PayPal plugs £2.5 billion cashflow gap for UK small businesses
New PayPal data has revealed the reach and impact of ‘alternative business funding’ amongst British small businesses.
A decade on from the launch of PayPal Working Capital, over 58,000 British small businesses have received cash advances totalling over £2.5 billion.
Top 5 UK cities which have utilised PayPal’s alternative business funding over past 10 years:
- London - over £222 million received
- Manchester - over £71 million received
- Birmingham - over £40 million received
- Glasgow – over £34 million received
- Leeds - over £24 million received
Fintech's like PayPal diversified into business funding as small businesses struggled to secure funding in the wake of the 2007 financial crisis. Famous for its online checkout button, PayPal was able to leverage its vast sales history with businesses to offer them cash advances which they could pay through their future sales.
Top 3 industries which have secured the most business funding1 over 10 years:
- £326 million provided to over 4,400 auto-parts businesses
- £309 million provided to over 6,400 fashion businesses
- £164 million provided to over 2,600 houseware businesses
Small and medium sized enterprises (SMEs) play a vital role in the UK economy, accounting for 99% of all firms and employing around 61% of all private sector employees. However, the SME sector is waiting for its post-pandemic recovery as the total number of British small businesses still stands at less than it was in 2020, with the total number dropping from 5.9 million in comparison to today’s 5.5 million, according to Startups.co.uk’s Small Business Statistics 2024.
Given this decline, alternative funding remains pivotal in upholding and growing the SME economy. In fact, PayPal’s 2024 Business of Change Report found that 47% of UK small businesses plan on scaling their company in the next one to two years.
Vincent Belloc, Managing Director of PayPal UK, said: “Small business owners wear multiple hats and face several challenges, from finding new customers and managing cashflow to driving sales and much more. We launched PayPal Working Capital 10 years ago in response to a real need for funding that works just as flexibly as the small businesses we serve. Since then, we have advanced over £2.5 billion to more than 58,000 businesses.
“Nine in 10 (91%) businesses who have utilised PayPal Working Capital say their revenue increased or stayed the same, demonstrating the real impact alternative business funding can have on a business. SMEs are the lifeblood of the UK economy, and we’re proud that we can help take some of the stress out of what goes into running a small business so owners can focus on what they do best, bringing their ambitions to life.”
Jonathan Welland, the Founder and Managing Director at The London Candle Company, spelled out the role the solution has played in supporting his business: “PayPal Working Capital has been so helpful when I’ve needed to stock up on bulk candles ahead of the busy winter months, especially because I need to pay my suppliers right away. I’ve found it simple and easy to use too, as you choose the percentage of your sales that you pay towards the advance – you've still got cash flow coming in but you’re only losing a portion of it. And before I know it, it’s been paid.”
On top of the funding provided to fashion, auto-parts and houseware businesses, PayPal Working Capital has provided over £147 million to sports equipment businesses and £131 million to cosmetics businesses.
In terms of end usage, half of UK businesses leverage their funding to purchase inventory, 37% to purchase equipment, 26% to gain a competitive advantage through marketing, and 20% for business or product line expansion.
