When a lender has strict income and tenure-in-business standards, it's easy to become irritated if you're a business owner who requires operating money. However, you can feel a little less frustrated after using PayPal LoanBuilder.

Low revenue criteria distinguish LoanBuilder from its rivals in the finance industry. However, you should be aware of any potential drawbacks before rushing to begin a loan application, such as its high flat costs and not-so-low credit criterion.

We'll go over all of that and more in this LoanBuilder review to assist you in determining whether a working capital loan from LoanBuilder is appropriate for your company.

LoanBuilder is best for businesses with low revenue but good credit

For an internet lender, LoanBuilder has somewhat unusual borrower requirements.

It has some of the lowest revenue needs that we've seen, on the one hand. It just requests $42,000 in revenue annually. For comparison, a traditional lender (a bank or credit union) typically requires $200,000 or more, whereas your typical alternative lender will look for $100,000 or more.

To put it another way, LoanBuilder's revenue requirements are incredibly low—much lower than those of lenders like Lendio, which just demand $50,000 annually. Additionally, keep in mind that you are not dependent on PayPal sales for any of your income. Even without a PayPal account, you can apply.

It’s also got pretty low requirements for how long your business has been around. LoanBuilder will accept a mere nine months in business. Other lenders, like Lendio, will accept younger businesses with 6 months or less. But since most online lenders look for one year or more (and traditional lenders look for two years or more), LoanBuilder still comes in on the low side.

The fact that LoanBuilder has a rather high credit criterion seems weird in light of this. A 580 personal credit score is required.

That is within the range of what the majority of online lenders want and is regarded as having a "bad" FICO score. While many of the lenders on our list of the top small-business loans provide better loan rates and terms than LoanBuilder offers, it is still just marginally lower than the majority of them.

Simply said, the borrower qualifications for PayPal LoanBuilder are generally quite minimal.

In fact, LoanBuilder really only works best for businesses with low revenue. If you have higher revenue or stronger credit, you’ll probably want to go with another lender―because LoanBuilder loans are nothing to write home about.

The list of prohibited industries on LoanBuilder is the longest we've seen. Numerous lenders refuse to provide financing to businesses in the adult, marijuana, or casino industries. But in addition to these, LoanBuilder also declines to lend to charitable organizations, freelancers, lawyers, and financial services.

With the greatest loan size we observed being $500,000, we heard from borrowers who said they had been accepted for certain loans of a moderate size. Having said that, we noticed more reports of smaller loans, i.e., those of up to $40,000. Therefore, LoanBuilder funding can likely assist with a variety of working capital requirements, but it most likely won't be sufficient for larger projects.

Additionally, LoanBuilder charges a flat lending fee rather than interest on the borrowed amount. As a result, you will never receive a discount for paying off your loan early. LoanBuilder is a fairly pricey financing solution because borrowers frequently reported fees between 12% and 14%. However, the website for LoanBuilder featured examples of loans with costs ranging from 2.8% to 187%.

You'll pay back your loan via automatic weekly deductions from your business bank account, regardless of its amount or interest rate. As far as we know, the maximum loan duration is one year, while shorter terms of up to 15 weeks may be available.

Although they aren't the worst we've seen, those financing rates and terms are far from ideal. For this reason, as we previously stated, if you have the income to do so, we advise choosing a different lender.

However, if you do choose to continue with LoanBuilder, you will at least have the choice to make a few changes to your loan.

Creating a customized company loan using LoanBuilder
While many lenders will merely present you with a loan offer that you can accept or reject, LoanBuilder enables you to make a few minor customizations.

While your loan amount will be predetermined, the LoanBuilder Configurator will provide you the option to select from a variety of loan term lengths (basically just little sliders that show you how costs change over time).

The fee rate will be reduced but the weekly payments will be greater if you choose a shorter payback period. You can also opt for a longer repayment period, which will result in higher fees but smaller weekly payments.

Therefore, you should select the shorter term with its lower loan fee if you want the least expensive financing possible. But if maintaining cash flow is more important to you, you can choose the loan with the longer duration and the lowest installments.

Although LoanBuilder isn't the only lender we've observed doing this, it's nevertheless a pleasant feature for a loan that otherwise isn't very good.