eBay to offer credit to small businesses

eBay's new partnership with the British Fashion Council may only be applicable to emerging contemporary

fashion brands, but other retailers can benefit from its new credit initiative.

After a successful trial in the US, eBay plans to extend finance to small companies through its PayPal subsidiary.

The initiative would bring working capital and funds to potentially "hundreds of thousands" of small UK businesses signed up for its PayPal payments service, reported The Times newspaper.

PayPal's business customers with more than a year's track record will be able to borrow up to 8 percent of the annual sales they gain through PayPal with no set limits on how quickly the money has to be paid back.

Under a "merchant cash advance" arrangement, PayPal takes an agreed percentage of the customer's future sales proceeds until the advance is repaid.