I paid my PayPal credit card with my PayPal balance (which was "cleared funds"), $700 or so, and that triggered a three week hold on both my card and my balance.
It’s illegal for PayPal to treat held funds as an overnight loan— that’s a gross misunderstanding of what is going on.
If PayPal isn’t holding deposits and doesn’t forward the hold to the underlying bank, then go get your funds from the underlying bank or sue them.
FinTech is a stack of companies operating as veneers on the underlying, heavily regulated banks.
Look through the disclosures and agreements you signed on account opening and find out which banks PayPal is using for your account. The linked one above is for a deposit account at Synchrony Bank.