PayPal UK is further encroaching on the high street banks’ territory by launching cash advances for business customers.
PayPal Working Capital, already live in the US, will be available from this autumn to small businesses, including those operating on PayPal-linked platform eBay.
Managing director of Paypal UK, Cameron McLean, said: "Small businesses are the lifeblood of the British economy.
"But seven years after the start of the credit crunch, many of them are still struggling to get funding."
The payment service said that borrowers could access money within minutes of applying online and that no credit checks were needed as the service did not amount to a loan.
PayPal also said there were no interest fees or late charges and that borrowers would repay advances with a share of their daily sales. Nothing would need to be paid back on days when there were no sales.
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McLean said: "According to the British Government, around a third of SMEs rely on retained earnings or the owner’s own finances rather than bank or equity funding.
"This means that many find it very difficult to finance their present needs or future growth and the problem is acute for smaller, online businesses.
"PayPal is well placed to make a difference … and we’re delighted that our UK customers will be next to benefit from faster, fairer funding."
In the US, PayPal Working Capital has given SMEs $140m in cash advances since launching last September.
The programme bears similarities to a scheme launched in the US during May by rival payments company Square.
Square Capital provides small business with a set lump sum as a cash advance and the company says it has funded 10,000 merchants since launching the scheme.
PayPal has recently been in the spotlight due to rumours it may be working with Apple on the latter’s Touch ID capability.
The payment service already supports fingerprint authentication on the Samsung Galaxy Tab S, as part of its plan to enable the users to securely and conveniently pay online.
The company said that the users of Galaxy Tab S can use their fingerprint to log in and pay at millions of merchants that accept PayPal on mobile and in stores without any need of passwords or logins.
Other recent partnerships include a deal at UK shopping centre Westfield London, to allow shoppers to pay for parking via PayPal.
The company is also piloting next-day settlement (NDS) of payments for eligible businesses in the US, to provide speedier money transfers online.