Paypal’s loan program is a bit… sketchy

Casey Rosengren:

On one hand, Paypal was saying that our account was too risky for them to release the $20,000 they’d taken as collateral. On the other hand, they were saying our account was credible enough to offer us a loan.

The issue:

For a new business, freezing $20,000 in funds could be catastrophic. In our case, we were able to bridge the gap with personal funds in order to stay out of the red. However, a young, cash-poor company could be left with no other option than to take Paypal up on their offer. Paypal causes a cash-flow crisis and then offers to fix it.

That’s… probably illegal, or at least I hope it is.

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