayPal account or a specified bank account. The company promises a seven-minute application process and an instant decision. A business can access as much money as it needs as often as once each day. Fees are between one and 13.5 percent for the first two months and a flat one percent for each remaining month, with the business paying back one-sixth of the amount each month over the next six months.


For businesses in need of larger loan amounts, OnDeck may be the perfect choice. With a maximum loan amount of $250,000, OnDeck has loan terms of three to 24 months and daily automated payback options. The company promises a ten-minute approval process, with funding available as quickly as one business day. OnDeck charges an origination fee of 2.5 percent and loan fees based on the amount of loan and the size of the business.

For businesses who do extensive work on PayPal, PayPal Working Capital is likely the best choice. Otherwise, Kabbage and OnDeck have their own benefits, with OnDeck being ideal for small offline merchants and Kabbage being best for online retailers, including those selling on Amazon this holiday season. For businesses that know they’ll be able to easily pay back these loans after the holiday season, these short-term loans are a great alternative to traditional loans. They often have slightly higher APRs than long-term loans, but you’ll pay them off quickly and avoid the trap of allowing your debt to build up year after year. The Small Business Administration has a Seasonal Line of Credit Program that can help some merchants, but the approval process can take longer and be more involved than these short-term loan options.

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