81–90 of 283 posts
So am I understanding this correctly? It is a fixed 10% fee, irrespective of the payment schedule. And then the payment schedule is simply taken as ~12%(increasing as the amount loaned increases) of transactions processed through Stripe until 110% of the loaned amount has been deducted?
So am I understanding this correctly? It is a fixed 10% fee, irrespective of the payment schedule. And then the payment schedule is simply taken as ~12%(increasing as the amount loaned increases) of transactions processed through Stripe until 110% of the loaned amount has been deducted?
I could easily see lots of businesses taking a little higher interest rate for faster / easier capital and without putting up core business assets: it’s all pledged on future income.
It’s a win win, bravo.
Earlier quoted context omitted.
structured repayment of the loan -- fixed fee, dynamic loan term -- is is an interesting way to make it hard to compare against other lenders You would need to consult an appropriate scholar to be sure, but it could be to be compatible with Islamic finance, which prohibits charging interest. Some banks do mortgages structured around fees rather than interest too.
Any transaction of money in exchange for time is interest.
Some Jews won't push a button in an elevator on the Sabbath, but it's fine if its programmed to stop at every floor.
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…
Harsha from the Stripe Capital team here. We’ve designed the program so that most offers take about 8-12 months to pay back, and therefore the repayment rate would change to reflect that projected duration (which would ultimately impact the APR). The 15% repayment rate you see on the landing page is just an example. We do think this is a significantly improved overall user experience—it works straight out of your Str…
Wow, that's a whopping 10-15% p.a. interest rate. Time to mint the money has come for Stripe, yeah?
What's most interesting about this is that, reading between the lines, this is effectively an income share agreement for businesses, capped to the loan amount: you pay back a percentage of your revenues until you hit the cap. This could be huge, and Stripe is perfectly positioned to execute on this.
It's only ISA-like for businesses whose low-profit times are their low-revenue times, like seasonal businesses. But often businesses have a relatively steady stream of revenue and fluctuating/unpredictable net profit/loss (especially if they're dealing with non-software margins), and this model isn't much of a downside-risk-reducer for them.
Earlier quoted context omitted.
Alternative financing is always going to be expensive. Most businesses won't have access to bank rates, so they often have to access capital via alternative lenders (factoring, Merchant Cash Advance, high-interest fixed-term loans) that often charge upwards of 50-60%. Comparatively, 20% APR isn't so bad.
>Most businesses won't have access to bank rates 50-60% would violate most if not all usury laws, unless you are a bank. Even in my state the usury is capped at 18%, so to even charge 20% you have to be a bank or its an illegal loan.
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 les…
This is not true in my experience. A lot of people just wing it through life without doing or being able to do any calculations. Not that it excuses them.
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…
I can see that. But put another way, it's a flat fee. No disguise.
I see issues with you being able to get better rates elsewhere, but by calling it a fixed fee instead of using an APR with fine print saying there's a prepayment penalty, I see the OPPOSITE of disguise.
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…