How to Use PayPal to Make Loans

Making Payments
1. Check to determine if the recipient either has a PayPal account or can receive payments via PayPal. For example, some companies are now allowing you to send money via PayPal due to its efficiency.
2. Visit PayPal.com and click the link to 'Send money.' Enter the amount and currency you would like to use.
3. Input the email address of the recipient and confirm that you want to send the money. Input your account number and other information, explaining that it is a loan payment. Your recipient will receive an email informing her that she's received money. If she doesn't have a PayPal account, she can create one to get access to the funds.
Making Loans
4. Draft a contract specifying the details of the loan. Make sure to list the loan amount, any interest rates, due dates and other specifics of the loan. Have an attorney look over the contract, whether you're creating this loan to receive money from someone else or to issue money.
5. Make sure both parties have PayPal accounts. Create a PayPal account by going to PayPal.com and clicking 'sign-up' next to ' New to PayPal?' Follow the prompts.
6. Sign into your PayPal account and click 'Send money' if you're making a loan or 'Request money' if you're borrowing from someone else or requesting repayment of a loan. Input the email address and the amount and any terms in the fields listed. Your recipient will get an email allowing him to pay via his PayPal account, credit card or checking account.
7. Make the loan payments or ensure you receive the loan payments by using your credit card or checking account to upload money into your PayPal account. If you do not have a credit card or checking account, you can also purchase Visa gift cards from your local retailer, which can be used to send money online.