Small and medium businesses have borrowed more than $85 million from online payments operator PayPal over the past two years, and could soon be getting even more.
The California-based company is trying to tap a segment of the market that often struggles to get approvals from traditional lenders.
PayPal Australia general manager of credit Kareem Al-Bassam said business owners often re-mortgage their homes or max out personal credit cards to keep operations afloat.
It previously lent up to eight per cent of a company's PayPal-channelled revenue, but has upped that to 18 per cent, with a maximum of $97,000 up from $85,000.
"Our first interest is to help our merchant partners grow and retain them," Mr Al-Bassam told AAP.
PayPal's focus remains on providing a payment system, but offering loans ranging from $1,000 to $97,000 can add value for business customers, Mr Al-Bassam said.
Over 3,000 small and medium business owners in Australia and close to 90,000 globally have borrowed from PayPal since the Working Capital began in 2014.
"I really just wanted a flexible solution ... a traditional bank loan will just take much longer," said Ettitude chief executive Phoebe Yu, who has benefited from the program.
Ms Yu's business started in Australia selling ethical and environmentally friendly products including bamboo sheets in 2008, and now reaches US customers as well.
The loan amounts increase as PayPal sales grow, which means the money helped Ms Yu buy more stock over busy periods, she said.
"Before Easter and Christmas we know that we will have a surge in sales ... so it really helps to meet demands and not lose sales," Ms Yu said.
The loans have no interest rate and cost a fixed fee on sign up. The repayments are tied to the merchant's PayPal sales increasing in peak periods and decreasing as sales slow.
