> When you give money to a bank, it's no longer yours

The cash is no longer yours, but the "money" certainly is. It's just taking the form of a demand deposit at a depository institution. We can quibble about the definition of "money". By the Federal Reserve's definition (and the bulk of international and American case law), bank deposits are your money [1]. Claims against money transmitters aren't even M2.

> If the bank goes under, you're just another creditor

If the bank goes under, you're a super-senior creditor partially or fully insured by the FDIC. PayPal, itself, isn't FDIC insured [2].

> if the bank suspects you're a human trafficker or a money launderer, they will freeze your money even if they can pay you back

If a bank freezes your funds, you have regulatory recourse to ensure they're doing it per the law. If a money transmitter does this, you need to pay for your own lawyers and enforcement.

[1] https://www.federalreserve.gov/faqs/money_12845.htm

[2] http://money.howstuffworks.com/paypal7.htm

PayPal doesn't need FDIC insurance because it's not in the money lending business. In fact, to my knowledge, PayPal had no trouble weathering the financial meltdown of 2007, whereas many regulated banks went under and had to be bailed out.

FDIC insurance is not only for financial meltdowns and saving customers money out of assets that deemed to be too risky. It would protect money if the whole PayPal would go down too. Which realistically probably wouldn't happen, but still insurance is insurance

PayPal does offer business line of credit. I see the damn interstitial ad every sign in

Is it definitely from PayPal? I have a credit line in the PayPal interface but it's actually from some other company.