Five Questions With: Jeff Caruso

"We make multiple sales every day so we can gauge how long it will take to pay them back. It makes the source of funds a lot easier."

Jeff Caruso owns Crisloid Product Inc., a maker of backgammon, checkers cribbage and other classic board games. Working a niche market, Caruso conducts a large portion of his business online, so he decided to use PayPal as a vehicle to receive payments from around the world. Looking for ways to expand operations, Caruso opted to borrow money from PayPal through its Working Capital program, an alternative to traditional borrowing methods, and he discusses the experience here with Providence Business News.
PBN: Why did you chose to use PayPal Working Capital?
CARUSO:
We, historically, were a wholesale manufacturer dealing with brick and mortars outlets and the retail world. Four years ago, I made a big shift in the business and pumped up our website to direct consumer business. It was around that time we did a lot more business and we needed a smart and intuitive background. [PayPal] was a great partner and a really good tool in our commerce business. Two years ago in September they launched a beta program for their PayPal Working Capital and we were invited to be a part of that program that’s how it came about. It made a lot of sense for us and it we got on board.

PBN: Why should people consider this method of borrowing over traditional methods, such as via a bank?
CARUSO:
It was really clearly written, made sense, it wasn’t predatory in any sense. They’re an existing partner that’s offering another good tool for their customers. It was a really easy decision to make.
Since 2008 traditional methods of borrowing for small businesses have been almost non-existent. So you either go with hard money with high rates from money lenders or go with the few banks that will do it, but will have high closing costs and inflexible terms.
The option for the PayPal Working Capital was just the opposite. We’d already built a history with them and they give us an opportunity to borrow against that.

PBN: Have you ever obtained a loan from a bank, or other lending institution, how did the experience compare?
CARUSO:
You don’t have to pay for the underwriting process and if you pay for an underwriting process only to find out that you weren’t approved, you’re not any further along and you’ve just lost time. They’re putting a lot of trust in you as a customer.

PBN: Did you have any qualms with the payback method?
CARUSO:
For all of my loans, I pay 15 percent of every sale I make back to PayPal and a [single fixed fee] between 5 [percent] to 6 percent. It’s one fee and monitored daily and it’s not miles worth of paperwork. I don’t feel like I’m missing that one point.
And as long as you don’t jump ship to another lender there’s no penalty there. We make multiple sales every day so we can gauge how long it will take to pay them back. It makes the source of funds a lot easier. It’s an excellent tool.

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PBN: How have you used the capital to bolster your business and would you consider borrowing this way again?
CARUSO:
We’ve already done it four time and we’re going to do it for a fifth time. There are a myriad of reasons why a small business needs capital including, research and development, search engine optimization, raw materials, equipment. Primarily, it will go toward raw materials or finished goods that will go out the door.

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