A provider of short-term loans to small businesses, LoanBuilder stands out thanks to a quick and easy application process and no extra fees.
WRITTEN & RESEARCHED BY
Lead Staff Writer
Last updated onUpdated
REVIEWED BY
Expert Contributor
| Total Rating | 3.5 |
|---|---|
| Rates & Fees4.1 | |
| Services2.9 | |
| Eligibility Requirements3.4 | |
| Application3.8 | |
| Sales & Advertising Transparency3.8 | |
| Customer Service2.8 | |
| User Reviews4.1 | |
Table of Contents
LoanBuilder is a PayPal service that offers short-term business loans, which are interest-free loans in which borrowers repay a predetermined fixed fee with the borrowed amount. LoanBuilder’s short-term loan is unique in that it offers weekly repayments instead of daily, making it a competitive option if you’re in the market for a small short-term loan.
Unlike PayPal Working Capital loans, LoanBuilder Loans do not require a PayPal Business Account in order to qualify, but LoanBuilder does have a potentially high borrowing fee and a long list of ineligible businesses.
Let’s see exactly how the pros and cons of a LoanBuilder loan play out.
| Services2.9 |
|---|
| Lending Services 3.0 |
| Lending Limits 3.0 |
| Payment Portal & Mobile App 2.5 |
LoanBuilder issues short-term business loans. This type of loan offers lump sums of capital at a fixed fee. LoanBuilder has a more flexible structure than other short-term lenders by offering weekly repayments. PayPal doesn’t disclose the LoanBuilder term lengths, but most short-term loans typically have term lengths of less than 18 months.
LoanBuilder has relatively low borrower amounts for customer needs and also doesn’t offer any mobile apps, resulting in a 2.9/5 star rating for this section.
| Eligibility Requirements3.4 |
|---|
| Availability 3.5 |
| Borrower Qualifications 3.5 |
| Transparency 3.0 |
LoanBuilder offers competitive borrower requirements and has even lowered the annual required revenue by almost $10k.
The company no longer discloses a specific minimum credit score, stating that LoanBuilder “requires credit checks because the loan is based on a full picture of your business.” In the past, the minimum was 620, but there’s no advertised minimum now.
LoanBuilder also requires both a personal guarantee and a blanket lien.
| Time In Business: | 9 months |
| Business Revenue: | $33,000 per year |
| Personal Credit Score: | Not disclosed |
Previously, LoanBuilder’s list of ineligible industries was rather lengthy and included attorneys, nonprofits, financial services, and others. While it no longer makes this list readily available, here are the industries that were previously affected:
If your business falls into one of these industries, you may still be able to qualify. You’ll just have to contact LoanBuilder directly to check your eligibility.
Your business must also be based in the United States and not have any active bankruptcies. LoanBuilder also does not lend to companies based in Hawaii, Nevada, North Dakota, or South Dakota.
| Rates & Fees4.1 |
|---|
| Pricing 4.4 |
| Affordability 3.8 |
In the past, LoanBuilder was far more transparent with its borrowing information. Now, the company makes it incredibly difficult to get any information about borrowing amounts, term length, etc., which we took into consideration when rating LoanBuilder as a short-term lending solution.
Because of LoanBuilder’s lack of transparency, the best way to get the most accurate interest rate and fee information is by contacting LoanBuilder directly. However, here are the rates and fees LoanBuilder used to advertise. While these numbers might not be 100% accurate anymore, they can at least give you an idea of what to expect. (Note that the collateral, origination fee, and effective APR information are all still accurate.)
| Borrowing Amount: | $5,000-$150,000* |
| Term Length: | 17-52 weeks |
| Borrowing Fee: | One-time fee of approx. 2.9%-18.72% of the borrowing amount |
| Origination Fee: | None |
| Effective APR: | Learn more |
| Collateral: | UCC blanket lien & Personal Guarantee |
* In the past, LoanBuilder loans were available up to $500,000 for qualified borrowers. Now, LoanBuilder does not advertise a borrowing amount; however, the PayPal Business Loan website lists borrowing amounts as $5,000-$100,000 for first-time borrowers and up to $150,000 for business owners who have borrowed with PayPal Business Loans before. Because PayPal Business Loans and LoanBuilder are the same product with different websites, odds are the change is universal. The best way to find out how much you qualify for is by asking a LoanBuilder rep directly.
LoanBuilder rates are one-time fees and have ranged from 2.9% to 18.72% of the borrowing amount. While no specific collateral is required to qualify, a blanket lien and personal guarantee is required as a condition of receiving a LoanBuilder business loan.
LoanBuilder borrowing fees are usually not too high. However, the loans have relatively short repayment terms, making for large weekly payments. The two main fees are a fixed Total Loan Fee and a $20 Returned Item Fee if your payment is returned.
Notably, LoanBuilder does not charge an origination fee, so you won’t have anything deducted from the money you receive. As for LoanBuilder’s borrowing fees, they are not expensive, but they’re not the cheapest either and could potentially be as high as 18.72% of the borrowing amount.
Repayment is hands-off. Each week, LoanBuilder will deduct a fixed amount from your business bank account via an automated clearing house (ACH). It’s worth mentioning that many of LoanBuilder’s competitors withdraw payments daily, making LoanBuilder’s weekly payment system a little easier than most to plan for. You can pay the loan off early without penalty if you choose, but unfortunately, there’s no monetary benefit.
Determining your Total Loan Fee is easy — simply multiply the Total Interest Percentage by the borrowing amount. For example, if you are borrowing $100,000 and you have an interest percentage of 10%, you will have a borrowing fee of $10,000. In total, you would have to repay $110,000.
Note: the Total Interest Percentage is not the same as an interest rate or APR. Unlike interest, which accrues over the life of the loan, LoanBuilder’s borrowing fees are only calculated once and stay the same for the loan term (even if you pay the loan off early, you’ll still have to pay the full Total Loan Fee).
Some online sites claim that there are LoanBuilder discounts and Loanbuilder.com coupons. However, because Loanbuilder is a lending service, there are no traditional coupons or discounts. The best way to save money on your LoanBuilder loan is to have a strong credit profile to qualify for the best terms possible.
| Application3.8 |
|---|
| Application Process 3.0 |
| Application Timeline 4.5 |
LoanBuilder has a quick and easy application process.
The first step is to fill out an online pre-qualification form. You can sign in using your PayPal account (in which case, LoanBuilder will already have some of your information) or as a guest. The application has five steps: Contact Info, Personal Info, Business Location, Business Details, and Verify Identity. LoanBuilder advertises that this form only takes five to ten minutes to complete.
After submitting the application, LoanBuilder will let you know if you’ve been approved to continue the process. To determine eligibility, LoanBuilder evaluates your business’s financials and overall health, as well as your personal credit history. If pre-approved, you will receive estimated rates and fees, and you can customize your borrowing amount and term length.
When you have settled on your terms, you have to complete a full application. In this stage, LoanBuilder will perform a hard check on your credit, which might have a small impact on your credit score. If approved for a loan, you must electronically sign a contract before receiving your funds.
Once you sign your contract, your funds will generally transfer the next business day.
If you need immediate small business funds, check out the best same-day business loans instead.
| Sales & Advertising Transparency3.8 |
|---|
| Sales Practices 4.0 |
| Web Presence 3.5 |
Over the past two years, LoanBuilder has sharply cut back on the amount of information it provides upfront to prospective borrowers. There’s still a FAQ that provides some general information about how Loanbuilder works, but you won’t find much information about rates and precise terms. The PayPal Business Loan page provides similar information in a slightly different format and generally has a bit more information on it than the LoanBuilder page. Although, there are some discrepancies between the two like one site says you don’t need a PayPal Business Account for a PayPal loan and one site says that you do — which is a big discrepancy.
We wish LoanBuilder: A PayPal Service would step things up in this area, but the company does have a lot of customer feedback regarding good sales practices and ethics.
| Customer Service2.8 |
|---|
| Personal Support 2.7 |
| Self-Service 3.0 |
Customer service is available by phone Monday through Saturday. Support is also reachable via email and social media. There is no live chat feature.
Though customers in the past have complained about the difficulty of reaching a customer support representative, LoanBuilder appears to have taken great pains to improve its customer service experience, and most recent reviews of the company’s customer experience are positive. LoanBuilder has had an increase in positive reviews from customers regarding customer support, despite the company not offering as many support avenues as other competitors. This lack of support options and a limited knowledge base give LoanBuilder a 2.8/5 star rating for this section.
| User Reviews4.1 |
|---|
| User Feedback 4.0 |
| Review Site Aggregate 4.2 |
Previously, it was difficult to distinguish PayPal’s loan services from those of its other operations. However, the internet has finally caught up with PayPal’s LoanBuilder acquisition, and you’ll find thousands of LoanBuilder reviews. Currently, LoanBuilder: A PayPal Service receives an aggregate third-party review score of 4.2 stars with a positive majority of customer reviews.
While the majority of LoanBuilder reviews are positive, there are some recurring complaints against this service:
Some of the older negative reviews are related to COVID-19 and issues getting PPP funding.
LoanBuilder has several testimonials on its website and many positive reviews on TrustPilot. Customers usually like the following:
While LoanBuilder no longer has transparent fees, recent reviews note low interest rates and competitive pricing compared to other lenders. Some reviews also noted that LoanBuilder paused repayments during COVID to help businesses not default on their loans, which created a few very satisfied customers.
LoanBuilder has plenty to offer the right type of business. LoanBuilder’s loans are fast, easy to qualify for, and more flexible than your average fintech business loan. LoanBuilder’s weekly repayments stand out, as well as the sheer number of positive customer reviews.
PayPal’s move away from transparency over the last two years is puzzling and a step in the wrong direction, but the service remains among the better short-term loan offerings out there, though some businesses may want or need larger borrowing limits.
While some borrowers might want to look at other top small business loans or short-term loans,
While LoanBuilder can be a great option for short-term loans, it might not be the best fit for everyone. Maybe you don’t qualify for LoanBuilder; maybe you want a longer repayment period or aren’t comfortable with a blanket lien. Or maybe you just want to see all of your options.
Luckily, there are several LoanBuilder alternatives worth considering:
Merchant Maverick has been researching and reviewing business lenders since 2015. Our writers have tested over a hundred different funding products, including traditional term loans, online loans, lines of credit, start-up loans, merchant cash advances, and equipment financing. In each review, we evaluate rates and fees, services, eligibility requirements, application process, sales and advertising transparency, customer service, and user reviews.
Read more about how we rate business loans and funding products.
When comparing different lenders and loan products, we consider many data points, including the ease and transparency of the application process, interest rates, repayment structure, sales ethics, time to funding, revenue and time in business qualifications, and credit score requirements. Our lists of the best funding products include only those we’ve deemed worthwhile from multiple vantage points, and often share qualities such as widespread accessibility across fifty states, low rates, flexible requirements, and competitive borrowing amounts.
We spend an average of 10-15 hours researching and updating each one of our lists, making sure the loans and funding products included meet our internal standards for quality and reputation.
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Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.
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