"Opportunities come to small businesses, and they have to be able to act fast," said Darrell Esch, vice president of small-business lending at PayPal. "[Banks] either lack the ability to respond quickly, or the access is not there."
That certainly is an issue for Drew Silver, founder and president of ticket brokerage firm Drew's Tickets, based in Sherman Oaks, California. The company, which has five full-time employees, has $3.2 million in annual revenue. Silver typically needs cash to buy blocks of tickets for sporting events, theater productions and concerts, which he then sells to his customers.
"In my type of business, accessing capital is crucial because we purchase a large amount of inventory for shows throughout the country," said Silver. A PayPal merchant since 2009, Silver said he decided to give their new working capital loans a try in 2014.
He filled out an online application and qualified for $20,000 in minutes. Since his first loan, he has returned seven times, typically taking about 30 days for repayment, he said. The loans also have helped Silver build up a new consignment business, where he sells blocks of season tickets for business owners and other ticket holders, which he said has boosted his company's revenues 50 percent and allowed him to hire an additional employee.
"Being able to access capital like this allows me to pay for additional staff, and purchase additional inventory, and that fuels my sales and my growth," Silver said.
—By Jeremy Quittner, special to CNBC.com