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Sure, if you have it added as a funding source.
Well you do need a balance to do the refund properly. I am not sure how paypal operates but usually credit card processors take it out of your balance in the next cycle. If you go negative, prompt payment or revenue is expected to make up for it otherwise fines may be assessed or credit rating is impacted.
You need balance to issue the refund. As far as you can add balance using your CV, it's okay.
Depending on the country, but for example in he U.K. If you Don't have balance refund will go from your bank account via Direct Debit. Ask PayPal support.