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Stripe Capital

stripe.com

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Re: Stripe Capital

#71

Post by jgalt212 »

asdf21 wrote: post #18
atourgates wrote: post #11

Earlier quoted context omitted.

Based on the amount of junkmail I get offering my small business loans, I have a hard time believing the "filling a niche no-one else is offering" narrative. We get about 2x mailers per week from AMEX alone offering business loans of up to $500k, not to mention the many other offers we get less frequently. I like Stripe and think the offer a great product, but I don't think they're doing this because no-one else will…

Have you actually tried to qualify though?

From my experience as a consumer and business borrower, it's very easy to borrow money at a crummy interest rate. ZIRP comes no where close to permeating SMB.

Re: Stripe Capital

#72

Post by amirhirsch »

adventured wrote: post #60
amirhirsch wrote: post #47

Earlier quoted context omitted.

If it seems like you were paying it back too quickly you should switch most of your sales to another payment provider like PayPal or Square to throttle your Stripe revenue lowering your effective APR until it's compatible with a bank line-of-credit.

They surely have built-in terms covering that premise. Otherwise you could switch 99% of your payment processing off of Stripe and pay them a trickle of your sales over a decade. For example, I wouldn't be surprised if they legally tie repayment to your actual business sales (or any sales conducted through a qualified payment processor, comparable to Stripe; some legal structure that catches this), not just your Stri…

I do wonder about those terms then. I run a Shopify store that did millions of dollars via Stripe and PayPal then quickly transitioned to mostly revenue from paper checks when we backed away from consumer sales towards bulk orders, retail and distributors. I'm considering turning off direct consumer sales entirely and moving to Amazon.

Re: Stripe Capital

#73

Post by harshadante »

aznpwnzor wrote: post #12

it's smart because they already have cash flow insights and also control your revenue stream. but i wonder how this nets out in terms of: 1. do i want the entity holding my loan to also control my billing/revenue management? 2. aren't smb rates much lower than this usually? so crazy that certain usurious rates are just explicitly allowed

Harsha from the Stripe Capital team here. Access to capital has been one of our top user asks, and users were excited about the possibility of Stripe leveraging our knowledge of their business to offer them an integrated solution for their capital needs.

As for pricing, the cost of the loan is a single fixed fee that adjusts to the loan amount, and it is paid over the course of the loan—there is no interest rate or additional fees. The effective APR is dependent on how long it takes to repay the loan. We’re priced very favorably compared to alternative lenders.

Re: Stripe Capital

#74

Post by bduerst »

pc wrote: post #67
atourgates wrote: post #11

Earlier quoted context omitted.

Based on the amount of junkmail I get offering my small business loans, I have a hard time believing the "filling a niche no-one else is offering" narrative. We get about 2x mailers per week from AMEX alone offering business loans of up to $500k, not to mention the many other offers we get less frequently. I like Stripe and think the offer a great product, but I don't think they're doing this because no-one else will…

[Stripe cofounder.] > Based on the amount of junkmail I get offering my small business loans, I have a hard time believing the "filling a niche no-one else is offering" narrative. Leaving aside questions about how good those lenders actually are to work with, it's still a surprisingly inefficient market. Businesses built on Stripe still report that access to capital is one of the _very top_ limiting factors on their…

>Our hypothesis is that existing lenders are disproportionately ineffective at detecting and underwriting internet businesses

Is that because you have a view into your business customers cash flows, so you think you'll be able to better assess risk than traditional lenders?

Re: Stripe Capital

#75

Post by kraig »

adamqureshi wrote: post #31

Stripe offered my 1 man shop a cash advance. $12,500 $1,250 Fixed fee then 10% of sales withheld. $18,500. $1,850 Fixed Fee. 14% of sales withheld. $25,000.00 $2,500 fixed fee. 20% of sales withheld. terms: No lengthy application: You’re pre-qualified for your advance—no time-consuming application process required. No hidden fees: We charge one fixed fee for the advance—there are no interest charges or late fees. Pay…

The hidden fee is baked into your % of sales withheld, unless you have extremely static income

Re: Stripe Capital

#76

Post by iambateman »

pc wrote: post #59
jawns wrote: post #25

The way Stripe Capital has structured repayment of the loan -- fixed fee, dynamic loan term -- is is an interesting way to make it hard to compare against other lenders, which typical express their fees through APRs. The term of the loan is variable, and depends on daily sales, but assuming you have a high volume of sales and take out a small loan, the effective APR is going to be through the roof! For instance, supp…

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

This is such a great response...different customers have different needs, and sometimes covering downside matters more than optimizing interest rate in the best-case scenario.

Re: Stripe Capital

#77

Post by pc »

bduerst wrote: post #74
pc wrote: post #67

Earlier quoted context omitted.

[Stripe cofounder.] > Based on the amount of junkmail I get offering my small business loans, I have a hard time believing the "filling a niche no-one else is offering" narrative. Leaving aside questions about how good those lenders actually are to work with, it's still a surprisingly inefficient market. Businesses built on Stripe still report that access to capital is one of the _very top_ limiting factors on their…

>Our hypothesis is that existing lenders are disproportionately ineffective at detecting and underwriting internet businesses Is that because you have a view into your business customers cash flows, so you think you'll be able to better assess risk than traditional lenders?

Yes, but much of it is simply taking the problem more seriously. In principle, others could build this by leveraging bank account data. (Or by using Stripe Connect.)

We were so struck by the extent of the problem reported by Stripe users, and by how that remained constant over time, that we decided to go tackle it directly.

Re: Stripe Capital

#78

Post by laurentb »

pc wrote: post #59
jawns wrote: post #25

The way Stripe Capital has structured repayment of the loan -- fixed fee, dynamic loan term -- is is an interesting way to make it hard to compare against other lenders, which typical express their fees through APRs. The term of the loan is variable, and depends on daily sales, but assuming you have a high volume of sales and take out a small loan, the effective APR is going to be through the roof! For instance, supp…

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

In this case, then surely showing a calculator straight on the page allowing people to see what APR they would get based on their payment/sales configuration would make the whole process more transparent and easier to understand by people who might not be savvy enough to understand the nuances then?

Re: Stripe Capital

#79

Post by ryanmonroe »

jawns wrote: post #25

The way Stripe Capital has structured repayment of the loan -- fixed fee, dynamic loan term -- is is an interesting way to make it hard to compare against other lenders, which typical express their fees through APRs. The term of the loan is variable, and depends on daily sales, but assuming you have a high volume of sales and take out a small loan, the effective APR is going to be through the roof! For instance, supp…

It took you less than 30 mins from the time this was posted to calculate the APR for two possible repayment schemes and compare that to loans available elsewhere. I'm not seeing the problem. I think it's fair to presume that businesses in the market for a loan will be at least as capable of understanding the loan structure as you, some internet commenter with no personal financial interest in the issue, were with less than a half hour of time.

Re: Stripe Capital

#80

Post by dahdum »

adventured wrote: post #56
dahdum wrote: post #21

Earlier quoted context omitted.

This does seem to be exactly like PayPal Working Capital, down to the application and fee structure.

I'm guessing that what Stripe is really bringing to the table here, is what they so often do: considerable simplification of annoying, often slow, red-tape-heavy processes. Their entire existence has been built on that. They look for the burr in the saddle. If PayPal had not been so incompetent with their API, Stripe probably wouldn't have had enough of an angle in the beginning to gain broad traction among developer…

I agree they simplified payments, but I don't see how they improved this product over PayPal. Both decide almost instantly and don't require a bunch of documentation.

Probably hard to improve on that process, but it does look like they are just playing catch up in this small area of their business.

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